TaxTMI 
TaxTMI 
TaxTMI 
2015 (3) TMI 979
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....rcumstances of the case and in law the learned Commissioner of Income-tax ought to have accepted the computation of capital gains as computed by the appellant and not as per direction given with regard to claim of depreciation. 3. On the facts and in the circumstances of the case and in law the learned Commissioner of Income-tax erred in directing the Assessing Officer not to take the amount of Rs. 31.05 crores which is encumbrance and obligation for the purpose of computing long-term capital gain. 2. In this case, the assessment under section 143(3) was made vide order dated December 15, 2009. The assessee-company is engaged in the business of manufacturing and export of garment products and also exporting shoes. The assessee has returned income under the head "income from house property", "profits and gain of business" and "capital gain on sale of property". After thoroughly scrutinising the return of income, the Assessing Officer made disallowance under the following heads : Rs. 1. Lease rent receivable vis-a-vis interest-free deposit 4,31,298 2. Under the head Income from business-interest on loan to direc....
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....ayment was necessitated and sanctioned and approved as per the orders of the High Court and the arbitration award. Since there was litigation among the shareholders, the Paville House could not have been sold unless the shareholders have been paid off. Accordingly, to discharge the liability, Paville House was sold, hence, the payment to the shareholders was claimed as discharge of encumbrances. 7. The submissions of the assessee were considered by the learned Commissioner. The learned Commissioner was of the firm belief that the assessee has made a wrong computation of capital gain by claiming deduction actually not allowable as per law and the Assessing Officer passed the order by mechanically accepting the petition of the assessee while passing the order under section 143(3) of the Act resulting loss to the Revenue. The learned Commissioner was of the belief that the order is prejudicial to the interests of the Revenue. The order is also erroneous as it is a case of incorrect assumption of facts and incorrect application of law which has been passed without application of mind. On the claim of deduction of Rs. 31.05 crores, the learned Commissioner was of the firm belief that s....
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....sing Officer, then the learned Commissioner cannot take a different view. In support of the claim of deduction, reliance was placed on the following case law : (i) The decision of the Madras High Court in CIT v. V. Indira [1979] 119 ITR 837 (Mad) ; (ii) The decision of the Bombay High Court in CIT v. Miss Piroja C. Patel [2000] 242 ITR 582 (Bom) ; (iii) The decision of the Bombay High Court in CIT v. Shakuntala Kantilal [1991] 190 ITR 56 (Bom). 9. Learned counsel finally concluded by saying that the assessment order is a well reasoned order passed after scrutiny of the return of income and cannot be said to be erroneous and prejudicial to the interests of the Revenue. 10. Per contra, relying upon the findings of the learned Commissioner, the learned Departmental representative relied upon the decision of the Madras High Court in Smt. S. Valliammai v. CIT [1981] 127 ITR 713 (Mad) [FB]. 11. We have carefully considered the rival contentions and perused the assessment order and the order of the learned Co....
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....tala Kantilal [1991] 190 ITR 56 (Bom) has held that the expenditure incurred in removing encumbrances to transfer is deductible under section 48 of the Act. The court has observed that in so far as clause (i) of section 48 is concerned, the expression used by the Legislature in its wisdom is "the expenditure incurred wholly and exclusively in connection with such transfer". The expression "in connection with such transfer" is wider than the expression, "for the transfer". The High Court further observed that any amount the payment of which is absolutely necessary to effect the transfer will be an expenditure covered by this clause. Thus, the allowability of the claim of deduction is also supported by the judicial decision. We find that the learned Commissioner, at page 7/paragraph 2 of its order has made the following observation : "Accordingly in computing the capital gains arising from the impugned sale, the expenses incurred for payment to shareholders is not deductible as cost of improvement or for that matter in any other manner." 13. This view of the learned Commissioner is also not correct....