Meaning of “Expenditure incurred wholly and exclusively in connection with such transfer”

Case Name :  CIT Vs. Bradford Trading Co. (P.) Ltd.

Citation : [2002] 125 Taxman 632 (mad.)

Court : Madras high court

Section : 48

Meaning :  The expression used in section 48, viz., ‘Expenditure incurred wholly and exclusively in connection with such transfer’ has a wider connotation than the expression, ‘for the transfer’.

Case Name : Kra Hholding & Trading (P.) Ltd. Vs. Dy. CIT

Citation : [2011] 46 sot 19/11 taxmann.Com 250 (pune)

Court : Pune high court

Section : 48

Meaning : The expression ‘wholly and exclusively in connection with such transfer’ is wider in scope and it is not so narrow not to accommodate the ‘portfolio fee’, which is paid undisputedly and obviously for acquisition and sale of the securities/unit, if any. The expression ‘in connection with such transfer’ enjoys much wider meaning and, therefore, the fee paid to the portfolio manager has to be construed to have been expanded for the purposes of acquisition and transfer of the investment of the securities. The expression ‘transfer’ involves various sub-components and the first sub-component must be of purchase and possession of the impugned securities. Unless the assessee is in possession of the asset, he cannot transfer the same. Therefore, the expression ‘expenditure incurred wholly and exclusively in connection with such transfer’, read with ‘as a result of the transfer of the capital asset’ mentioned in section 48 and 48(i) must necessarily encompass the transfer involved at the stage of acquisition of the securities till the stage of transfer involved at the step of sale of the impugned securities.