AIG OFFSHORE SYSTEMS SERVICES INC., MUMBAI v. ASST DIT (IT)1(1), MUMBAI

ITA 6715/MUM/2014 | 2010-2011
Pronouncement Date: 18-01-2019 | Result: Allowed
Expert Summary: Where assessee being a foreign company sold shares in its Indian subsidiary, for computing long term capital gain and it claimed deduction of the legal/professional fees of lawyers/ accounting firms, keeping in view that such services received by the assessee were in relation to advise on sale of entire shareholding of Indian subsidiary and included preparation of share sale/purchase agreement etc., thus it could be concluded that such expenditure was in relation to transfer of shares of Indian subsidiary and the asseesee's claim for deduction was valid

Appeal Details

RSA Number 671519914 RSA 2014
Assessee PAN AAGCA7477A
Bench Mumbai
Appeal Number ITA 6715/MUM/2014
Duration Of Justice 4 year(s) 2 month(s) 13 day(s)
Appellant AIG OFFSHORE SYSTEMS SERVICES INC., MUMBAI
Respondent ASST DIT (IT)1(1), MUMBAI
Appeal Type Income Tax Appeal
Pronouncement Date 18-01-2019
Appeal Filed By Assessee
Tags No record found
Order Result Allowed
Bench Allotted L
Tribunal Order Date 18-01-2019
Last Hearing Date 05-09-2018
First Hearing Date 05-09-2018
Assessment Year 2010-2011
Appeal Filed On 05-11-2014
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL I BENCH MUMBAI BEFORE SHRI SAKTIJIT DEY JUDICIAL MEMBER AND SHRI RAJESH KUMAR ACCOUNTANT MEMBER ITA NO. 6715/MUM./2014 ( ASSESSMENT YEAR : 20 10 11 ) AIG OFFSHORE SYSTEMS SERVICES INC. C.O DELOITTE HASKINS & SELLS LLP INDIABULLS FINANCE CENTRE ELPHINSTONE MIOLL COMPOUND SENAPATI BAPAT MARG ELPHINSTONE (WEST) MUMBAI 400 013 PAN AAGCA7477A . APPELLANT V/S ASSTT . COMMISSIONER OF INCOME TAX INTERNATIONAL TAXATION CIRCLE 1( 1 ) MUMBAI . RESPONDENT ASSESSEE BY : SHRI P.J. PARDIWALA A/W MS. AARTI SATHE REVENUE BY : SHRI N. PADMANABHAN DATE OF HEARING 29 . 1 0.2018 DATE OF ORDER 18.01.2019 O R D E R PER SAKTIJIT DEY J.M. AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE CHALLENGING THE ORDER DATED 30 TH JUNE 2014 PASSED BY THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) 10 MUMBAI FOR THE ASSESSMENT YEAR 201 0 11. 2 AIG OFFSHORE SYSTEMS SERVICES INC. 2 . T HE DISPUTE IN THE PRESENT APPEAL IS CONFINED TO DISALLOWANCE OF ASSESSEES CLAIM OF DEDUCTION UNDER SECTION 48(I) OF THE INCOME TAX ACT 1961 (FOR SHORT THE ACT ). 3 . BRIEF FACTS ARE THE ASSESSEE A FOREIGN COMPANY IS CARRYING ON ACTIVITIES IN INDIA AS A FORE IGN INSTITUTIONAL INVESTOR (FII). IN THE FINANCIAL YEAR RELEVANT TO THE ASSESSMENT YEAR IN DISPUTE THE ASSESSEE HAD SOLD 23 10 498 SHARES HELD IN ITS INDIAN SUBSIDIARY VIZ. AIG SYSTEMS SOLUTIONS PVT. LTD. IN THE RETURN OF INCOME FILED FOR THE IMPUGNED ASSESSMENT YEAR ON 15 TH AUGUST 2010 THE ASSESSEE OFFERED LONG TERM CAPIT AL GAIN OF ` 5 54 49 453 ON ACCOUNT OF SALE OF SHARES IN THE INDIAN