TaxTMI 
TaxTMI 
2012 (8) TMI 668
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....three assessees were Directors in one M/s Raj Television Network Limited. The assessees had admitted in their respective returns for the impugned assessment year, capital gains of varying sums and some of them had claimed exemption under Section 54F of Income-tax Act, 1961 (in short 'the Act') as well. Capital gains shown by Smt. Usha Raghunathan was Rs. 2,71,99,556/- and exemption claimed under Section 54F of the Act was Rs. 2,50,00,000/-. Capital gains returned by Shri Raghunathan was Rs. 3,20,81,676/- and exemption was claimed for an equal amount. Capital gains returned by Smt. Amudha Rajendran came to Rs. 2,72,00,001/- and it seems there was no claim for any exemption under Section 54F of the Act. Assessees were required to file details....
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....nses accounted in company's accounts 7,27,66,765 Assessees also admitted that there were no specific individual agreements between the assessees and M/s Raj Television Network Limited for bearing a part of the expenses. As per the assessees, the expenses were apportioned on the basis of number of shares. Assessees it seems produced details of bills and vouchers for the claim of expenditure. However, the A.O. was not impressed. According to him, the total issue expenses for the IPO was to be borne by the company Raj Television Network Limited. There was no specific agreement between the said company and assessees for sharing of expenses. As per the A.O., without any such specific agreement, the entire expenses on the IPO had to be cons....
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.... the work while going for IPO. Rajini Associates - for professional service relating to vetting of prospectus, issue of certificates are all services rendered to the company in discharge of legal and procedural obligations in connection with IPO by the company. Comfort Advertising - for the service of publisher of IPO in the media is service rendered in connection with wise publicity of IPO of the company which is legal obligation of the company as the Indian Companies Act. Trans Union Courier - for courier service for IPO various expenditure relating to shipping of documents and forms to all corners of the country which is the obligation of the company. Western Press Pvt. Ltd. - printing work in connection with IPO of applicati....
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.... incur huge expenses in connection with the IPO. Assessees being only shareholders in the company, had no liability to bear a share of such huge expenditure for effecting the sale of their shares. CIT (Appeals) noted that liability to incur the expenditure was only with the company and not with the assessees. He, therefore, was of the opinion that the expenditure claimed by the assessees could not be considered for deduction while computing capital gains, and thus confirmed the disallowance made by the A.O. 4. Now before us, A.R., strongly assailing the orders of authorities below, submitted that undisputedly, the prospectus issued by M/s Raj Television Network Limited, for the IPO clearly mentioned that such IPO consisted not only fresh....
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....tation of capital gains is given under Section 48 of the Act and this is reproduced hereunder:- "48. The 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 the cost of any improvement thereto" It is clear that from the full value of consideration received, expenditure incurred wholly and exclusively in connection with such transfer has to be deducted. The terminology used is "in connection with" such transfer. There....