TaxTMI 
TaxTMI 
2016 (10) TMI 802
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....ed b. Ground and Air Technical Services Private Limited c. Bobba Aviation Ground Handling Services Private Limited and d. Mount Kailash Power Projects Private Limited * The Honourable Commissioner of Income-Tax, Appeals-1, Bangalore ought to have appreciated that the assesse has paid the tax liabilities of the above company's as per the conditions of the share purchase agreement. * The Honourable Commissioner of Income-tax, Appeals -I, Bangalore ought to have appreciated the fact that the reimbursement of taxes relates to the period prior to the date of transfer. * The Honourable Commissioner of income-tax, Appeals - I, Bangalore ought to have appreciated the fact that the assessee has submitted all the details like share sale agreement, tax payment challans along with nature and details of expenditure incurred. * The Honouralbe Commissioner of Income-tax, Appeals - I Bangalore ought to have appreciated the fact that the assessee hasdicharged her liability in accordance with clause 7(1) of the Share sale agreement. * The Honourable Commissioner of Income-tax, Appeals - I, Banalore out to have considered the decision given the Honourable high court in case of Smt Sita Na....
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.... as expenditure incurred in connection with transfer and deductable from capital gain. 3. Briefly facts of the case are that the assessee is an individual deriving income under the head 'salary', 'house property', 'capital gains' and 'other sources'. Return of income for the assessment year 2009-10 was filed on 26/10/2010 declaring income of Rs. 1,17,84,059/-. Against said return of income, assessment was completed by the Assessing Officer [AO] u/s 143(3) vide order dated 18/11/2011 at a total income of Rs. 2,57,23,321/-. While doing so, the AO disallowed the expenditure of Rs. 90,74,103/- claimed an expenditure in connection with transfer of shares while computing capital gains arising out of sale of shares in Bobba Aviation Services Pvt.Ltd, Bobba Aviation Ground Handling Services Pvt. Ltd., Ground and Air Technical Services Pvt. Ltd., and Mount Kailash Power Project Pvt. Ltd. It is the contention of the assessee that as per clause 7(1) of the Share Purchase Agreement entered between the assessee and the purchaser of shares, tax liability of all the companies should be borne by shareholders of the companies. It is stated that the assessee had paid income-tax liability of the com....
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....he company whose shares were sold. The liability of the company has to be borne by the transferor company and not by the individual share holders. v) The plea of the assessee that the expenditure was incurred wholly and exclusively in connection with such transfer has to be allowed has been examined and found that the expenditure claimed are not related to wholly and exclusively for transfer of shares held. vi) The case laws relied upon the the assessee M/s. Gopee Nath Paul & Sons & ANR Vs. DCIT (2005) reported in 278 ITR 240 (Cal) and M/s. Ambala Cantt Electric Supply Vs. CIT reported in 130 ITR 343 (P&H) have been examined and found that the facts and circumstances of the case relied upon are different and distinguishable to that of the assessee. As such, they are not applicable. In the light of the above, a sum of Rs. 90,74,103/- is disallowed and brought to tax. 5. Being aggrieved, an appeal was filed before the CIT(A) who, vide impugned order, confirmed the addition as follows: 4.3. I have carefully considered the appellant's submissions. The assessee sold the shares held as investment to a third party during the period under consideration and offered the same as capi....
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....as discharged income-tax liability of the companies in which he held shares pursuant to conditions imposed in the sale of shares agreement. He submitted that any expenditure incurred for facilitating transaction i.e. sale of shares is an expenditure incurred wholly and exclusively for transfer and therefore clearly allowable u/s 48(2) of the Act. In this connection, he relied on the decision of the Hon'ble Madras High Court in the case of CIT vs. Bradford Trading Co. P.Ltd.(261 ITR 222)(Mad). He also relied on the decision of the Hon'ble Supreme Court in the case of CIT vs. George Henderson & Co. Ltd.(66 ITR 622) for the proposition that 'full valuation of consideration' cannot be construed as a market value but as a price bargained by the parties to the sale. 6.2 On the other hand, learned Departmental Representative vehemently contended that discharge income-tax liability of the company always lies with company. The liability cannot be fastened only to one particular shareholder. He further submitted that income-tax liability of companies of which shares held by the assessee cannot go to reduce value of consideration received by the assessee-company. In support of this he relied....