9911796707
TMI Blog2022 (12) TMI 1005X X X X Extracts X X X X X X X X Extracts X X X X ..... mpanies M/s. Knowlarity Communications Pvt. Ltd. (Singapore) M/s. Knowlarity Communications Pvt. Ltd. (India). On the other hand the Ld. CIT(A) has partly agreed with the Assessee by not doubting the transaction per se. By following the ratio laid down by the Jurisdiction High Court in the case of Kausalya Devi [ 2018 (4) TMI 1137 - DELHI HIGH COURT] we are of the opinion that, the expenses incurred by the Assessee is allowable transfer expenses as per Section 48 of the Act and both the Lower authorities have committed an error in disallowing the expense incurred by the Assessee. - Decided in favour of assessee. - I.T.A. No. 7387/DEL/2019 - - - Dated:- 13-12-2022 - DR. B. R. R. KUMAR, ACCOUNTANT MEMBER AND SHRI YOGESH KUMAR U.S., ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nsfer of shares and such expenses are eligible as per Section 48 of the Income Tax Act 1961 ( Act for Short). 4. The assessment order came to be passed on 09/12/2018 wherein the Ld. A.O. has disallowed transfer expenses on the basis that the said transfer expenses of Rs. 25,92,818/- claimed by the assessee in the nature of fees for advisory service and management consulting. Therefore, the same cannot be considered to be allowable transfer expenses as per Section 48 of the Tax Act. 5. Aggrieved by the assessment order dated 09/12/2018, the assessee has preferred an appeal before the CIT(A). The Ld.CIT(A) has allowed the transfer expenses to the extent of Rs. 1,50,000/- (being 0.1% of the transaction cost) and balance disallowance of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h M/s Signal Hill on 23/01/2014 which is placed on page 16 to 18 of the paper book wherein M/s Single Hill have agreed for certain duties and responsibilities. The relevant portions of the said Agreement are as under:- Signal Hill India s duties and responsibilities shall be limited to those expressly set out in this Agreement. Signal shall: a. Provide Client with assistance to identify buyer of shares held in Knowlarity Communications Pvt .Ltd (India) and Knowlarity Communications Holdings Pte. Ltd (Singapore). b. Conduct negotiations with buyer and get the share purchase agreement signed. c. Provide Client with accounting, legal, tax and other specialist advice related to transaction. 11. Further, in turn, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct:- 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, ii) The cost of acquisition of the asset and cost of any improvement thereto; 16. The Hon ble jurisdictional Delhi High Court in the case of Kausaiya Devi Vs CIT ITA No 600/2004 had held that once the amount is spent and paid, the authorities cannot decide commercial expediency by putting themselves in the arm chair of the assessee to examine and consider whether they would have or the assessee should have incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rcial expediency by putting themselves in the arm chair of the assessee to examine and consider whether they would have or the assessee should have incurred the said expenditure including the quantum having regard to the circumstances. Excessive expenditure cannot be disallowed when it is wholly and exclusively in connection with the transfer, on the ground that prudence did not require the assessee to incur the expenditure. Disallowance on such grounds must be specified and provided by the statute. 17. In the present case, the service of M/s Signal Hills has been utilized for sale of share s of private limited company shares exclusively; further the payment has been made by banking channel as against the invoice raised by M/s Signa ..... X X X X Extracts X X X X X X X X Extracts X X X X
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