TMI Blog1980 (6) TMI 19X X X X Extracts X X X X X X X X Extracts X X X X ..... y acquisition of his capital asset which is the land is an expenditure incurred wholly and exclusively in connection with the transfer of such capital asset ? (2) Whether the Tribunal was, on the facts and circumstances of the case, in the departmental appeal right in allowing the assessee-respondent to make for the first time a claim for deduction of expenditure incurred wholly and exclusively in connection with the transfer of capital asset subject to the condition that in no event the quantum of capital gains after such deductions can be settled at a figure lower than what was fixed by the Appellate Assistant Commissioner ? " An immovable property belonging to the assessee was acquired by the State Govt. under the Land Acquisition Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e until the civil court actually rendered its decision it was not possible to predict as to what extent, if any, the civil court's decision regarding the claim would be upheld. This contention did not find favour with the AAC. The AAC, however, effected a substantial reduction in regard to the market value of a building situated in the property acquired and estimated the full value of the consideration of the property at Rs. 1,19,773. He allowed only a sum of Rs. 13,000 as deduction for cost of acquisition and the further deduction of Rs. 10,000 allowed by the ITO by way of cost of improvement was disallowed by the AAC. In the result, the AAC determined the quantum of capital gains at Rs. 1,06,773. The ITO appealed to the Tribunal contend ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... before the civil court. The counsel contends that the subject-matter of the appeal before the Tribunal was only whether the AAC was right in estimating the full value of the consideration of the property at only Rs.. 1,19,773, by fixing the reduced value for the building situated on the land. We see no force at all in this contention. As pointed out by the Bombay High Court in Pokhraj Hirachand, v. CIT [1963] 49 ITR 293, the subject-matter of the appeal before the Tribunal consists of the grounds of appeal raised by the appellant in his memorandum of appeal, the grounds that the Tribunal may allow him to raise and also the contentions raised by the respondent before the Tribunal in support of the order made by the AAC by challenging the ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l to put forward the contentions relating to the deductibility of the said item of expenditure. The further question to be considered is whether the Tribunal was right in its view that the expenditure incurred by the assessee in prosecuting the land acquisition reference case before the civil court is an expenditure incurred wholly and exclusively in connection with the transfer of the land. It is strongly argued by counsel for the revenue that the said expenditure was incurred only subsequent to the transfer which should be taken as having become complete when possession of the land was taken by the State under s. 18 of the Act and title thereto became vested in the State Govt. The words " in connection with " used in cl. (1) of s. 48 ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ideration for the transfer is finally effected only by the decision rendered by the civil court. Such fixation forms an integral part of the process of transfer by way of compulsory acquisition provided by the Land Aquisition Act. The expenditure incurred by the assessee in conducting the land acquisition reference proceedings before the civil court cannot, therefore, but be regarded as expenditure wholly and exclusively incurred in connection with the transfer. Our attention has been drawn to a recent decision of a learned single judge of this court wherein an identical view has been expressed-Vasumathy v. CIT [1980] 123 ITR 94. We are in complete agreement with the dictum laid down in the said decision. We accordingly hold that the Tribun ..... X X X X Extracts X X X X X X X X Extracts X X X X
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