Expenses wholly incurred for transfer is allowable as a deduction while computing capital gains:

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Expenses wholly incurred for transfer is allowable as a deduction while computing capital gains:

 

Adil Rehman, Hyderabad (ITA No. 15/Hyd/2024)

Facts:

  1. While computing capital gains in respect of the immoveable property sold during the financial year 2013- 14, the assessee claimed the transfer expenses at Rs. 2,81,425/- which included expenses towards obtaining special power of attorney from India Consulate in USA, air tickets, hotel accommodation receipts, postal charges receipts, conveyance charges, lawyer fees, photocopying expenses receipts, etc., which was specifically needed to execute the sale.
  1. Learned Assessing Officer allowed transfer expenses to the tune of Rs. 46,000/- incurred in respect of brokerage, air tickets, hotel accommodation receipts, postal charges receipts, conveyance charges, lawyer fees, photocopying expenses and disallowed Rs. 2,35,425/- claimed by the assessee in respect of brokerage, air tickets, hotel accommodation receipts, postal charges receipts, conveyance charges, lawyer fees, photocopying expenses.
  1. Assessee preferred objections before the learned DRP and submitted that all the expenses incurred by the assessee in connection with transfer are allowable expenditure and relied upon by the decision of the Hon’ble Bombay High Court in the case of CIT vs. Shakuntala Kantilal (1991) 190 ITR 56 (BOM).
  1. Learned DRP, however, was of the opinion that such an expenditure was merely incidental to the sale transaction and cannot be allowed to be deduction since such an expenditure was not wholly and exclusively for the transfer of property.

ITAT Hyderabad held as below:

  1. The assessee is a non resident and for the purpose of effecting transfer of property, he has to travel to India and has incurred expenses for obtaining power of attorney from Indian consulate in USA, air tickets, accommodation receipts, postal charges receipts, conveyance charges, lawyer fees, photocopying expenses, without which, the transfer could not have taken place.
  1. So the said expenses are covered by Sec 48(i) of the Income Tax and are allowable expenses.

The copy of the order is as under:

1710848687-ITA 15 Adil Rehman RKP KNC

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