Jamshed Ali Molla, Kolkata V. ACIT, Circle-30, Kolkata, Kolkata

ITA 2233/KOL/2016

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 2230 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 11 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 16-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Assessment Year: 2008-2009
• Appeal Filed On: 24-11-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ROBIN CHOUDHUR Y
• Keywords: Capital asset; Charitable institution; Cost of acquisition; Condonation of delay
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH : KOLKATA [BEFORE HONBLE SHRI A T VARKEY, JM, & SHRI M.BAL AGANESH, AM] I.T.A NO. 2233/KOL/20 16 ASSESSMENT YEAR : 2008-0 9 JAMSHED ALI MOLLA -VS- DCIT, CIRCLE-30, KOLK ATA [PAN: AEVPM 4145 H ] (APPELLANT) (RESPONDENT) FOR THE APPELLANT : SHRI SOUMITRA CHOU DHURY, ADVOCATE SHRI JOYDEEP CHAKRABORTY, ADVOCATE FOR THE RESPONDENT : SHRI ROBIN CHOUDHURY, AD DL. CIT DR DATE OF HEARING : 08.10.2018 DATE OF PRONOUNCEMENT : 16.11.2018 ORDER PER M.BALAGANESH, AM 1. THIS APPEAL BY THE ASSESSEE ARISES OUT OF THE ORDER OF THE LEARNED COMMISSIONER OF INCOME TAX(APPEALS)-8, KOLKATA [IN SHORT THE LD CIT (A)] IN APPEAL NO. CIT(A), KOLKATA-8/10183/2014-15 DATED 28.10.2016 AGAINST T HE ORDER PASSED BY THE ACIT, CIRCLE-30, KOLKATA [ IN SHORT THE LD AO] UNDER SE CTION 143(3) / 254 OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT) DATED 21.07.2014 F OR THE ASSESSMENT YEAR 2008-09. 2. THE ONLY EFFECTIVE ISSUE INVOLVED IN THIS APPEAL IS AS TO WHETHER THE LD CITA WAS JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF CAPITAL LOSS OF RS 78,60,000/- IN THE FACTS AND CIRCUMSTANCES OF THE CASE. 2 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 2 3. THE BRIEF FACTS OF THIS ISSUE ARE THAT THE ASSES SEE FILED HIS RETURN OF INCOME FOR THE ASST YEAR 2008-09 ON 30.10.2009 DECLARING TOTAL INC OME OF RS 34,08,690/-. IN THE FIRST ROUND OF ASSESSMENT PROCEEDINGS, A SUM OF RS 78,60, 000/- WAS ADDED BACK DISALLOWING THE SAID LOSS WHICH WAS SET OFF AGAINST CAPITAL GAI N OF RS 94,48,000/- RECEIVED ON SALE OF PROPERTY AT GURGAON. THE LD CITA PASSED AN EXPARTE ORDER FOR NON-APPEARANCE ON BEHALF OF THE ASSESSEE. THE ASSESSEE PLEADED THAT THE NOT ICES WERE SENT BY THE LD CITAS OFFICE TO THE WRONG ADDRESS. THIS TRIBUNAL IN FIRST ROUND OF PROCEEDINGS REMITTED THE ISSUE TO THE FILE OF THE LD AO FOR FRESH CONSIDERATION. 