Case Law Details
RELEVANT EXTRACTS:
12. The applicant has given the details of legal proceedings that preceded the transfer of shares starting from the filing of Company Petition No. 19/2007 and 133 of 2007 by the Indian Promoters and by the applicant respectively before the Company Law Board (CLB). These Company Petitions were filed under Section 397 and 398 of the Companies Act for relief against oppression of minority shareholders and mismanagement of the company. Ultimately, as stated, the parties settled the disputes and arrived at a settlement. The Memorandum of Settlement was signed on 6.5.2008. According to the terms of the settlement, the Indian Promoters of Indian Company and/or nominees of Promoter No. l in C.P.133/2007 agreed to purchase 25 lakh shares owned by the applicant @ Rs.65/- each. Besides, the parties agreed to the retention of remaining shares of 4.95 lakhs by the applicant. The CLB, thereafter, passed an order on 9.5.2008 to give effect to the terms of settlement. After narrating these facts, the applicant stated as follows :-
“That the applicant till date during the entire process of settlement culminating into proposed transfer of shares of the Indian Company borne legal expenses to the tune of Euros 1,49,445.00 (equivalent to Rs.8,902,063/ -).” The applicant has not furnished any break up of the said figure or the details pertaining to the expenses. The applicant’s counsel has relied on the decision of Kerala High Court in V.A.Vasumathi vs. CIT in 123 I.T.R. 94 wherein the expenditure incurred for the purpose of litigation in the Civil Court, pursuant to a reference under section 20 of the Land Acquisition Act, was allowed as deduction under section 48(i).
13. In order to appreciate the above issue, it is desirable to refer to the provisions of section 48 of the Act which read as under:-“Mode of computation.
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 assets 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 cost of any improvement thereto:
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