TaxTMI 
TaxTMI 
2019 (1) TMI 1065
X X X X Extracts X X X X
X X X X Extracts X X X X
.... shares held in its Indian Subsidiary viz. AIG Systems Solutions Pvt. Ltd. In the return of income filed for the impugned assessment year, on 15th August 2010, the assessee offered long term capital gain of Rs. 5,54,49,453, on account of sale of shares in the Indian Subsidiary. The return of income filed by the assessee was selected for scrutiny and in course of assessment proceedings, the Assessing Officer while examining the computation of total income filed by the assessee along with the return of income noticed that for computing long term capital gain on sale of shares, the assessee has claimed deduction of U.S. $ 13,27,609, as expenditure incurred towards transfer of shares. Therefore, the Assessing Officer called upon the assessee to furnish necessary details relating to the expenditure claimed and also justify the allowability of such claim. In response, it was submitted by the assessee that the said expenditure represents legal / professional fees paid to lawyers / accounting firms for assisting in transfer of shares. In support of such claim the assessee also furnished supporting evidences indicating the payment made to different persons / entities. After verifying the de....
X X X X Extracts X X X X
X X X X Extracts X X X X
....itte Corporate Finance LLP, U.S.A., who are the advisors for the sale of shares. He submitted, U.S. $ 2,43,825 was paid to Dua Associates, who are the lawyers appointed for advising on the sale of shares. He submitted, the U.S. $ 2,86,829, was paid to Milbank, Tweed, Hadley and Mccloy LLP, Attorneys for advising on the sale of shares. He submitted, all these payments were in connection with professional and legal services rendered by the entities in relation to transfer of shares. In this connection he drew our attention to the sample copies of invoices placed in the paper book. He also drew our attention to certain e-mail correspondences placed in the paper book to emphasize upon the fact that the expenditure incurred was wholly and exclusively for the purpose of transfer of shares. The learned Sr. Counsel submitted, all these expenses were incurred only after the assessee decided to transfer the shares. The learned Sr. Counsel submitted, the Assessing Officer does not dispute that the Project Genesis relates to the transfer of shares of the Indian Subsidiary. He submitted, the invoices raised are clearly in respect of the Project Genesis. Therefore, it cannot be said that the exp....
X X X X Extracts X X X X
X X X X Extracts X X X X
....el for the assessee submitted, mention of Project Eagle in the invoice placed at Page-20 of the paper book is a typographical error. To demonstrate the aforesaid fact, he drew our attention to the letter dated 28th July 2009, issued by Milbank, Tweed, Hadley and Mccloy LLP, copy of which is at Page-90 of the paper book. The learned Sr. Counsel submitted, all the documentary evidences including the e-mail correspondences clearly establish that the expenditure incurred was towards transfer of share of the Indian Subsidiary. The learned Sr. Counsel submitted, the decisions relied upon by the learned Departmental Representative are not applicable to the facts of the present case as it relates to deduction claimed on account of payment of Portfolio Management Scheme (PMS) fee. 7. We have considered rival submissions and perused material on record. We have also applied our mind to the decisions relied upon. The dispute between the parties precisely is,whether the expenditure incurred of U.S. $ 13,27,609, is wholly and exclusively in relation to the transfer of shares of the Indian subsidiary, hence, allowable as deduction under section 48(i) of the Act? Before we proceed to examine th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ny expenditure intrinsically connected to the transfer of the capital asset is allowable as deduction under section 48(i) of the Act. 8. Keeping in view the aforesaid legal position, if we examine the facts of the present case, undisputedly, in the relevant previous year, the assessee has transferred / sold shares of its Indian Subsidiary and has offered the income from such transfer as long term capital gain. The Assessing Officer himself in the assessment order has mentioned that the transaction relating to transfer of shares in the Indian Subsidiary has been termed as Project Genesis. From the correspondences between the assessee and the Advocates / Accounting Firms as placed at Page-111 and 122 of the paperbook clearly demonstrate that the legal / professional services were rendered in connection with Project Genesis. The scope of work further clarifies that services to be rendered are in relation to advise on sale of entire shareholding of the Indian Subsidiary and includes preparation of share sale / purchase agreement, rendering advise on and preparing necessary closing documentation including board resolution, share transfer forms, etc. Further, the invoices raised by th....