TMI Blog2010 (11) TMI 367X X X X Extracts X X X X X X X X Extracts X X X X ..... aise those issues before the Tribunal though it was raised in its reply dated December 9, 2006, submitted before the assessing authority - the appellant should not be deprived of a fair opportunity of hearing, inasmuch as the said issue is a legal issue and if the appellant is able to demonstrate before the assessing authority on the said issue by producing satisfactory materials, the appellant would be entitled to gain substantial benefits - Decided in the favour of the assessee by way of remand - 1029 of 2010 - - - Dated:- 15-11-2010 - IBRAHIM KALIFULLA F. M., KIRUBAKARAN N., JJ. JUDGMENT F. M. Ibrahim Kalifulla J.- The assessee has come forward with this appeal raising the following substantial questions of law : "1. Whether the amount spent for rectifying the defects in the title to the property and removing encumbrance to transfer, is expenditure incurred in connection with the transfer for the purpose of computation of capital gains as per section 48 of the Income-tax Act ? 2. Whether on the facts and circumstances of the case, the Appellate Tribunal was right in upholding the assessment under section 144 when neither a notice under section 142(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tely. 7. It is in the above stated background, the appellant went before the Tribunal and the Tribunal by the order impugned in this appeal dated February 26, 2010 passed in I. T. A. No. 1852 of 2008 having rejected the stand of the appellant, the appellant has come forward with this appeal. 8. We heard Mrs. Pushya Sitaraman, learned senior counsel for the appellant and Mr. Patty B. Jagannathan, learned standing counsel for the respondent. 9. The learned senior counsel in her submissions contended that when the ultimate order of assessment dated December 12, 2006 was best judgment assessment made under section 144 of the Act, by virtue of the first proviso to section 144(1) of the Act, there should have been a specific notice calling upon the appellant to show cause by fixing a date and time to be specified in the notice to state why the assessment should not be completed to the best of judgment. The learned senior counsel would contend that in the case on hand, there was non-compliance with such statutory requirements for making an assessment under section 144 and therefore, the whole proceedings was ab initio void. 10. Learned senior counsel would then contend tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed on behalf of the appellant as regards the entitlement of certain deductions having not been raised either before the assessing authority or before the Tribunal, cannot be permitted to be raised at this stage. 15. According to the learned standing counsel, the appellant was given several opportunities to submit her detailed objections and the appellant failed to avail of those opportunities. Therefore, no more opportunity should be extended to the appellant. According to the learned standing counsel, inasmuch as the respondent has initiated proceedings by invoking section 143 of the Act, for passing orders under section 147 of the Act, the respondent was fully empowered to pass orders under section 144 of the Act, by making a best judgment assessment in the absence of any material or detail furnished by the appellant. 16. Having heard the learned counsel for the respective parties and having perused the material papers placed before us, in so far as the contention based on the first proviso to section 144 of the Act is concerned, we find that the earliest notice issued by the respondent dated December 10, 2002 in which while issuing the said notice with specific reference ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... material papers, which the appellant is bound to satisfactorily exhibit before the assessing authority to support her stand. As far as the said issue is concerned, we are convinced that the issue is purely a question of law. The question whether the expenses alleged to have been incurred by the appellant in order to get the property free from so-called legal entanglement and that the appellant was eligible to seek deduction of such expenditure for determining the tax liability is purely a question of law. In fact, in the decision relied upon by the appellant, the distinction in respect of point of law has been decided by this court relating to the claim for deduction of money paid against the discharge of mortgage by the vendee, as decided in CIT v. N. Vajrapani Naidu [2000] 241 ITR 560 (Mad), wherein the decision of the Supreme Court in Rm. Arunachalam v. CIT [1997] 227 ITR 222 came to be followed, was distinguished by making a specific reference to the facts involved in the case covered by CIT v. Bradford Trading Co. P. Ltd. [2003] 261 ITR 222 (Mad). 20. In page 227, the Division Bench has analysed the legal consequence of an expenditure incurred by the assessee and as to th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Buhari over and above his contribution of Rs. 5 lakhs so as to pave the way for easy transfer of the property in favour of India Tobacco Company Ltd. In other words, we are of the view that only by the payment of Rs. 2 lakhs, the assessee was in a position to transfer the property, viz. capital asset in favour of India Tobacco Company Limited, and hence, we hold that the payment was made wholly and exclusively in connection with the transfer of the capital asset . . .We therefore hold that the amount of Rs. 2 lakhs was paid to get over the difficulties created by A. M. Buhari for the sale of the property and unless the amount was paid, the transfer of property would not have taken place at all. We, therefore, hold that the Appellate Tribunal was right in holding that the payment had an intimate connection with the transfer of the undertaking as by allowing the litigation to go on the hands of the company would be tied against the transfer of the undertaking in favour of India Tobacco Company Limited and the assessee would not have realised the sale consideration from the prospective purchaser. In so far as a sum of Rs. 1.5 lakhs paid by India Tobacco Company Limited is concer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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