SUBSIDIARY. THE RETURN OF INCOME FILED BY THE ASSESSEE WAS SELECTED FOR SCRUTINY AND IN COURSE OF ASSESSMENT PROCEEDINGS THE ASSESSING OFFICER WHILE EXAMINING THE COMPUTATION OF TOTAL IN COME FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME NOTICED THAT FOR COMPUTING LONG TERM CAPITAL GAIN ON SALE OF SHARES THE ASSESSEE HAS CLAIMED DEDUCTION OF U . S . $ 13 27 609 AS EXPENDITURE INCURRED TOWARDS TRANSFER OF SHARES. THEREFORE T HE ASSES SING OFFICER CALLED UPON THE ASSESSEE TO FURNISH NECESSARY DETAILS RELATING TO THE EXPENDITURE CLAIMED AND ALSO JUSTIFY THE ALLOWABILITY OF SUCH CLAIM. IN RESPONSE IT WAS SUBMITTED BY THE ASSESSEE THAT THE SAID EXPENDITURE REPRESENT S LEGAL / PROFESSIONAL FEES PAID TO LAWYERS / ACCOUNTING FIRMS FOR ASSISTING IN TRANSFER OF SHARES. IN SUPPORT OF SUCH CLAIM THE 3 AIG OFFSHORE SYSTEMS SERVICES INC. ASSESSEE ALSO FURNISHED SUPPORTING EVIDENCES INDICATING THE PAYMENT MADE TO DIFFERENT PERSONS / ENTITIES. AFTER VERIFYING THE DETAILS SUBMITTED BY THE ASSESSEE THE ASSESSING OFFICER NOTED THAT THE INVOICES RAISED BY DIFFERENT ENTITIES WERE ON ACCOUNT OF PROFESSIONAL FEES RENDERED IN CONNECTION WITH PROJECT GENESIS RELATING TO TRANSFER OF SHARE S OF THE INDIAN S UBSIDIARY. AFTER VERIFYING THE DETAILS THE ASSESSING OFFICER WAS OF THE VIEW THAT THE EXPENDITURE INCURRED DID NOT RELATE TO TRANSFER AS ENVISAGED UNDER SECTION 48(I) OF THE ACT. ACCORDINGLY HE ISSUED A SHOW CAUSE NOTICE TO THE ASSESSEE TO EXPLAIN WHY THE DEDUCTION CLAIMED SHOULD NOT BE DISALL OWED. IN RESPONSE TO THE SAID SHOW CAUSE NOTICE THE ASSES SEE FILED A DETAILED SUBMISSION JUSTIFYING ITS CLAIM OF DEDUCTION BY STATING THAT THE LEGAL / PROFESSIONAL FEES PAID IS WHOLLY AND EXCLUSIVELY RELATING TO THE TRANSFER OF SHA RES GIVING RISE TO CAPIT AL GAIN. THE ASSESSING OFFICER HOWEVER DID NOT FIND MERIT IN THE SUBMISSIONS OF THE ASSESSEE. REFERRING TO CERTAIN JUDICIAL PRECEDENTS THE ASSESSING OFFICER OBSERVED THAT THE EXPENDITURE CLAIMED BY THE ASSESSEE CANNOT BE CONSIDERED TO HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH TRANSFER OF SHARES. HE OBSERVED THE EXPENDITURE CLAIMED BY THE ASSESSEE ARE NOT OF SUCH NATURE THAT WITHOUT INCURRING THOSE EXPENSES THE SALE OR TRANSFER OF SHARES COULD NOT HAVE BEEN DONE. THE ASSESSING OFFICER O BSERVED THE OBJECTIVE BEHIND INCURRING EXPENSES IS TO OPTIMISE THE ECONOMIC VALUE 4 AIG OFFSHORE SYSTEMS SERVICES INC. OF THE BUSINESS AND NOT FOR TH E PURPOSE OF TRANSFER OF SHARES. FURTHER HE OBSERVED THE DOCUMENTARY EVIDENCES SUBMITTED BY THE ASSESSEE NOWHERE MENTIONS THE NAME OF THE BUYER NOR THEY INDICATE THAT THESE EXPENSES HAVE BEEN INCURRED FOR TRANSFER OF SHARES TO THE ULTIMATE BUYER VIZ. MPHASIS LTD. THUS ULTIMATELY THE ASSESSING OFFICER DISA LLOWED THE EXPENDITURE CLAIMED OF U . S . $ 13 27 609. BEING AGGRIEVED WITH SUCH DISALLOWANCE THE ASSESSEE PREFERRED APPEAL BEFORE THE FIRST APPELLATE AUTHORITY. HOWEVER LEARNED COMMISSIONER (APPEALS) UPHELD DISALLOWANCE OF ASSESSEES CLAIM BY HOLDING THAT T HE EXPENDITURE INCURRED BY IT IS IN THE NATURE OF BUSINESS EXPENSES. 