Income Tax Appeal v. S.j. Kathawalla, Jj

22 ITXA 602 OF 2017.doc IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION INCOME TAX APPEAL NO.602 OF 2017 Pr. Commissioner of Income Tax – 1 …Appellant versusSTCI Ltd. …Respondent Mr. Suresh Kumar, for Appellant. Ms. A. Vissanji with Mr. S.J.Mehta, for Respondent. CORAM: AKIL KURESHI & S.J. KATHAWALLA, JJ. th JUNE, 2019 DATE: 11 P.C.: 1.This Appeal is filed by the Revenue to challenge the Judgment of the Income Tax Appellate Tribunal (“the Tribunal” for short). The following question is presented for reconsideration : (i) Whether on the facts and circumstances of the case and in law,the Hon'ble Tribunal was justified in deleting the addition ofindemnity payment to the tune of Rs.5,10,00,000/- incurred inconnection with the transfer of share in UTI Securities Ltd., for thepurpose of computation of capital gain without appreciating that thesaid expenditure was incurred wholly and exclusively in connectionwith cost of improvement in the value of shares ? 2. The Respondent-assessee had sold certain shares through agreement. The SSP 1/2 assessee had incurred expenses of Rs.10 Crores towards indemnity charages duringsuch transactions. The assessee claimed such expenditure during the course ofcomputation of its capital gains arising out of the sale of shares. The Assessing Officerrefused to allow adjustment upon which the assessee carried the matter in Appeal.The Commissioner (Appeals) allowed the Appeal holding that such expenditure wasincurred wholly and exclusively for the purpose of transfer of shares. However,noticing that the assessee had sold only 49% of its share holding, allowed theexpenditure only to the extent of such proportion of the total expenditure, therebydisallowed the amount of Rs.5.10 Crores.3.The Revenue did not carry the matter and accepted the decision of theCommissioner. The assessee carried the issue before the Tribunal. The Tribunalallowed the entire claim observing that the indemnity had to be provided which waspart of the agreement and the entire expenditure was wholly and exclusive in relationto transfer of shares. We see no error in the decision of the Tribunal. The IncomeTax Appeal is dismissed. ( S.J.KATHAWALLA, J. ) ( AKIL KURESHI, J. ) SSP 2/2