TaxTMI 
TaxTMI 
2005 (3) TMI 73
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....ns for the assessment year 1992-93. In order to ascertain the proposition reference to the factual aspects of the case1 are required to be referred to. The submission: Dr. Pal, learned senior counsel, ably assisted by Mr. J.P. Khaitan, pointing out to the various materials submitted that there is already a finding of fact to the extent that the assessee was carrying on business under the name and style of Gobindo Sheet Metal Works and Foundry (Gobindo Sheet Metal). It is also pointed out that there is nothing on record to show that the Gobindo Sheet Metal was an assessee, on the other hand, the sale proceeds of the said two firms was assessed at the hands of Gopee Nath Paul and Sons, the assessee. Relying on the decision in CIT v. Bra....
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....ability, capital nature, would not be an expenditure incurred wholly and exclusively in connection with the transfer to a post-transfer application of the sale proceeds or distribution of the sale proceeds after transfer. Pointing out from the materials on record, he contended that this was to be made after 30 days from the date of realisation of the full amount. This being a post-transfer affair, this could not be treated to be an expenditure incurred in connection with the transfer. Mr. Som then relied on the decision in CIT v. S.R.V. Press and Publications (P.) Ltd. [2000] 241 ITR 626 (Ker), where an amount of finance received from a financial corporation repaid out of the sale proceeds received by the liquidator, was held not to be an e....
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....going concerns on account of the liability of Gobindo Sheet Metal towards the Allahabad Bank. After having passed several orders, by an order dated April 27, 1989, the court directed deposit of Rs. 25,00,000 with the Registrar of this court to be kept in fixed deposit with the Allahabad Bank free from lien and all attachments until further orders of this court. This was done in order to effectuate the transfer of the assets of these two firms after securing payment of the liability towards the Allahabad Bank in respect of one of the firms. It appears that there was but one sale comprising the assets of both the firms and the bid of one Ganesh Prasad at Rs. 3,51,00,000 was accepted as the highest bid and that the payment towards the same ....
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....itted in clause (i) deduction of 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". Any amount the payment of which is absolutely necessary to effect the transfer will be an expenditure covered by clause (i) of section 48(1). In other words, if without removing any encumbrance, sale or transfer could not be effected, the amount paid for removing that encumbrance will fall under clause (i). From the facts as disclosed above, it appears that the amount was received out of the sale of assets of both the firms under the orders of this court subject to meeting of the liability of the Allahabad Bank since confirme....
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....it was, it would be a case of application of the income. As discussed above, in this case, the sale could not be effected without meeting the liability, as it appears from the different orders passed by this court in the latter suit wherefrom it is apparent that the former suit was transferred to this court and was ultimately settled between the parties through Lok Adalat. But from the facts as discussed above, we are of the view that the orders passed by this court directing the sale of the assets of the two firms and its confirmation thereof are staring on the face of the inference drawn by the Commissioner of Income-tax (Appeals). Thus, we are of the view that the liability met by the assessee towards the dues of the Allahabad Bank....
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....inguishable and would have no manner of application in the present case in view of the fact that the amount was spent in that case after the receipt of the consideration by the liquidator to discharge the liability of the assessee in respect of finance received from the Kerala Finance Corporation on the security of the property which was created after acquisition in the course of a winding up proceeding. There was nothing from which it would be held that such payment was absolutely necessary. On the other hand, learned counsel for the assessee in that case had conceded that section 48 of the Act had no application to the facts of the said case. However, the alternative argument of the assessee was that the corporation had overriding title o....