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1 - 4 of 4 (0.18 seconds)Commissioner Of Income-Tax vs Attili N. Rao on 11 October, 2001
Mr. Dubey, learned Advocate appearing for the Revenue, submitted that
the sum of Rs.72 lakhs could not be deducted from out of the capital gains
made by the assessee nor the sum of Rs.72 lakhs could be taken into account
for the purpose of computation of the capital gains. He, in support of his
submission, relied upon a judgment in the case of Commissioner of Income
Tax, Visakhapatnam vs. Attili N. Rao, reported in (2003) 9 Supreme Court
Cases 658. What had happened in that case was that the assessee was in debt
payable to the Excise Department of the State of Andhra Pradesh. In order to
secure the debt the assessee mortgaged his immovable property which, at a
later date, was sold by public auction. A sum of Rs.5,62,980/- was realised.
The State deducted a sum of Rs.1,29,020/- towards debt due by the assessee
to the State and the balance sum was made over to the assessee. The assessee
contended that the sum of Rs.1,29,020/- due by him to the State should be
deducted from the total consideration for the purpose of computing capital
gains. The contention of the assessee was rejected.
The Commissioner Of Income-Tax vs M/S.Bradford Trading Company (P) Ltd on 18 September, 2002
Mr. Bharadwaj, learned Advocate appearing for the assessee/respondent,
has drawn out attention to a judgment of the Madras High Court in the case of
Commissioner of Income Tax vs. Bradford Trading Company Private Limited,
reported in 2003 (261) ITR 222 (Madras). An almost identical situation had
arisen before the Madras High Court. The facts briefly were that the assessee
had entered into an agreement with one Buhari, agreeing to allow the latter to
participate in the hotel business. The assessee subsequently sold the hotel to
ITC and settled the matter with Buhari at a sum of Rs. 2 lakhs. The Madras
High Court following an earlier judgment of the Bombay High Court, held as
follows:
Commissioner Of Income-Tax vs Shakuntala Kantilal on 19 March, 1991
"The Bombay High Court in CIT v. Shakuntala Kantilal [1991] 190
ITR 56 (58 Taxman 106), has dealt with a case where the assessee
owned a piece of land and she entered into an agreement of sale of
the said property with one R and a dispute subsequently arose and
R filed a suit for specific performance and there was a settlement
whereby the assessee agreed to pay certain sum of money to R and
in the meantime, the assessee entered into another agreement of
sale in 1967 in respect of the same property with one C and C gave
an assurance to R that on the completion of the sale, they would
deduct a sum of Rs.35,504/- from the total consideration and pay
it to R. The assessee claimed that the sum of Rs.35,504/- from the
total consideration and pay it to R. The assessee claimed that the
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sum of Rs.35,504/- should be allowed as deduction for the
purpose of computing her income from capital gains. The Bombay
High Court held that unless the assessee had settled the dispute
with R, the sale transaction with C could not have materialised
and the sale consideration had to be reduced by the amount of
compensation paid to R. We are in agreement with the view
expressed by the Bombay High Court that the expression used in
section 48 of the Act, viz., 'expenditure incurred wholly and
exclusively in connection with such transfer' has wider connotation
than the expression, 'for the transfer'. We are of the view that but
for the payment of Rs.2 lakhs, the transfer would not have taken
place and the payment has necessarily to be made for the transfer
of the hotel in favour of India Tobacco Company Limited. Hence,
we are of the view that the sum of Rs.2 lakhs was expended by the
assessee wholly and exclusively in connection with the transfer of
the capital asset and not de hors the transfer".
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