9911796707
TMI Blog2012 (11) TMI 985X X X X Extracts X X X X X X X X Extracts X X X X ..... ding. The Company, however, created a sub-tenancy on the same property in favour of the Bank of Baroda. Payment of Rs.15,00,000/- made to the Company by the assessee was only for reducing its tax liability and not for the purpose of executing the transaction of sale. Sect 48(1) of the Act provides for mode of computation and deduction while charging capital gain. Clause-I thereof in particular provides for a payment from the value of consideration received or accrued as a result of transfer of capital asset, expenditure incurred wholly and exclusively in connection with such transfer. The expenditure cannot be stated to be incurred wholly and exclusively in connection with such transfer - no error in order of Tribunal - In the result, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g question No.1. Such question arises in following background: (2.1) The appellant-assessee was owner of rented property situated in Sayaji Ganj area of Baroda, on which the assessee had already constructed a building of seven floors with a provision for further construction of three more floors. Such construction was still going on. The assessee entered into lease rent agreement with one Amora Chemicals Pvt. Ltd. (hereinafter to be referred to "the Company") on 1.7.1978. The Company enjoyed the possession of 2nd and 4th to 7th floor of the building as a tenant. Upon completion of remaining three floors also, the Company was put in possession thereof as a tenant. The Company in turn sublet the property to the Bank of Baroda. About seven y ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ngredients of section 48(1) of the Act were not satisfied. The Revenue Authorities and the Tribunal have held that the expenditure was not incurred wholly and exclusively in connection with the transfer of the capital assets. He pointed out that the sale deed was not a tripartite agreement and the amount expended by the assessee separately would not fall within the expression wholly and exclusively incurred in connection with the transfer. 5. Having thus heard learned counsel for the parties, from the impugned decision of the Tribunal, we may notice that the Karta of the assessee HUF and his brother were the directors of the said Company. The said Company was shown to be the tenant of substantial portion of the building. The Company, howe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10th floor of the said building as and when they are constructed and ready. It appears that even before the company had entered into the aforesaid agreement, it has been going about looking for the tenants in the market and carrying on negotiations with the prospective parties. On 24.1.1978 the company issued an advertisement in the Lok Satta seeking offers from the prospective tenants on the terms and conditions contained in the said advertisement. The advertisement has been issued in the name of Shri B.M. Patel director of the Amora Chemicals. Subsequently protractive negotiations have been made with the Bank of Baroda, by the said Shri B.M. Patel in his capacity as director of the assessee company. The Bank of Baroda suggested certain m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... resolution only on 10.6.1984 to relinquish the rights of tenancy by which time the assessee HUF had already received the entire sale consideration from the Bank. Payment of Rs. 15,00,000/- was made much later after full consideration was received by the HUF. It was noted that in the rent note dated 1.7.1978, there was no provision for subletting the property, despite which, the Company had created sublease in favour of the Bank. It was, therefore, concluded that payment of Rs.15,00,000/- made to the Company by the assessee was only for reducing its tax liability and not for the purpose of executing the transaction of sale. 8. Section 48(1) of the Act provides for mode of computation and deduction while charging capital gain. Clause-I the ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
