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2022 (8) TMI 205 - HC - Income TaxCapital gain computation - sale of shares - full value of consideration - deduction of expenses u/s 48 - The appellant had agreed to pay the tax component as per Clause 7(1) of the share purchase agreement. - whether the tax component does not fall within the definition of expenditure - HELD THAT:- Section 48 of the Income Tax Act provides for mode of computation in terms of which the income chargeable under the head 'Capital Gains' shall be computed by deducting full value of the consideration received. The expenditure incurred and cost of acquisition are deductible. The Revenue's case is, payment of tax does not fall in these two categories. But in the facts of this case, the total amount realised or in other words, which the appellant got in her hand, is Rs.1.80 Crores. The deduction is claimed based on the agreement between the parties. A careful perusal of the agreement shows that intention of the parties is clear to the effect that the value of the shares shall be the amount agreed between the parties excluding the tax component. However, the contention urged by Shri Aravind that tax component should be distributed among both sellers merits consideration. Therefore, appellant shall be entitled for deduction of only 50% of the tax component proportionate to her share holding. This appeal is allowed in part. The questions are answered partly in favour of the assessee and against the Revenue, holding that assessee shall be entitled for deduction of only 50% of the tax component.
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