4 . SHRI P.J. PARDIWALA LEARNED SR. COUNSEL APPEARING FOR THE ASSESSEE SUBMITTED THE EXPENDITURE INCURRED BY THE ASSESSEE CLEARLY QUALIFIES AS DEDUCTION UNDER SECTION 48(I) OF THE ACT. DRA WING OUR ATTENTION TO THE DETAILS OF EXPENDITURE INCURRED AS FURNISHED IN A CHART AT PAGE 3 OF THE PAPER BOOK HE SUBMITTED U.S. $ 7 96 955 WAS PAID TO DELOITTE CORPORATE FINANCE LLP U.S.A. WHO ARE THE ADVISORS FOR THE SALE OF SHARES. HE SUBMITTED U.S . $ 2 43 825 WAS PAID TO D UA ASSOCIATES WHO ARE THE LAWYERS APPOINTED FOR ADVISING ON THE SALE OF SHARES. HE SUBMITTED THE U.S. $ 2 86 829 WAS PAID TO MILBANK TWEED HADLEY AND MCCLOY LLP ATTORNEYS FOR ADVISING ON THE SALE OF SHARES. HE SUBMITTED ALL THESE PAYMENTS WERE IN CONNECTION WITH PROFESSIONAL AND LEGAL SERVICE S RENDERED BY THE ENTITIES IN RELATION TO 5 AIG OFFSHORE SYSTEMS SERVICES INC. TRANSFE R OF SHARES. IN THIS CONNECTION HE DREW OUR ATTENTION TO THE SAMPLE COPIES OF INVOICES PLACED IN THE PAPER BOOK. HE ALSO DREW OUR ATTENTION TO CERTAIN E MAIL CORRESPONDENCES PLACED IN THE PAPER BOOK TO EMPHASIZE UPON THE FACT THAT THE EXPENDITURE INCURRED WAS WHOLLY AND EXCLUSIVELY FOR THE PURPOSE OF TRANSFER OF SHARES. THE LEARNED SR. COUNSEL SUBMITTED ALL THESE E XPENSES WERE INCURRED ONLY AFTER THE ASSESSEE DECIDED TO TRANSFER THE SHARES . THE LEARNED SR. COUNSEL SUBMITTED THE ASSESSING OFFICER DOES NOT DISPUTE THAT THE PROJECT GENESIS RELATES TO THE TRANSFER OF SHARES OF THE INDIAN SUBSIDIARY. HE SUBMITTED THE I NVOICES RAISED ARE CLEARLY IN RESPECT OF THE PROJECT GENESIS. THEREFORE IT CANNOT BE SAID THAT THE EXPENDITURE INCURRED ARE NOT IN CONNECTION WITH SALE OF SHARES. HE SUBMITTED ONLY BECAUSE THE NAME OF THE BUYER WAS NOT MENTIONED EITHER IN THE CORRESPONDEN CES OR INVOICES IT CANNOT BE ASSUMED THAT THE EXPENDITURE INCURRED IS NOT IN RELATION TO THE TRANSFER OF SHARES. IN SUPPORT OF HIS CONTENTION S THE LEARNED SR. COUNSEL RELIED UPON THE FOLLOWING DECISIONS: I ) CIT V/S SHAKUNTALA KANTILAL [1991] 190 ITR 56 ( BOM.); II ) V.A. VASUMATHI V/S CIT [1980] 123 ITR 94 (KER.); III ) COMPAGNIE FINANCIERE HAMON IN. RE. [2009] 310 ITR 001 (AAR); AND IV ) GIC HOUSING FINANCE LTD. V/S ACIT ITA NO.22/MUM./ 2016 DATED 21.08.2018. 6 AIG OFFSHORE SYSTEMS SERVICES INC. 5 . SHRI N. PADMANABHAN T HE LEARNED DEPARTMENTAL REPRESENTATIVE STRONGLY RELYING UPON THE OBSERVATIONS OF THE ASSESSING OFFICER AND LEARNED COMMISSIONER (APPEALS) SUBMITTED THE ASSESSEE HAS FAILED TO SUBSTANTIATE ITS CLAIM THAT THE EXPENDITURE INCURRED IS IN CONNECTION WITH THE TRANSFER OF SHARES. