RAM & COMPANY,MUMBAI vs. JT CIT 24(2), MUMBAI

PER ASHWANI TANEJA, AM: Present appeal is against the order passed by principle CIT u/s. 263 of the Act. Perusal of the impugned order shows that it has been passed on following two issues;- i. The assessee has claimed deduction of transfer expenses u/s. 48 of the Act, aggregating to Rs.17,64,350/-. According to ld.CIT, the Assessing Officer has not examined whether these expenses are allowable u/s. 48 of the IT Act and, therefore, order passed by the assessing officer was considered as erroneous in so far as prejudicial to the interest of the Revenue.

ii. It was noted by the ld. CIT on the perusal of the assessment record that assessee had claimed loss under the head business on account of valuation of closing stock of shares of two companies. According to ld. CIT these shares were held as investment, and therefore, the impugned loss should not have been allowed as business loss and should not have been set off

2 ITA No.3050/M/15-Ram & Co. against Long term Capital Gain (LTCG) .The assessing officer without looking into these facts

and making necessary enquiries allowed the said claim.

explaining that exhaustive enquiries were made by the assessing officer during the course of assessment proceedings before accepting claim of the assessee made in the return, but ld. CIT

was not satisfied with the response of the assessee and assessment order framed by the assessing

officer and therefore, he directed the AO to re-do the assessment and not to allow the loss under the head ‘income from business or profession’. Being aggrieved, the assessee is before the Tribunal.

has shown that exhaustive details were filed before the AO during the course of assessment

proceedings and were examined by him before passing the assessment order on both the issues,

and, therefore, the ld. CIT was legally and factually incorrect in pointing out these discrepancies

and in framing the impugned order u/s. 263. 4. We have gone through the order of the lower authorities and heard both the parties. It is noted, with the assistance of ld. Counsel that exhaustive details were filed by the assessee before

the Assessing Officer, during the assessment proceedings on both the issues as have been raised

in the impugned order. It is noted that vide letter dated 7.8.2012, addressed to the assessing

officer, the assessee submitted as under :-

3 ITA No.3050/M/15-Ram & Co. a) The assessee was owning several industrial galas and shops at Mumbai. These properties

were provided as security to State Bank of India for credit facilities provided to Group

Companies in 1994 or thereabout. However, due to certain disputes with the Bank, all the properties were under attachment and in possession of Court Receiver. On settlement of disputes

with Bank, these properties were released by Bank on condition of payment of sales

consideration towards loan outstanding of the principal borrowers.

with following explanation.

b) Details of legal expenses, transfer fees and brokerage paid claimed as deduction out of Realisation in computation of capital gains are furnished herewith with particulars of TDS

deducted, wherever applicable.

and professional charges, transfer charges, brokerage and rates and taxes for the amount

aggregating –to Rs.17,64,350/-.

sale deed of the properties sold and order of the Debt Recovery Tribunal, in support of the transactions done by the assessee. The assessee has also submitted copies of correspondence with State Bank of India (SBI) on the issue of settlement of dues under compromise. Thus, from all the evidences it was clearly discernible that the impugned expenses were done for the purposes

of enabling the assessee to make transfer of the property sold by it during the year under consideration. On this issue we find that the position of law is in favour of the assessee. In the case of CIT vs. Shakuntala Kantilal (190 ITR 56), Hon'ble Bombay High Court has held that 4 ITA No.3050/M/15-Ram & Co. any amount the payment of which is absolutely necessary to effect the transfer will be an expenditure covered u/s.

an encumbrance without which transfer could not be effected, such expenditure is allowable u/s.

and details submitted by the assessee, the AO took a view that these expenses were allowable.

The view adopted by the AO is correct as per law. In any case, it can be said to be one of the views possible as per law. Under these circumstances, the view adopted by the AO cannot be held to be erroneous, as envisaged u/s. 263 of the Act.

the AO. Ld.CIT-DR was fair enough to admit that requisite details were on record of the AO. It is noted that assessee has filed complete details of shares as stock- in- trade. The assessee has also filed evidences for market value of shares. In the assessment order of the earlier years the impugned shares have been accepted as part of stock-in-trade. This year also, the assessee was engaged in the business of share trading activities, as has also been mentioned by AO in para- 3

of the assessment order and these facts have not been denied by the Ld.CIT. There were no reasons with the AO in the present year to take a different view. In our view, there are no valid

basis with the Ld. CIT to treat these shares as part of investments. Ld. CIT has suggested in his

order that disclosures made by the assessee in his balance sheet are immaterial and the AO

should have ignored the same, and should have treated these shares in the nature of investments,

that too, by disregarding the treatment given in the earlier years. In our view the reasoning given

by the ld. CIT in his order is not acceptable in law, and in the given facts of the case. We find

5 ITA No.3050/M/15-Ram & Co. that the AO has accepted the claim of the assessee, after analyzing facts of the case and evidences placed by the assessee and in line with the record of assessment of earlier years. The view adopted by the AO was in accordance with law and facts. In our view, on this issue also, order of the AO cannot be held to be erroneous or prejudicial to the interest of Revenue.

6 ITA No.3050/M/15-Ram & Co.

आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत/Copy of the Order forwarded to : आदेश आदेश क" क" "ितिलिप "ितिलिप अ"ेिषत अ"ेिषत 1. अपीलाथ" / The Appellant