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TMI Blog2015 (7) TMI 656X X X X Extracts X X X X X X X X Extracts X X X X ..... hareholder. Prior to the entering into the agreement the assessee had written a letter agreeing to pay an additional amount in the event MIFL gets him a good price for his shares. The evidence on record shows the assessee got 72% cents extra when compared to other shareholders. Under the letter dated 25.03.2004 entered prior to the agreement he had agreed to bear the extra charges. Therefore, he being the major shareholder and a director of the company who is a person who was actively involved and interested in selling the shares. He wanted additional amount to be paid to his shares and therefore, he has agreed to pay the additional charges also on the basis of such amount which he would get. It is not in dispute that the assessee got a sum ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esented legal and professional charges paid to M/s. Marchmont International Finance Limited (hereinafter referred to as 'MIFL'). The assessee was a shareholder in M/s. Deccannet Designs Limited (hereinafter referred to as 'DDL'). He holds 9,01,080 shares out of the total shares of 30,73,299. Thus, he was the major shareholder in the company of which he was a director. There were six other substantial shareholders who between themselves held 19,90,746 shares but none of them individually holds as many shares as the assessee did. There were several other individual shareholders who together held 1,81,473 shares. On 28.07.2004 an agreement was entered into between DDL, the assessee and the six major shareholders on the one hand ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uction while computing capital gains on the sale of shares. The Assessing Authority restricted consultancy charges to 25% and disallowed the remaining 75%. The said order was upheld by the Commissioner of Income-Tax (Appeals). 3. In the appeal preferred by the assessee against the said order before the Tribunal it was held that they do not see any reason why the entire legal and professional charges paid to MIFL cannot be allowed when there is no dispute regarding the services rendered by the MIFL to the assessee and there is no objection by the department of this score. Accordingly, appeal was allowed directing the Assessing Officer to allow the entire legal and professional charges paid by the assessee to the MIFL. Aggrieved by the sai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee supported the impugned order. 7. Section 48 of the Income Tax Act deals with the mode of computation of the capital gains. It provides, the income chargeable under the head capital gains shall be computed by deducting from the full value of the consideration received or accruing as a result of the transfer of the capital asset the following amounts, namely:- (i) expenditure incurred wholly and exclusively in connection with such transfer; and (ii) the cost of acquisition of the asset and the cost of any improvement thereto. 8. Therefore, wholly and exclusively in connection with such transfer should establish the expenditure incurred by him. The statute did not make any distinction between amount agreed under the agree ..... X X X X Extracts X X X X X X X X Extracts X X X X
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