3.1. THE ASSESSEE IS HAVING REGULAR INCOME FROM PRO PERTY DEALING BUSINESS , RENT AND OTHER SOURCES. HE IS ALSO ASSOCIATED WITH MANY PHIL ANTHROPIC ACTIVITIES. THE ASSESSEE IS A SETTLER OF A TRUST NAMED AS AL-HABIB-WELFARE & C HARITABLE TRUST AS PER THE DEED OF TRUST EXECUTED ON 29.2.2000. HE ENTERED INTO A CON TRACT WITH THE SAID TRUST WHEREBY, USING HIS INFLUENCE, HE COMMITTED THEM A CONSTRUCTE D AREA OF APPROXIMATELY 4000 SQ.FEET IN AND AROUND KOLKATA WITH AN APPROXIMATE V ALUE OF RS 25,00,000/- WHICH WAS AT A HIGHLY DISCOUNTED PRICE. THE AGREEMENT BETWEEN T HE ASSESSEE AND THE SAID TRUST WAS ENTERED ON 11.9.2002 AND SUBSEQUENTLY AN ADVANCE OF RS 23,90,000/- WAS TAKEN FROM THE SAID TRUST BY THE ASSESSEE FOR PURCHASE OF 4000 SQ.FT AREA TO CREATE A MUSAFIRKHANA TO HOUSE THE POOR TRAVELLERS. THE THE ASSESSEE SHOWED SEVERAL PLACES IN DIFFERENT AREAS IN AND AROUND KOLKATA TO THE TRUSTEES OF THE SAID TRUS T BUT NONE OF THEM WERE UPTO THE EXPECTATIONS OF THE TRUST. THE AGREEMENT ENTERED I NTO BY THE ASSESSEE WITH THE SAID TRUST ON 11.9.2002 CLEARLY IMPOSED A CONDITION THAT IN CA SE IF THE ASSESSEE IS NOT ABLE TO ARRANGE THE REQUIRED PROPERTY FOR THE TRUST, THE AD VANCE DRAWN BY THE ASSESSEE SHOULD HAVE TO BE REFUNDED TO THE TRUST TOGETHER WITH CUMU LATIVE INTEREST OF 2% PER MONTH. THE SAID TRUST FOLLOWED UP WITH THE ASSESSEE ON VARIOUS DATES STARTING FROM 25.3.2003 ONWARDS FOR RECOVERY OF THE DUES FROM THE ASSESSEE. THE ASSESSEE ALSO WROTE A LETTER DATED 10.7.2004 TO THE SAID TRUST STATING THAT SINC E HE HAD NO PROJECT READILY IN HIS HAND AT THE TIME OF RECEIVING THE ADVANCE FROM THE TRUST , HE HAD PARKED THE SAID ADVANCE SUM 3 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 3 OF RS 23,90,000/- WITH JAI MAA KALI RICE MILL. HE F URTHER STATED THAT HE HAD WITHDRAWN RS 10,00,000/- FROM JAI MAA KALI RICE MILL ON 9.7.2 004 AND HAD UTILIZED THE SAME FOR ADVANCING TO GREEN MAX ESTATE PVT LTD TO ACQUIRE A FLAT AND THE SAID FLAT WOULD BE HANDED OVER TO THE TRUST AS AND WHEN POSSESSION OF THE SAME IS HANDED OVER TO ASSESSEE. THE ASSESSEE WAS ALLOTTED UNIT NO. 403 IN GRADEN CO URT C IN THE IVY CONDOMINIUM COMPLEX, SECTOR 28, GURGOAN, HARYANA, INDIA ON 23.2 .2005. THIS SHOWS THAT THE ASSESSEE HAD EFFECTIVELY UTILIZED THE MONIES DRAWN FROM THE AFORESAID TRUST TO PURCHASE A FLAT IN HIS NAME AT GURGOAN AND THAT THE SAID FLAT WAS ALLOTTED TO HIM ON 23.2.2005 BY GREEN MAX ESTATE PVT LTD. THE ASSESSEE ENTERED INT O A