Court permits condonation of delay, dismisses Revenue's appeal on sum paid as transfer expenditure.

The court allowed the application for condonation of delay, enabling the appeal to proceed. Regarding the treatment of the sum paid by the assessee, the court dismissed the Revenue's appeal, affirming that the sum could be considered as expenditure incurred in connection with the transfer under Section 48(i) of the Income Tax Act. The court relied on precedents emphasizing that the sum paid was indeed expended in connection with the transfer of the asset, contrary to the Revenue's argument based on a different precedent involving debt repayment.

---

---

Issues:
1. Condonation of delay in filing the appeal.
2. Whether the sum paid by the assessee pursuant to an award can be treated as expenditure incurred with regard to the transfer under Section 48(i) of the Income Tax Act.

Analysis:

Issue 1: Condonation of delay in filing the appeal
The application for condonation of delay was allowed by the court, enabling the appeal to proceed despite the delay in filing. This decision was crucial to the subsequent consideration of the appeal on its merits.

Issue 2: Treatment of sum paid by the assessee
The primary issue in this case was whether the sum of Rs.72 lakhs paid by the assessee pursuant to an award could be considered as expenditure incurred in connection with the transfer under Section 48(i) of the Income Tax Act. The Revenue contended that this sum should not be deducted from the capital gains made by the assessee or considered in the computation of capital gains, citing a precedent involving debt repayment. However, the court distinguished this case, emphasizing that the money received by the assessee and the money applied in repayment of dues must both be considered for computing capital gains. The court found the precedent cited by the Revenue to be inapplicable to the present case.

In contrast, the assessee's representative referred to a judgment by the Madras High Court in a similar context. The Madras High Court decision, supported by an earlier Bombay High Court ruling, highlighted a case where a sum paid in settlement was considered as expenditure incurred wholly and exclusively in connection with the transfer of a capital asset. The court agreed with the reasoning of the Madras High Court and the Bombay High Court, emphasizing that the sum paid by the assessee was indeed expended in connection with the transfer of the asset.

Ultimately, the court dismissed the appeal by the Revenue, affirming that the sum of Rs.72 lakhs paid by the assessee pursuant to the award could be treated as expenditure incurred in connection with the transfer under Section 48(i) of the Income Tax Act. The decision was based on the broader interpretation of the term "expenditure incurred wholly and exclusively in connection with such transfer," as established in the cited judgments.

---