1980 (3) TMI 79

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..... x. P-3) held that the petitioner was not entitled, in computing the capital gains, to deduct the expenditure incurred by him for the purpose of prosecuting in a civil court his claim for enhancement of the compensation. The Commissioner held that such expenditure was not incurred in connection with the transfer of a capital asset. Section 45 of the I.T. Act, 1961, defines capital gains as follows .....

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..... ion with such transfer ; ....... In computing the capital gains, the expenditure incurred wholly and exclusively in connection with the transfer cf the capital asset has to be deducted. The question is whether the expenditure incurred for the purpose of litigation pursuant to a reference under s. 20 of the Land Acquisition Act is an expenditure wholly and exclusively incurred in connection with t .....

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..... diture was incurred subsequent to the transfer, s. 48(1) will have no application. In other words, what is important in terms of s. 48(1), according to counsel, is the time at which the expenditure was incurred. In answer to this seemingly technical contention, Shri C. N. Ramachandran, appearing for the petitioner, has brought to my notice the decision of the Court of Appeal in Johnson v. Johnso .....

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..... ed only upon the determination of the compensation. If the amount awarded by the Collector is accepted by the owner without question, the proceedings come to an end. If, however, the owner challenges the award, the question disputed, namely, the amount payable, will have to be determined judicially. It is only upon a final determination of that question by the competent court do the acquisition pr .....

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..... from a reference under s. 20 of the Land Acquisition Act. This is a matter which has to be determined by the Commissioner. Ex. P.3 is unsustainable in so far as the Commissioner held that the expenditure said to have been incurred as a result of a reference under s. 20 of the L.A. Act is not deductible under s. 48(1) of the I.T. Act. It is, accordingly, quashed. The 1st respondent is directed to .....

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