BUYERS AGREEMENT ON 15.9.2005 WITH GREEN MAX ESTATE PVT LTD (DEVELOPER) IN RESPEC T OF FLAT NO. 403, IN GARDEN COURT, BLOCK C, ON 4 TH FLOOR IN THE GROUP HOUSING COMPLEX HAVING AN APPRO XIMATE SUPER AREA OF 3540 SQ.FT (328.90 SQ. METERS) FOR AGREED PURCHA SE CONSIDERATION OF RS 1,16,82,000/- . THE ASSESSEE EVEN AVAILED BANK LOAN FROM ABN AMRO B ANK VIDE SANCTION LETTER DATED 14.10.2005 FOR RS 95,18,000/- FOR PURCHASE OF THIS FLAT AT GURGOAN. THE ASSESSEE OFFERED TO THE AFORESAID TRUST TO USE THE FLAT AT G URGOAN FOR ITS CHARITABLE PURPOSES AND ADJUST THE SAME IN LIEU OF ADVANCE ALREADY DRAWN BY HIM AND REQUESTED TO TAKE OVER THE BANK LOAN FROM ABN AMRO BANK ALSO ALONG WITH THE FL AT. THE AFORESAID TRUST VIDE ITS LETTER DATED 14.11.2005 TO THE ASSESSEE INDICATED T HAT THE COST OF THE FLAT AT GURGOAN WOULD BE BEYOND ITS COMPREHENSION AND EXPRESSED ITS INABILITY TO TAKE OVER THE SAID FLAT FOR ITS CHARITABLE PURPOSES. IN THE SAID LETTER DA TED 14.11.2005, THE TRUST ALSO ACCUSED THE ASSESSEE FOR HAVING BOUGHT A FLAT IN HIS NAME USING THE MONIES BELONGING TO THE CHARITABLE TRUST. IT WAS ALSO STRONGLY INDICATED BY THE TRUST TO THE ASSESSEE IN THE VERY SAME LETTER THAT THE ASSESSEE SHOULD SELL THE FLAT AT GURGOAN AND BUY SOME PROPERTY AT KOLKATA IN THE NAME OF THE TRUST AND FINAL TIME OF ONE YEAR TO COMPLETE THE SAID DEAL WAS ALLOWED TO THE ASSESSEE BY THE TRUST. THE ASSESSEE WROTE A LETTER DATED 12.12.2006 TO THE SAID TRUST STATING THAT HE HAD MADE ARRANGEMENT TO SELL HIS FLAT AT GURGOAN AND PROCEEDS OF THE SAME WOULD BE UTILIZED TO BUY A SUITABLE PRO PERTY IN THE FRINGE LOCALITY OF KOLKATA TO MEET THE REQUIREMENTS OF THE TRUST AND SOUGHT FO R SIX MONTHS TIME TO COMPLETE THE 4 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 4 ENTIRE PROCESS. THE ASSESSEE FINALLY SOLD HIS GURGO AN FLAT VIDE SALE AGREEMENT DATED 4.1.2007 TO A THIRD PARTY HAVING SUPER AREA OF 3540 SQ.FT ALONG WITH ONE CAR PARKING SPACE FOR RS 2,33,64,000/-. THE RIGHTS HELD BY THE ASSESSEE PURSUANT TO AGREEMENT OF SALE ENTERED ON 15.9.2005 INTO WITH GREEN MAX ESTAT E PVT LTD GOT TRANSFERRED TO THE NEW BUYER OF THE FLAT PURSUANT TO THE NEW AGREEMENT OF SALE ENTERED ON 4.1.2007. AS PER THE PAYMENT RECEIPT ISSUED BY THE ASSESEE TO DR RAJENDR A SINGH , THE ASSESSEE HAD RECEIVED THE FOLLOWING PAYMENTS ON SALE OF PROPERTY AT GURGO AN :- 22.1.07 24,00,000 CHQ NO. 102353 DRAWN ON CITIBANK 7.3.07 30,00,000 CHQ NO. 102364 DRAWN ON