D.K. Seth, J. - (1.) In this case, the liability of one of the firms Gobindo Sheet Metal Works and Foundry held to be the erstwhile firm under the name and style of which the assessee was carrying on business could satisfy the test of being expenditure incurred wholly and exclusively in connection with the transfer of the assets of the assessee for the purpose of computation of capital gains for the assessment year 1992-93. In order to ascertain the proposition reference to the factual aspects of the case are required to be referred to.
(2.) Dr. Pal, learned senior counsel, ably assisted by Mr. J. P. Khaitan, pointing out to the various materials submitted that there is already a finding of fact to the extent that the assessee was carrying on business under the name and style of Gobindo Sheet Metal Works and Foundry (Gobindo Sheet Metal). It is also pointed out that there is nothing on record to show that the Gobindo Sheet Metal was an assessee, on the other hand, the sale proceeds of the said two firms was assessed at the hands of Gopee Nath Paul and Sons, the assessee. Relying on the decision in CIT v. Bradford Trading Co. P. Ltd., Dr. Pal contended that this expenditure was incurred wholly and exclusively in connection with the transfer and, as such, is allowable under Section 48(1) of the Income-tax Act, 1961, as it then stood. He also relied on the decision in CIT v. Shakuntala Kantilal as his sheet-anchor and pointed out that the liability of the Allahabad Bank was an absolute necessity to meet in order to effect the sale and without removing this liability the property could not be sold and, as such, this satisfies the test of being an expenditure incurred wholly and exclusively in connection with the transfer.
(3.) Mr. Som, the learned senior advocate appearing for the Department, strenuously argued that the assessee and Gobindo Sheet Metal were two different firms and the liability of Gobindo Sheet Metal towards the Allahabad Bank seeking declaration of hypothecation of stock-in-trade and other movable goods would not be a liability or encumbrance which was absolutely necessary to be removed for transfer of the assets of the assessee or without removal of which encumbrance the assets could not be sold. He drew our attention elaborately to the records before us, particularly those in the paper book and had attempted to drive home his contention with unparallel eloquence.;