1984 (1) TMI 22

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..... and exclusively laid out for the purpose of transfer and, hence, are to be allowed as a deduction in computing the capital gains ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was right in holding that only the net interest income from Indian Overseas Bank, Colombo, after deduction of tax deducted at source should be included in the assessee's case and not the gross interest? However, after hearing the counsel on both sides at some length, we consider that question No. 1 does not require any reference, though there is a justification for directing a reference on the second question on the facts and circumstances of this case. The assessee derived income from business and certain other sources. .....

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..... ght to be assessed on accrual basis and, since the entire interest income accrued to the assessee before deduction of tax at source, the tax paid to the foreign Government cannot be deducted. On a further appeal to the Income-tax Appellate Tribunal, it held that the assessee is entitled to claim allowance on the sum of Rs. 67,339 and the deduction of Rs. 12,190 which is the tax paid to the Ceylon Government on the interest income which accrued to the assessee is also justified. Aggrieved by the order of the Tribunal, the Revenue has come forward with this reference petition seeking a reference on the two questions set out above. So far as the first question is concerned, it is seen that originally the assessee has claimed a sum of Rs. 67, .....

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..... ad been incurred if it is not exclusively incurred for the transfer of the land. It appears that the assessee is living far away from the land sold and, therefore, had to maintain a small office for the purpose of preparing a layout and also for finding out suitable purchasers for the house sites. The maintenance of an office which has to be located in a building situated in the land itself by making some improvement should also be taken to be exclusively for the purpose of transfer of the land. We, therefore, agree with the finding of the Tribunal that the sum of Rs. 67,339 representing the travelling expenses, stationery, salary and repairs to the building where the office was located, should be taken to be an expense solely incurred in c .....

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