CITIBANK 30.3.07 1,50,00,000 DD NO. 413740 DRAWN ON CI TIBANK 16.4.07 23,89,000 CHQ NO. 102373 DRAWN ON CITIBANK 16.4.07 1,50,000 CHQ NO. 102372 DRAWN ON CITIBANK TOWARDS INTEREST THE ASSESEE WROTE A LETTER TO THE AFORESAID TRUST D ATED 20.6.2007 INTIMATING THAT HE HAD ALREADY ADVANCED A SUM OF RS 60,00,000/- FOR PURCHA SING A PROPERTY AT KOLKATA IN THE NAME OF THE AFORESAID TRUST FOR SETTING UP MUSAFIRK HANA AND THAT THE POSSESSION OF THE SAID PROPERTY WOULD BE DELIVERED WITHIN A SHORT TIM E. THE SAID TRUST WAS ALLOTTED TWO FLATS ON 21.3.2008 AT NCCF SUNNY FORT HOUSING PRO JECT AT NEW TOWN BEARING UNIT NO. D0101 (BUILT UP AREA OF 1682 SQ.FT) FOR RS 56,5 7,500/- AT THE PREMISES NO. AA-IIB, BLOCK -7, NEWTOWN, KOLKATA AND UNIT NO. A0101 (BUIL T UP AREA OF 1353 SQ.FT) FOR RS 45,92,500/- AT THE PREMISES NO. AA-IIB, BLOCK -7, N EWTOWN, KOLKATA INCLUDING TWO SEPARATE CAR PARKING SPACES. HENCE IT COULD BE OB SERVED THAT THE ASSESSEE HAD SPENT A SUM OF RS 1,02,50,000/- ( 56,57,500 + 45,92,500) TO WARDS PURCHASE OF TWO PROPERTIES ON BEHALF OF THE TRUST. SINCE THE ASSESSEE HAD DRAW N ONLY RS 23,90,000/- FROM THE SAID TRUST WAY BACK ON 11.9.2002, THE ASSESSEE CLAIMED T HE DIFFERENTIAL PAYMENT OF RS 78,60,000/- ( 1,02,50,000 -23,90,000) AS COMPENSAT ION PAID BY HIM TO THE TRUST. 3.2. THE ASSESSEE DECLARED CAPITAL GAINS ON SALE OF BOOKING RIGHTS OF FLAT AT GURGOAN OF RS 94,48,749/- AND REDUCED THE LOSS INCURRED BY HIM ON THE PROPERTY TRANSACTIONS 5 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 5 AMOUNTING TO RS 78,60,000/- AS ABOVE FROM THE SAID CAPITAL GAINS. THE ASSESSEE ACCORDINGLY OFFERED THE DIFFERENTIAL SUM OF RS 15,8 8,749/- AS SHORT TERM CAPITAL GAINS IN THE RETURN OF INCOME FOR THE ASST YEAR 2008-09. 4. THE LD AO DISALLOWED THE LOSS OF RS 78,60,000/- CLAIMED BY THE ASSESSEE ON THE GROUND THAT THE SAID LOSS HAD GOT NOTHING TO DO WIT H THE SALE OF PROPERTY AT GURGOAN AND THE LIABILITY INCURRED BY THE ASSESSEE BY PAYING EX TRA COMPENSATION TO THE TRUST AMOUNTING TO RS 78,60,000/- IS ONLY HIS PERSONAL LI ABILITY. IT WAS FURTHER HELD THAT THE ASSESSEE WAS NOT HAVING ANY CAPITAL ASSET IN RESPEC T OF PROPERTIES PURCHASED AT RAJARHAT , NEWTOWN, KOLKATA AS ADMITTEDLY THE SAID PROPERTIES WERE PURCHASED ONLY IN THE NAME OF THE TRUST USING THE FUNDS OF THE ASSESSEE. THESE FINDINGS WERE UPHELD BY THE LD CITA AFTER GIVING PARTIAL RELIEF TO THE TUNE OF RS 9,49, 475/- DUE TO ERRONEOUS CONSIDERATION OF FIGURES IN THE COMPUTATION OF CAPITAL GAINS. AGGRIE VED, THE ASSESSEE IS IN APPEAL BEFORE US. 5. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIALS AVAILABLE ON RECORD. THE FACTS STATED HEREINABOVE REMAIN UNDISPUTED AND HENCE THE SAME ARE NOT REITERATED FOR THE SAKE OF BREVITY. IT IS NOT IN DISPUTE THAT THE PROPERTIES AT RAJARHAT, NEW TOWN WERE PURCHASED FROM M/S SUNNY ROCK ESTATES AND DEVE LOPER P LTD IN THE NAME OF AL HABIB WELFARE & CHARITABLE TRUST BY THE ASSESSEE US ING HIS OWN FUNDS. THIS WAS DONE BY HIM AS COMPENSATION FOR USING THE FUNDS OF THE T RUST FOR HIS PERSONAL PURPOSES IN THE PAST. FROM THE VARIOUS CORRESPONDENCES EXCHANGED B ETWEEN THE ASSESSEE AND THE SAID TRUST AS DETAILED SUPRA, WE FIND THAT THE ASSESSEE AT THE FIRST INSTANCE HAD PURCHASED A FLAT AT GURGOAN FOR THE PURPOSE OF USAGE OF THE TRUST AC TIVITIES ONLY. BUT SINCE THE TRUST REFUSED TO ACCEPT ANY PROPERTY OTHER THAN IN THE FR INGE LOCALITY OF KOLKATA AND DUE TO HEAVY PRESSURE APPLIED BY THE SAID TRUST ON THE ASS ESSEE TO LOCATE A PROPERTY IN KOLKATA FOR PURSUING ITS CHARITABLE OBJECTS, THE ASSESSEE W AS FORCED TO SELL THE FLAT AT GURGOAN AND UTILIZE THE PROCEEDS THEREON FOR PURCHASING A PROPE RTY AT RAJARHAT, NEWTOWN IN THE NAME 6 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 6 OF THE TRUST FOR A HIGHER AMOUNT DUE TO HUGE RISE I N REAL ESTATE MARKET AND DUE TO EFFLUXION OF TIME. BUT IT CANNOT BE BRUSHED ASIDE THAT THE ASSESSEE WAS HAVING THE SAID FLAT AT GURGOAN TOGETHER WITH AN ATTACHED ENCUMBRAN CE OF AMOUNTS DRAWN BY HIM FROM THE SAID TRUST WHICH HAD TO BE COMPENSATED IN FUTUR E EITHER IN CASH OR IN KIND FOR THE BENEFIT OF THE TRUST. HENCE THERE WAS AN ATTACHED ENCUMBRANCE IN THE FORM OF A CONTRACTUAL OBLIGATION TO BE FULFILLED BY THE ASSES SEE TO THE TRUST. WE FIND THAT THE LD AR PLACED RELIANCE ON THE DECISION OF THE HONBLE JURI SDICTIONAL HIGH COURT IN THE CASE OF CIT VS SATYABRATA DEY IN GA NO. 172 OF 2014 , G.A.N O. 227 OF 2014 , ITAT NO. 20 OF 2014 DATED 7.5.2014 WHEREIN THE HONBLE COURT UNDER SIMILAR CIRCUMSTANCES ORDERED AS UNDER:- THE COURT: THE APPLICATION FOR CONDONATION OF DELAY IS ALLOWED . THE SUBJECT MATTER OF CHALLENGE IN THIS APPEAL IS A JUDGMENT AND ORDER DATED 14TH MAY, 2013 BY WHICH THE APPEAL PREFERRED BY THE ASSESSEE WAS ALLOWED. AGGRIEVED BY THE ORDER THE REVENUE HAS COME UP IN APPEAL. THE FACTS AND CIRCUMSTANCES OF THE CA SE BRIEFLY STATED ARE AS FOLLOWS: