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Facts
The assessee claimed a deduction of Rs. 74,19,097/- as compensation expenditure for not transferring HIPL shares to OXEECO, which was disallowed by the Assessing Officer and the CIT(A). The compensation arose from an agreement where the assessee received an advance for share purchase but failed to transfer them by the due date.
Held
The Tribunal held that the compensation paid to OXEECO was a penal in nature for the failure to transfer shares, and not an expenditure incurred wholly and exclusively in connection with the transfer of shares to Harsco Investments Europe BV. Therefore, it is not allowable as a deduction under Section 48 of the Income Tax Act.
Key Issues
Whether the compensation paid for non-transfer of shares to one party can be considered as an expenditure incurred wholly and exclusively in connection with the transfer of shares to another party, deductible under Section 48 of the Income Tax Act.
Sections Cited
143(3), 144B, 143(2), 48, 234C
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Income Tax Appellate Tribunal, Hyderabad ‘ B ‘ Bench, Hyderabad
आदेशकी �ितिलिप अ�ेिषत/ Copy of the order forwarded to:- 1. िनधा�रती/The Assessee : Fusion Lastek Technologies Private Limited, C-37 and 38, Industrial Estate, Sanath Nagar, Hyderabad, Telangana- 500001. 2. राज�/ The Revenue : Deputy Commissioner of Income Tax, Circle-8(1), Signature Towers, Kothaguda, Botanical Gardens, Serilingampally, Hyderabad, Telangana-500084. The Principal Commissioner of Income Tax, Hyderabad. 3. िवभागीय�ितिनिध, आयकर अपीलीय अिधकरण, हैदराबाद / DR, ITAT, Hyderabad 4. 5. The Commissioner of Income Tax गाड�फ़ाईल / Guard file 6.
आदेशानुसार / BY ORDER
Sr. Private Secretary ITAT, Hyderabad