TMI Blog2019 (1) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... by the assessee on account of legal and professional fees paid is in connection with transfer of shares. The decision relied upon by the learned Departmental Representative on the other hand, will not be applicable to the facts of the present case, since, it involves allowability of PMS fee which is not the issue in the present appeal. Thus, in view of the aforesaid, we hold that assessee’s claim of deduction of U.S. $ 13,27,609 is allowable under section 48(i). - Decided in favour of assessee. - ITA no.6715/Mum./2014 - - - Dated:- 18-1-2019 - SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER For The Assessee : Shri P.J. Pardiwala a/w Ms. Aarti Sathe For The Revenue : Shri N. Padmanabhan ORDER PER SAKTIJIT DEY, J.M. Aforesaid appealhas been filed by the assesseechallenging the order dated 30th June 2014, passed by the learned Commissioner of Income Tax (Appeals) 10, Mumbai, for the assessment year 2010 11. 2. The dispute in the present appeal is confined to disallowance of assessee s claim of deduction under section 48(i) of the Income Tax Act, 1961 (for short the Act ). 3. Brief facts are, the assessee, a foreig ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be considered to have been incurred wholly and exclusively in connection with transfer of shares. He observed, the expenditure claimed by the assessee are not of such nature that without incurring those expenses the sale or transfer of shares could not have been done. The Assessing Officer observed, the objective behind incurring expenses is to optimise the economic value of the business and not for the purpose of transfer of shares. Further, he observed, the documentary evidences submitted by the assessee nowhere mentions the name of the buyer nor they indicate that these expenses have been incurred for transfer of shares to the ultimate buyer viz. Mphasis Ltd. Thus, ultimately, the Assessing Officer disallowed the expenditure claimed of U.S. $ 13,27,609. Being aggrieved with such disallowance, the assessee preferred appeal before the first appellate authority.However, learned Commissioner (Appeals) upheld disallowance of assessee s claim by holding that the expenditure incurred by it is in the nature of business expenses. 4. Shri P.J. Pardiwala, learned Sr. Counsel appearing for the assessee submitted, the expenditure incurred by the assessee clearly qualifies as deduction und ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s submitted before the Assessing Officer or the learned Commissioner (Appeals) disclosed the name of buyer. Therefore, it cannot be said that the expenditure incurred was on account of transfer of shares of the Indian Subsidiary. The learned Departmental Representative submitted, even one of the invoice raised is in respect of Project Eagle and not in respect of Project Genesis. Therefore, assessee s claim that the expenditure incurred is in connection with transfer of shares of Indian Subsidiary is unsubstantiated. In this context, he drew our attention to the copy of invoice placed at Page 20 of the paper book. The learned Departmental Representative submitted, the e mail correspondences submitted by the assessee do not specify in what context services were provided. Thus, he submitted, assessee having failed to establish that the expenditure was wholly and exclusively towards transfer of shares of Indian Subsidiary, deduction was rightly disallowed. The learned Departmental Representative submitted, the decisions relied upon by the learned Sr. Counsel for the assessee are distinguishable on facts and not applicable. In support of his submissions, the learned Departmental Represe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ll be an expenditure covered by section 48(i) of the Act. The Hon'ble Jurisdictional High Court held that if the assessee incurs certain expenditure for removing any encumbrance over the asset, it will qualify for deduction under section 48(i) of the Act, since, without removing such encumbrance sale or transfer could not be effected. The Hon'ble Kearala High Court in V.A. Vasumathi (supra) observed that the words in connection with such transfer would mean the expenditure which is intrinsically related to such transfer. In the facts of the said case, the Hon'ble High Court held that the litigation expenses incurred by the assessee in pursuance to a reference under section 20 of the Land Acquisition Act, is an expenditure coming within the purview of the section 48(i) of the Act. The ARR in Compagnie Financiere Hamon, In. Re., held that the expenses incurred on legal proceedings preceding transfer of shares qualifies for deduction under section 48(i) of the Act. The Tribunal, Mumbai Bench, in GIC Housing Finance Ltd.held that expenditure incurred towards fees paid to professionals / advisors who provided services by way of advise / assistance in connection with transf ..... X X X X Extracts X X X X X X X X Extracts X X X X
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