THE ASSESSEE ENTERED INTO AN AGREEMENT DATED 2ND SE PTEMBER, 2004 WITH ONE, BHAGYALAKSHMI COMMERCIAL COMPANY PVT. LTD. UNDER TH E AFORESAID AGREEMENT THE LATTER AGREED TO SUB-LEASE THE FLAT NOS. 3B AND 3C AT PREMISES NO.5, LOWDON STREET, KOLKATA TO THE ASSESSEE. THE ASSESSEE ON HIS PART E NTERED INTO AN AGREEMENT DATED 5TH MAY, 2005 WITH ONE, ONKAR MANAGEMENT PVT. LTD. AGRE EING TO TRANSFER THE AFORESAID TWO FLATS AT A CONSIDERATION OF RS.90 LAKHS. THE AS SESSEE TOOK AN ADVANCE OF A SUM OF RS.10,000/-. THE ASSESSEE, HOWEVER, IN BREACH OF AG REEMENT DATED 5TH MAY, 2005 TRANSFERRED THE FLATS ON 4TH AUGUST, 2006 TO POONAM AGARWAL AT A SUM OF RS.2 CRORE 20 LAKHS. ONKAR MANAGEMENT PVT. LTD. SUED THE ASSESSEE FOR RECOVERY OF DAMAGES. AN AWARD WAS PASSED ON 30TH SEPTEMBER, 2007 DIRECTING THE ASSESSEE TO PAY A SUM OF RS.72 LAKHS. THE ASSESSEE FILED HIS RETURN FOR THE ASSESSMENT YEAR 2007-08 ON 29TH MARCH, 2008 CLAIMING DEDUCTION OF THE SAID SUM OF R S.72 LAKHS UNDER SECTION 48(I) AS EXPENDITURE INCURRED IN CONNECTION WITH THE TRANSFE R. THE ASSESSING OFFICER AND THE CIT(A) BOTH HELD AGAINST THE AFORESAID CLAIM OF THE ASSESSEE WHICH WAS ULTIMATELY ALLOWED BY THE LEARNED TRIBUNAL. IT IS THIS ORDER O F LEARNED TRIBUNAL WHICH IS UNDER CHALLENGE. THEREFORE, THE QUESTION FOR CONSIDERATION IS WHETHE R THE SUM OF RS.72 LAKHS PAID BY THE ASSESSEE PURSUANT TO THE AWARD PASSED IN FAVOUR OF ONKAR MANAGEMENT PRIVATE LIMITED CAN BE TREATED AS EXPENDITURE INCURRED WITH REGARD TO THE TRANSFER UNDER SECTION 48(I) OF 7 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 7 THE INCOME TAX ACT. SECTION 48 IN- SO-FAR-AS THE SAME IS RELEVANT OR MATERIAL FOR OUR PURPOSE, READS AS FOLLOWS: '48. THE INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS' SHALL BE COMPUTED, BY DEDUCTING FROM THE FULL VALUE OF THE CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF THE TRANSFER OF THE CAPITAL ASSET THE FOLLOWING AMOUNTS , NAMELY:- (I) EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRANSFER; (II) THE COST OF ACQUISITION OF THE ASSET AND THE C OST OF ANY IMPROVEMENT THERETO; MR. DUBEY, LEARNED ADVOCATE APPEARING FOR THE REVEN UE, SUBMITTED THAT THE SUM OF RS.72 LAKHS COULD NOT BE DEDUCTED FROM OUT OF THE C APITAL GAINS MADE BY THE ASSESSEE NOR THE SUM OF RS.72 LAKHS COULD BE TAKEN INTO ACCO UNT FOR THE PURPOSE OF COMPUTATION OF THE CAPITAL GAINS. HE, IN SUPPORT OF HIS SUBMISS ION, RELIED UPON A JUDGMENT