TaxTMI 
TaxTMI 
2023 (1) TMI 175
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.... have been admitted to consider the questions of law raised in the appeals. After hearing the learned Advocate for the assessees and learned Standing Counsel for the Revenue, in our opinion, only the following question arises for consideration: Whether, on the facts and circumstances of the case and law applicable, the Tribunal is right in law in refusing to allow the expenses incurred towards fees paid to KPMG, Khaitan & Co., Bank Charges and other miscellaneous expenses in relation to the transfer of capital asset under Section 48 of the Income Tax Act, 1961? 2. Heard Shri. B R Sudheendra, learned Advocate for the Assessees and Shri. Dilip, learned Standing Counsel for the Revenue. 3. Briefly stated the facts of the case are, Appellant....
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....f shares in a Private Limited Company is restricted and in this case, in the manner and to the extent appearing in the para 8 of the Articles of Association; * the expenses incurred have inextricable nexus with the transfer of shares because without the assistance of professionals, the transaction could not have been concluded. 6. Opposing the appeal, Shri. Dilip submitted that the services rendered by KPMG and Khaitan & Co. Advocates are in the nature of consultancy and financial advice. Therefore, it has no nexus with the transfer of shares. The ITAT has rightly recorded a finding in para 07 of its order that vide the engagement letter dated June 20, 2014, the shareholders had structured the transactions, as transfer of shares, whereas....
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....of any of them are not so accepted within one month from the date of notice to the Board, the members proposing transfer shall, be at liberty; subject to Articles 8 and hereof to sell and transfer the shares to any person at the same or at a higher price..." (Emphasis supplied) 11. The above Article shows that a shareholder desirous of selling his shares must notify the number of shares, a 'fair value' and proposed transferee. Assessees' specific case is, they have engaged the services of the professionals for the said purpose. The transfer of shares is not disputed by the Revenue. Admittedly, KPMG is a firm providing advisory service and Khaitan & Co. is a law firm. 12. Section 48 of the IT Act reads: "48. The income charg....
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....ee had written a letter6 agreeing to pay an additional amount in the event MIFL gets him a good price for his shares. The evidence on record shows the assessee got 72 cents extra when compared to other shareholders. Under the letter dated March 25, 2004, entered prior to the agreement he had agreed to bear the extra charges. Therefore, he being the major shareholder and a director of the company who is a person who was actively involved and interested in selling the shares. He wanted additional amount to be paid to his shares and, therefore, he has agreed to pay the additional charges also on the basis of such amount which he would get. It is not in dispute that the assessee got a sum of Rs. 2,98,11,303 more than for his shares than what he....