JUDGMENT :

Dr. Vineet Kothari, J.

(Prayer: Tax Case (Appeal) filed under Section 260A of the Income Tax Act, 1961 against the order of the Income Tax Appellate Tribunal, 'A' Bench, Chennai, dated 26.10.2016 made in ITA No.40/Mds/2016.)

1. The Assessee N.Rajarajan has filed this present Appeal under Section 260A of the Income Tax Act raising the following purported substantial questions of law arising from the order passed by the Income Tax Appellate Tribunal on dated 26.10.2016 for the Assessment Year 2010-2011 dismissing the Appeal of the Assessee on two grounds:-

"(i) Whether the Appellate Tribunal is correct in sustaining the average value adopted on the consideration of the SRO’s guideline value and the Chartered Engineer’s valuation report to quantify the cost of acquisition being the fair market value as on 01.04.1981 in the recomputation of long term capital gains despite the settled position on the sanctity of SRO’s guideline value for the understanding/for the determination of the fair market value?

(ii) Whether the Appellate Tribunal is correct in law in sustaining the disallowance of the payments made to clear the loan liability as part of the cost of acquisition in the recomputation of long term capital gains while overlooking the pre-existing charge of the bank liability on the capital asset/property under consideration when it got vested by virtue of settlement deed dated 14.7.2004?

(iii) Whether the Appellate Tribunal is correct in law in sustaining the disallowance of the payments made to clear the loan liability as part of the expenses incurred in connection with the transfer as prescribed in section 48 of the Act in the recomputation of long term capital gains which was claimed as alternative stand by the Appellant?

(iv) Whether the Appellate Tribunal is correct in sustaining the recomputation of long term capital gains while overlooking the loss suffered consequent to the guarantee/mortgage of the property/capital asset in relation to the loan transaction with the bank entered into by the company which legally mandated for set off as well as not disputed the loss suffered in the capital field?"

2. The relevant findings of the learned Tribunal are quoted below for ready reference:-

"6.1 On appeal, the Ld.CIT(A) upheld the order of Id. Assessing officer with the following reasons.

(1) The loan was not taken by Smt.Susila Ammal assessee’s mother. As mentioned earlier, the loan was taken for business purposes by the aforesaid firm. As one of the partners, Smt.Susila Ammal had offered her asset as collateral security.

(2) The loan was finally settled by M/s. S.Albert & Co. Private Limited, the Company that subsumed the erstwhile firm, as per the Memo of Compromise between SBI and the company.

(3) It is not the case that the bankers had taken over the possession of the impugned property, and that the company was forced to sell the property and liquidate the loan as per the Memo of compromise. The Bankers had given a possession notice on 04.12.2005, following which the Company got its act together, and entered into the Memo of Compromise. It is seen from the schedule of payments furnished by the appellant that the first payment for liquidation loan was made in April, 2007, and the last on February 2010.

(4) The appellant has failed to controvert the finding in the assessment order that the sales consideration was not utilized to clear the loan liability.

(5) In any case, appellant’s grandmother was just a guarantor. The primary responsibility for the loan stands on the borrower, i.e. the Company that had taken over the firm. The charge of the bank was on the company, and not appellant's grandmother. The company was able to discharge the loan through negotiation and structuring without alienating the impugned property which was a collateral. Once the loan was restructured as per the Memo of compromise, the same was honored by th