IN THE CASE OF COMMISSIONER OF INCOME TAX, VISAKHAPATNAM VS. ATTIL I N. RAO , REPORTED IN (2003) 9 SUPREME COURT CASES 658. WHAT HAD HAPPENED IN THAT CASE WAS THAT THE ASSESSEE WAS IN DEBT PAYABLE TO THE EXCISE DEPARTME NT OF THE STATE OF ANDHRA PRADESH. IN ORDER TO SECURE THE DEBT THE ASSESSEE MORTGAGED HIS IMMOVABLE PROPERTY WHICH, AT A LATER DATE, WAS SOLD BY PUBLIC AUCTION. A SUM OF RS .5,62,980/- WAS REALISED. THE STATE DEDUCTED A SUM OF RS.1,29,020/- TOWARDS D EBT DUE BY THE ASSESSEE TO THE STATE AND THE BALANCE SUM WAS MADE OVER TO THE ASSESSEE. THE ASSESSEE CONTENDED THAT THE SUM OF RS.1,29,020/- DUE BY HIM TO THE STATE SHOULD BE DEDUCTED FROM THE TOTAL CONSIDERATION FOR THE PURPOSE OF COMPUTING CAPITAL GAINS. THE CONTENTION OF THE ASSESSEE WAS REJECTED. THE AFORESAID JUDGMENT, IN OUR VIEW, HAS NO APPLICA TION TO THE FACTS AND CIRCUMSTANCES OF THE CASE. THE MONEY RECEIVED BY THE ASSESSEE IN HAND AND THE MONEY APPLIED IN REPAYMENT OF THE DUES BY THE ASSESSEE TO THE STATE HAVE BOTH TO BE TAKEN INTO ACCOUNT FOR THE PURPOSE OF COMPUTING THE CAPITAL GAINS. THE MON EY APPLIED IN REPAYMENT OF THE DEBT DUE BY THE ASSESSEE IS NO LESS A MONEY RECEIVED BY THE ASSESSEE. THE PRESENT CASE IS ALTOGETHER DIFFERENT. MR. BHARADWAJ, LEARNED ADVOCATE APPEARING FOR THE A SSESSEE/RESPONDENT, HAS DRAWN OUT ATTENTION TO A JUDGMENT OF THE MADRAS HIGH COUR T IN THE CASE OF COMMISSIONER OF INCOME TAX VS. BRADFORD TRADING COMPANY PRIVATE LIM ITED , REPORTED IN 2003 (261) ITR 222 (MADRAS). AN ALMOST IDENTICAL SITUATION HAD ARI SEN BEFORE THE MADRAS HIGH COURT. THE FACTS BRIEFLY WERE THAT THE ASSESSEE HAD ENTERE D INTO AN AGREEMENT WITH ONE BUHARI, AGREEING TO ALLOW THE LATTER TO PARTICIPATE IN THE HOTEL BUSINESS. THE ASSESSEE SUBSEQUENTLY SOLD THE HOTEL TO ITC AND SETTLED THE MATTER WITH BUHARI AT A SUM OF RS. 2 LAKHS. THE MADRAS HIGH COURT FOLLOWING AN EARLIER J UDGMENT OF THE BOMBAY HIGH COURT, HELD AS FOLLOWS: 'THE BOMBAY HIGH COURT IN CIT V. SHAKUNTALA KANTILAL [1991] 190 ITR 56 (58 TAXMAN 106), HAS DEALT WITH A CASE WHERE THE ASSESSEE OWNE D A PIECE OF LAND AND SHE ENTERED INTO AN AGREEMENT OF SALE OF THE SAID PROPERTY WITH ONE R AND A DISPUTE SUBSEQUENTLY AROSE AND R FILED A SUIT FOR SPECIFIC PERFORMANCE A ND THERE WAS A SETTLEMENT WHEREBY 8 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 8 THE ASSESSEE AGREED TO PAY CERTAIN SUM OF MONEY TO R AND IN THE MEANTIME, THE ASSESSEE ENTERED INTO