1990 (10) TMI 166

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....4 and 25th Jan., 1973 by which all the properties except a rice mill had been divided. By a family arrangement called `release deed' dt. 18th June, 1980, Natarajan, Govindan and Mohan alias T. Natarajan released their rights in the rice mill for a consideration of Rs. 15,000. Subsequently on 22nd July, 1982 the assessee-HUF sold the rice mill to the Tamil Nadu Civil Supplies Corporation for Rs. 8,06,979. Thereafter, on 7th Feb., 1983, Murugan who had not earlier released his rights in the rice mill executed a deed of consent to the transaction receiving a consideration of Rs. 92,000. In computing the capital gains arising from the transfer of the rice mill, the assessee claimed that this payment of Rs. 92,000 should be deducted. The ito not....

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....we are of the opinion that the assessee is entitled to succeed on this point. The CIT(A) has not questioned the genuineness of the payment since he has actually directed the ITO to treat the expenditure as a capital expenditure. The Revenue has not appealed and, therefore, the finding that the expenditure was genuine has not been challenged by the Revenue. We are only concerned with the nature of the expenditure as to whether it is eligible for deduction in computing the capital gains. The title of the assessee is traceable to the larger HUF which originally owned the rice mill. The other branches of the larger HUF have released their rights except for one particular person. That person had retained his title to the property even though the....

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....as it referred to the investment of the whole or any part of the consideration in specified assets. On the other hand, the Revenue referred to certain amendments which came into force with effect from 1st April, 1983 to support the view of the authorities below. 6. On a consideration of the rival submissions, we are of the opinion that the assessee is entitled to succeed on this point also. Even from its inception, s. 54E provided for the situation where the assessee had invested the full value of the consideration or any part thereof received or accruing as a result of the transfer in a specified asset for being eligible for relief under that section. It is only with reference to the specified assets that the Expln. 1 provided for differe....

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....from 1st April, 1979 and was intended to remove the difficulty created by requiring the deposit of the full value of the consideration without taking into account the expenditure incurred for effecting the transfer. But even in the section, as it stood before that amendment, s. 54E(1)(b) provided that if the cost of the new asset was less than the full value of the consideration, proportionate relief had to be given. Thus at no time was there a provision in s. 54E insisting on the deposit of the full value of the consideration for getting relief under that section. We hold that the denial of relief by the authorities below was untenable and we direct the ITO to grant the admissible relief under s. 54E(1)(b). 7. The third point in dispute r....