VIKRAM NATH,J. - (1.) THE Income Tax Appellate Tribunal, Allahabad Bench, Allahabad has referred the following question of law under Section 256(1) of the Income Tax Act, 1961 (here in after referred to as the Act) for opinion if this Court: Whether on the facts and circumstances of case the I.T.A.T. was justified in holding that there was an over -riding charge against the sale proceeds of property and the assessee was not liable for capital gains in respect of Rs. 1,50,000/ - paid to bank in discharge of loan taken by M/s Shanker Trades.
(2.) THE reference relates to the assessment year 1984 -85. Briefly stated the facts giving rise to the present reference are as follows:
(3.) THE assessee is a partner in M/s Shanker Traders. M/s Shanker Traders took loan from the Bank of India. The house property No. 89/593 Prem Nagar, Kanpur, belonging to the assessee, was mortgaged to the Bank against the loan taken by the firm. The Bank enforced the recovery of loan against M/s Shanker Traders by sale of the property mortgaged. Under an agreement with the Bank, the house was auctioned by the assessee and out of the total sale consideration of Rs. 1,95,000/ - to be received by the assessee. Rs. 1,50,000/ - was paid to the Bank and Rs. 45,000/ -was received by the assessee. The Assessing Officer calculated the capital gain on the basis of the entire sale proceeds of Rs. 1,95,000/ - and added to income an amount of Rs. 96,000/ - by way of net taxable capital gains. Against the above addition, an appeal was preferred and the learned C.I.T.(A) vide his order dated 6.2.1987 confirmed the addition made by the Assessing Officer. The assessee being aggrieved came up in second appeal before the Tribunal. The Tribunal allowed the appeal holding that the Bank had an over -riding title over the property and the real value, to which the assessee was entitled, was only Rs. 45,000/ - and not the balance of Rs. 1,50,000/ - which was directly paid to the Bank and, therefore, no capital gain was chargeable to that extent. The Tribunal, while deciding the issue, had taken various decisions of the Benches of the Tribunal into consideration and also the decision of the Hon'ble Delhi High Court, reported in : [1986]160ITR840(Delhi) .;