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED NONE OF THE DOCUMENT S SUBMITTED BEFORE THE ASSESSING OFFICER OR THE LEARNED COMMISSIONER (APPEA LS) DISCLOSED THE NAME OF BUYER . THEREFORE IT CANNOT BE SAID THAT THE EXPENDITURE INCURRED WAS ON ACCOUNT OF TRAN SFER OF SHARES OF THE INDIAN SUBSIDIARY. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED EVEN ONE OF THE INVOICE RAISED IS IN RESPECT OF PROJECT EAGLE AND NOT IN RESPECT OF PROJECT GENESIS. THEREFORE ASSESSEE S CLAIM THAT THE EXPENDITURE INCURRED IS IN CONNECTION WITH TRANSFER OF SHARES OF INDIAN SUBSIDIARY IS UNSUBSTANTIATED. IN THIS CONTEXT HE DREW OUR ATTENTION TO THE COPY OF INVOICE PLACED AT PAGE 20 OF THE PAPER BOOK. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THE E MAIL CORRESPONDENCES SU BMITTED BY THE ASSESSEE DO NOT SPECIFY IN WHAT CONTEXT SERVICES WERE PROVIDED. THUS HE SUBMITTED ASSESSEE HAVING FAILED TO ESTABLISH THAT THE EXPENDITURE WAS WHOLLY AND EXCLUSIVELY TOWARDS TRANSFER OF SHARES OF INDIAN SUBSIDIARY DEDUCTION WAS RIGHTLY DI SALLOWED. THE LEARNED DEPARTMENTAL REPRESENTATIVE SUBMITTED THE DECISIONS RELIED UPON BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE ARE DISTINGUISHABLE 7 AIG OFFSHORE SYSTEMS SERVICES INC. ON FACTS AND NOT APPLICABLE. IN SUPPORT OF HIS SUBMISSIONS THE LEARNED DEPARTMENTAL REPRESENTATIVE RELIED UPON A DECISION OF THE TRIBUNAL MUMBAI BENCH IN MATEEN PYARALI DHOL KIA V/S DCIT [2018] 171 ITR 294 (MUM.). 6 . IN REJOINDER THE LEARNED SR. COUNSEL FOR THE ASSESSEE SUBMITTED MENTION OF PROJECT EAGLE IN THE INVOICE PLACED AT PAGE 20 OF THE PAPER BOOK IS A TYPOGRAPHICAL ERROR. TO DEMONSTRATE THE AFORESAID FACT HE DREW OUR ATTENTION TO THE LETTER DATED 28 TH JULY 2009 ISSUED BY MILBANK TWEED HADLEY AND MCCLOY LLP COPY OF WHICH IS AT PAGE 90 OF THE PAPER BOOK. THE LEARNED SR. COUNSEL SUBMITTED ALL THE DOCUMENTARY EVIDENCES INCLUDING THE E MAIL CORRESPONDENCES CLEARLY ESTABLISH THAT THE EXPENDITURE INCURRED WAS TOWARDS TRANSFER OF SHARE OF THE INDIAN SUBSIDIARY. THE LEARNED SR. COUNSEL SUBMITTED THE DECISIONS RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ARE NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE AS IT RELATES TO DEDUCTION CLAIMED ON ACCOUNT OF PAYMENT OF PORTFOLIO MANAGEMENT SCHEME (PMS ) FEE. 7 . WE HAVE CONSIDERED RIVAL SUBMISSI ONS AND PERUSED MATERIAL ON RECORD. WE HAVE ALSO APPLIED OUR MIND TO THE DECISIONS RELIED UPON. THE DISPUTE BETWEEN THE PARTIES PRECISELY IS W H ETHER THE EXPENDITURE INCURRED OF U.S. $ 13 27 609 IS WHOLLY AND EXCLUSIVELY IN RELATION TO 8 AIG OFFSHORE SYSTEMS SERVICES INC. THE TRANSFER OF SHARES OF THE INDIAN SUBSIDIARY HENCE ALLOWABLE AS DEDUCTION UNDER SECTION 48(I) OF THE ACT ? BEFORE WE PROCEED TO EXAMINE THE FACTUAL ASPECT IT IS NECESSARY TO LOOK INTO THE PROVISIONS OF SECTION 48 OF THE ACT WHICH LAYS DOWN THE MODE OF COMPUTATION OF INCOME CHARGEABLE UNDER THE HEAD CAPITAL GAIN . CLAUSE (I) OF SECTION 48 OF THE ACT PROVIDES FOR COMPUTATION OF CAPITAL GAIN AFTER DEDUCTING