ANOTHER AGREEMENT OF SALE IN 1967 IN R ESPECT OF THE SAME PROPERTY WITH ONE C AND C GAVE AN ASSURANCE TO R THAT ON THE COMPLETI ON OF THE SALE, THEY WOULD DEDUCT A SUM OF RS.35,504/- FROM THE TOTAL CONSIDERATION AND PAY IT TO R. THE ASSESSEE CLAIMED THAT THE SUM OF RS.35,504/- FROM THE TOTAL CONSIDER ATION AND PAY IT TO R. THE ASSESSEE CLAIMED THAT THESUM OF RS.35,504/- SHOULD BE ALLOWE D AS DEDUCTION FOR THE PURPOSE OF COMPUTING HER INCOME FROM CAPITAL GAINS. THE BOMBAY HIGH COURT HELD THAT UNLESS THE ASSESSEE HAD SETTLED THE DISPUTE WITH R, THE SALE T RANSACTION WITH C COULD NOT HAVE MATERIALISED AND THE SALE CONSIDERATION HAD TO BE R EDUCED BY THE AMOUNT OF COMPENSATION PAID TO R. WE ARE IN AGREEMENT WITH TH E VIEW EXPRESSED BY THE BOMBAY HIGH COURT THAT THE EXPRESSION USED IN SECTION 48 OF THE ACT, VIZ., 'EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH SUCH TRAN SFER' HAS WIDER CONNOTATION THAN THE EXPRESSION, 'FOR THE TRANSFER'. WE ARE OF THE VIEW THAT BUT FOR THE PAYMENT OF RS.2 LAKHS, THE TRANSFER WOULD NOT HAVE TAKEN PLACE AND THE PAY MENT HAS NECESSARILY TO BE MADE FOR THE TRANSFER OF THE HOTEL IN FAVOUR OF INDIA TOBACC O COMPANY LIMITED. HENCE, WE ARE OF THE VIEW THAT THE SUM OF RS.2 LAKHS WAS EXPENDED BY THE ASSESSEE WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF THE CAPITAL ASSE T AND NOT DE HORS THE TRANSFER'. WE ARE IN AGREEMENT WITH THE VIEWS EXPRESSED BY THE MADRAS HIGH COURT AND THE BOMBAY HIGH COURT. THE QUESTION FORMULATED ABOVE IS , THEREFORE, ANSWERED IN THE AFFIRMATIVE AND IN FAVOUR OF THE ASSESSEE. THE APPEAL PREFERRED BY THE REVENUE IS, THEREFORE, DISMISSED. 5.1. RESPECTFULLY FOLLOWING THE AFORESAID DECISION OF HONBLE JURISDICTIONAL HIGH COURT, WE ARE INCLINED TO GRANT RELIEF TO THE ASSESSEE IN THE INSTANT CASE. ACCORDINGLY, THE GROUNDS RAISED BY THE ASSESSEE ARE ALLOWED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE COURT ON 16.11 .2018 SD/- SD/- [A T VARKEY] [ M.BALAGANESH ] JUDICIAL MEMBER ACCOUNTANT MEMBER DATED : 16.11.2018 SB, SR. PS 9 ITA NO.2233/KOL/2016 JAMSHED ALI MOLLA A.YR. 2008-09 9 COPY OF THE ORDER FORWARDED TO: 1. SHRI JAMSHED ALI MOLLA, 79C, DILKHUSA STREET, 17 , COLONEL BISWAS ROAD, KOLKATA- 700019, 2. ACIT, CIRCLE-30, AAYAKAR BHAWAN DAKSHIN, 2, GARI AHAT ROAD (SOUTH), KOLKATA- 700031. 3. C.I.T(A)- 4. C.I.T.- KOLKATA. 5. CIT(DR), KOLKATA BENCHES, KOLKATA. TRUE COPY BY ORDER ASSIST ANT REGISTRAR ITAT, KOLKA TA BENCHES