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The assessee sold an immovable property for ₹20 crore, out of which ₹19.40 crore was directly paid by the buyer to SBI to discharge mortgage loans relating to the property. AO treated the entire transaction as taxable Long-Term Capital Gain in the hands of the assessee & computed LTCG of ₹19.86 crore, denying deduction for repayment of the mortgage liability. The assessee explained that the property had been settled by her husband in her favour without consideration, and therefore the capital gains were rightly offered to tax in the husband’s return under the clubbing provisions of section 64(1)(iv). She also contended that the amount paid to discharge the mortgage was an allowable deduction while computing capital gains.
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