EXPENDITURE INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF CAPITAL ASSET FROM THE FULL VALUE O F CONSIDERATION RECEIVED OR ACCRUING AS A RESULT OF SUCH TRANSFER. THEREFORE THE CONDITION PRECEDENT FOR CLAIMING EXPENDITURE UNDER THE AFORESAID CLAUSE IS IT MUST HAVE BEEN INCURRED WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF THE CAPITAL A SSET. THE PHRASEOLOGY IN CONNECTION WITH THE TRANSFER OF CAPITAL ASSET USED IN THE AFORESAID PROVISION HAS BEEN INTERPRETED BY THE HON'BLE JURISDICTIONAL HIGH COURT IN SHAKUNTALA KANTILAL (SUPRA) TO BE WIDER IN SCOPE THAN THE EXPRESSION FOR THE TRANSFER . THE HON'BLE JURISDICTIONAL HIGH COURT HELD THAT PAYMENT OF ANY AMOUNT WHICH IS ABSOLUTELY NECESSARY TO EFFECT THE TRANSFER WILL BE AN EXPENDITURE COVERED BY SECTION 48(I) OF THE ACT. THE HON'BLE JURISDICTIONAL HIGH COURT HELD THAT IF THE ASSESSE E INCURS CERTAIN EXPENDITURE FOR REMOVING ANY ENCUMBRANCE OVER THE ASSET IT WILL QUALIFY FOR DEDUCTION UNDER SECTION 48(I) OF THE ACT SINCE WITHOUT REMOVING SUCH ENCUMBRANCE SALE OR TRANSFER COULD NOT BE EFFECTED. 9 AIG OFFSHORE SYSTEMS SERVICES INC. THE HON'BLE KEARALA HIGH COURT IN V.A. VASUMATHI (SUPRA) OBSERVED THAT THE WORDS IN CONNECTION WITH SUCH TRANSFER' WOULD MEAN THE EXPENDITURE WHICH IS INTRINSICALLY RELATED TO SUCH TRANSFER. IN THE FACTS OF THE SAID CASE THE HON'BLE HIGH COURT HELD THAT THE LITIGATION EXPENSES INCURRED BY THE ASSESSEE IN PURSUANCE TO A REFERENCE UNDER SECTION 20 OF THE LAND ACQU I SITION ACT IS AN EXPENDITURE COMING W I THIN THE PURVIEW OF THE SECTION 48(I) OF THE ACT. THE ARR I N COMPAGNIE FINANCIERE HAMON IN. RE. HELD THAT THE EXPENSES INCURRED ON LEGAL PROCEE DINGS PRECEDING TRANSFER OF SHARES QUALIFIES FOR DEDUCTION UNDER SECTION 48(I) OF THE ACT. THE TRIBUNAL MUMBAI BENCH IN GIC HOUSING FINANCE LTD. HELD THAT EXPENDITURE INCURRED TOWARDS FEES PAID TO PROFESSION ALS / ADVISORS WHO PROVIDED SERVICES BY WAY OF ADVISE / ASSISTANCE IN CONNECTION WITH TRANSFER OF SHARES IS ALLOWABLE AS EXPENDITURE UNDER SECTION 48(I) OF THE ACT. THUS THE PRINCIPLE OF LAW WHICH EMERGES FROM THE AFORESAID DECISIONS IS TO THE EFFECT THAT AN Y EXPENDITURE INTRINSICALLY CONNECTED TO THE TRANSFER OF THE CAPITAL ASSET IS ALLOWABLE AS DEDUCTION UNDER SECTION 48(I) OF THE ACT. 8 . KEEPING IN VIEW THE AFORESAID LEGAL POSITION IF WE EXAMINE THE FACTS OF THE PRESENT CASE UNDISPUTEDLY IN THE RELEVANT PREVIOUS YEAR THE ASSESSEE HAS TRANSFERRED / SOLD SHARES OF ITS INDIAN SUBSIDIARY AND HAS OFFERED THE INCOME FROM SUCH TRANSFER AS LONG TERM CAPITAL GAIN. THE ASSESSING OFFICER HIMSELF IN THE ASSESSMENT ORDER HAS MENTIONED 10 AIG OFFSHORE SYSTEMS SERVICES INC. THAT THE TRANSACTION RELATING TO TRANSFER OF SHARES IN THE INDIAN SUBSIDIARY HAS BEEN TERMED AS PROJECT GENESIS. FROM THE CORRESPONDENCES BETWEEN THE ASSESSEE AND THE ADVOCATES / ACCOUNTING FIRMS AS PLACED AT