TaxTMI 
TaxTMI 
2010 (11) TMI 367
X X X X Extracts X X X X
X X X X Extracts X X X X
....98-99 and she did not file the return for the assessment year 1999-2000. In the letter dated December 10, 2002, where the subject-matter related to the non-filing of the return for the assessment year 2001-02, in paragraph 3, the assessing authority called upon the appellant to furnish the details regarding the returns filed by the appellant for the assessment years 1999-2000, 2000-01 and 2002-03 to enable him to up-date the records of the appellant. 3. The assessing authority was stated to have realised that the income (capital gain) chargeable to tax had escaped assessment and after getting approval from the competent authority, initiated proceedings under section 147 of the Act and issued a notice under section 148 of the Act, on March 15, 2006. The said notice was served by affixture on March 23, 2006. 4. Thereafter, a date of hearing was also fixed as October 27, 2006 at 11 a.m. by notice dated October 10, 2006 issued under section 143(2) of the Act. The hearing was adjourned to November 8, 2006 at 3.30 p.m. It was subsequently adjourned to November 15, 2006. The appellant's advocate appeared on November 15, 2006. He was asked to produce the copy of the agr....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rty, by which she received a part of consideration, could not be acted upon, as the original title deeds of the property was with the Jammu and Kashmir Bank Ltd., as collateral security for the loan availed of by M/s. Pan Clothing and Consolidated Ltd., Chennai, that to get back the title deeds from the bank, the appellant filed a suit, which was pending in the High Court and because of the said litigation and yet another litigation preferred by one of her creditors, namely Papa Reddy Navaneetha, who had a decree in her favour and got an order of attachment of the property in question and that to get the property free from such litigations, the appellant had to spend substantial amount, which the appellant is entitled to deduct from the total consideration of Rs. 1.10 crores agreed between her and the developer. 11. The learned senior counsel would contend that the said expenditure was intrinsically linked to the transfer of the capital asset and that as the payment made was wholly and exclusively in connection with the transfer of capital asset, the appellant was entitled to seek deduction of the said payment. The learned senior counsel contended that such a proposition ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....h details, it was stated that it would enable the respondent to up-date the records. The question for consideration is whether such a notice issued on December 10, 2002 can be taken as a notice issued under section 142(1) of the Act, in order to state that that would attract the second proviso to section 144(1) of the Act and thereby the specific requirement as provided under the first proviso to section 144(1) of the Act, may not be required to be complied with. 17. It is not in controversy that based on a notice issued under section 148 of the Act, for an assessment to be made under section 147 of the Act, in the absence of any materials having been furnished, it would be open for the assessing authority to make a best judgment assessment as provided under section 144 of the Act. However, the only point of controversy is as to when such a best judgment assessment would fall under section 144 of the Act, non-compliance with the specific prescription contained in the first proviso to section 144(1) of the Act, would invalidate the entire step taken by the respondent for making an assessment, when such step was taken by initiating a notice under section 148/147 of the Act.....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... "1. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding, and had valid materials to hold that the sum of Rs. 2 lakhs paid by the assessee to Shri A. M. Buhari is an expenditure incurred wholly and exclusively in connection with the transfer of the Bradford undertaking ? 2. Whether, on the facts and in the circumstances of the case, the Appellate Tribunal was justified in holding that the sum of Rs. 1.5 lakhs received by the assessee from India Tobacco Co. Ltd. and passed on to Shri A. M. Buhari did not become part of the consideration for sale in the hands of the assessee-company and as such the sum of Rs. 1.5 lakhs is not available for assessment in the hands of the assessee as part of the sale consideration ?" 21. On the said question of law, in the discussion made in paragraph 3 at page 227 and also the ultimate conclusion at pages 230 and 231 were to the following effect : "The proceedings in the litigation clearly show that a sum of Rs. 2 lakhs was paid to A. M. Buhari in settlement of his claim against the transfer of the assets of the company, more particularly, against the hotel undertak....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... the assessee in connection with the transfer of the hotel undertaking and it would form part of sale consideration. However, since the money was paid by the assessee-company, it would also constitute an expenditure wholly and exclusively in connection with the transfer. In the case of payment of Rs. 50,000, the same analogy would apply. In so far as the litigation expenditure of a sum of Rs. 16,000 is concerned, we hold that the Appellate Tribunal was right in holding that the litigation expenditure was also incurred wholly and exclusively in connection with the transfer and thus, it was deductible. Accordingly, we answer the questions of law referred to us as under : "First question : In the affirmative, against the Revenue and in favour of the assessee. Second question : In view of the answer to the first question, no answer is necessary to the second question. Third question : In the affirmative, against the Revenue and in favour of the assessee." 22. Since the said question is purely a question of law, we are of the view that though the appellant failed to raise those issues before the Tribunal tho....