PAGE 111 AND 122 OF THE PAPERBOOK CLEARLY DEMONSTRATE THAT THE LEGAL / PROFESSI ONAL SERVICES WERE RENDERED IN CONNECTION WITH PROJECT GENESIS. THE SCOPE OF WORK FURTHER CLARIFIES THAT SERVICES TO BE RENDERED ARE IN RELATION TO ADVISE ON SALE OF ENTIRE SHAREHOLDING OF THE INDIAN SUBSIDIARY AND INCLUDES PREPARATION OF SHARE SALE / PURC HASE AGREEMENT RENDERING ADVISE ON AND PREPARING NECESSARY CLOSING DOCUMENTATION INCLUDING BOARD RESOLUTION SHARE TRANSFER FORMS ETC. FURTHER THE INVOICES RAISED BY THE ADVOCATES / PROFESSIONALS CLEARLY INDICATE THAT THEY WERE IN CONNECTION WITH LEGAL / PROFESSIONAL SERVICES RENDERED FOR PROJECT GENESIS. A SINGLE INVOICE REFERRED TO BY THE LEARNED DEPARTMENTAL REPRESENTATIVE MENTIONING PROJECT EAGLE IN OUR VIEW IS A TYPOGRAPHICAL ERROR AS CONTENTED BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE SINCE T HE FORWARDING LETTER ACCOMPANYING SUCH INVOICE CLEARLY MENTIONS PROJECT GENESIS AND ALL OTHER INVOICES RAISED BY THE CONCERNED A DVOCATES CLEARLY MENTION THE NAME PROJECT GENESIS . THEREFORE THERE CANNOT BE ANY ROOM FOR DOUBT THAT THE EXPENDITURES WERE IN RELATION TO THE TRANSFER OF SHARES OF THE INDIA SUBSIDIARY TERMED AS PROJECT GENESIS . AS COULD BE SEEN FROM THE SCOPE OF WORK FOR WHICH THE SERVICES WERE RENDERED BY THE LEGAL / 11 AIG OFFSHORE SYSTEMS SERVICES INC. PROFESSIONAL FIRM IT IS CLOSELY AND INTRINSICALLY RELATED TO TRANSFER OF SHARES OF THE INDIAN SUBSIDIARY. THEREFORE APPLYING THE RATIO LAID DOWN I N THE DECISIONS CITED BY THE LEARNED SR. COUNSEL FOR THE ASSESSEE THE EXPENDITURE INCURRED IS WHOLLY AND EXCLUSIVELY IN CONNECTION WITH THE TRANSFER OF SHARES OF THE INDIAN S U BSIDI ARY . H ENCE QUALIFIES FOR DEDUCTION UNDER SECTION 48(I) OF THE ACT. NON DISCLOSURE / NON MENTION INGTHE NAME OF THE ULTIMATE BUYER OF THE SHARES IN NO WAY MILITATES AGAINST THE FACT THAT THE EXPENDITURE INCURRED BY THE ASSESSEE ON ACCOUNT OF LEGAL AND PROFESSIONAL FEES PAID IS IN CONNECTION WITH TRANSFER OF SHARES. THE DECISION RELIED UPON BY THE LEARNED DEPARTMENTAL REPRESENTATIVE ON THE OTHER HAND WILL NOT BE APPLICABLE TO THE FACTS OF THE PRESENT CASE SINCE IT INVOLVES ALLOWABILITY OF PMS FEE WHIC H IS NOT THE ISSUE IN THE PRESENT APPEAL. THUS IN VIEW OF THE AFORESAID WE HOLD THAT ASSESSEES CLAIM OF DEDUCTION OF U.S. $ 13 27 609 IS ALLOWABLE UNDER SECTION 48(I) OF THE ACT. GROUNDS RAISED ARE ALLOWED. 9 . IN THE RESULT ASSESSEES APPEAL IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON SD/ - RAJESH KUMAR ACCOUNTANT MEMBER SD/ - SAKTIJIT DEY JUDICIAL MEMBER MUMBAI DATED: 12 AIG OFFSHORE SYSTEMS SERVICES INC. COPY OF THE ORDER FORWARDED TO : ( 1 ) THE ASSESSEE; ( 2 ) THE REVENUE; ( 3 ) THE CIT(A); ( 4 ) THE CIT MUMBAI CITY CONCERNED; ( 5 ) THE DR ITAT MUMBAI; ( 6 ) GUARD FILE . TRUE COPY BY ORDER PRADEEP J. CHOWDHURY SR. PRIVATE SECRETARY ( SR. PRIVATE SECRETARY ) ITAT MUMBAI