Srinivasa Iyengar, J.
1. Pursuant to the order of this court in C.P. No. 54 of 1969, dated July 15, 1970, the Income-tax Appellate Tribunal, Bangalore Bench, has referred the following question of law arising out of its order in I.T.A. No. 14800(?) of 1964-65, for the opinion of this court :
'Whether, on the facts and in the circumstances of the case, the Tribunal is justified in not deducting Rs. 41,517 while computing the capital gains
The computation of the capital gains was for the assessment year 1962-63 (the accounting year ending March 31, 1962). The assessee is the widow of J. B. Pinto who was a partner in five firms. The assessee filed a return, and thereafter a revised return, showing an income of Rs. 18,150 and a loss of Rs. 94,66 under capital gains. The revised return came to be filed consequent on it being pointed out by the Income-tax Officer that she had not shown any income in respect of capital gains arising on the release by her of her rights in the firms in which her husband was a partner to which she had become entitled on his death.
J. B. Pinto died on July 8, 1958. The total of the amounts standing to his credit in the accounts of the firms amounted to Rs. 3,14,837,35. Certain debits had been made in these accounts alleged to be on account of gifts and the genuineness of the same was disputed by the assessee. On April 2, 1960, an agreement was entered into between the assessee and the continuing partners where by Rs. 4,89,132 was agreed to be paid to the assessee in respect of her husband's interest in the firms. However, further disputes arose between the parties and there was an oral agreement entered into on June 11, 1961, and on June 21, 1961, are lease deed was executed by the assessee where by a sum of Rs. 5,76,582 was agreed to be paid to the assessee 'in full and final settlement and quittance of right, title, interest, claim, demand of the party of the first part (viz., the assessee) against the party of the second part in respect of all and every part of the estate of her deceased husband, the late Joachim Bernard Pinto, as the sole heir representative and beneficiary thereto.'
2. The Income-tax Officer did not accept the loss claimed under capital gains. There was no dispute in regard to the total consideration under the release deed, viz., Rs. 5,76,582. During the course of the assessment proceedings, the assessee in her letter dated January 28, 1964, gave a break-up of this consideration amount and one of the items was a sum of Rs. 41,517 which was stated to be 'lawyer's fees and travelling expenses and damages for mental worry and suffering on account of wrongful withholding and detention of my property'. The Income-tax Officer did not accept the explanation in this behalf and also in regard to certain other items. He noticed that the release deed itself did not specify any amount being paid towards such expenses or damages and no such explanation had been given in the estate duty proceedings and at earlier stages in the proceedings and the assessee was taking inconsistent stands.
3. It was urged before him that this amount was paid to her so as to dissuade her from going to court but he did not accept the plea as being unsupported from the circumstances in the case, He held that certain other adjustments sought to be made in arriving at a loss under capital gains were not tenable and the break-up given of the amount of consideration was not supported by any documentary evidence and could not be accepted. He computed the capital gains at Rs. 67,133.
4. Among other items the rejection of the claim in regard to this amount of Rs. 41,517 was contested before the Appellate Assistant Commissioner. He held that the claim was obviously misconceived as, according to the assessee, it represented expenses reimbursed and when expenses are reimbursed they cease to be expenses and the assessee would revert to the position where she was prior to the incurring of the expenditure and, referring to the provision in section 48(i) of the Income-tax Act, rejected the claim as without may merit.
5. On further appeal before the Tribunal, the disallowance was upheld. It held that there was nothing in the release deed to show that this sum was paid in reimbursement of lawyer's fees, etc., and the exact amount of the lawyer's fees and travelling expenses were not known. It concluded : 'In the absence of evidence that the total consideration paid to the assessee was also in part reimbursement of the expenses incurred by the assessee, we are unable to interfere.'
6. It is urged before us that the Tribunal was wrong in proceeding on the basis that the amount of expenses was not known and misconstrued the claim of the assessee. It is argued that there was no dispute about the quantum of expenses and the Appellate Assistant Commissioner had accepted the same, though he rejected the claim on the basis that as it had been reimbursed it could not be deducted and the case of the assessee all along was that the amount was not part of the consideration for the release and there was no opportunity to the assessee to adduce evidence in this behalf. It is argued that the assessee was not claiming a deduction under section 48(i) but the claim was that the amount should be excluded from the consideration for the release. We are unable to accept the submissions.
7. The total consideration for the release, viz., Rs. 5,76,582, was not in dispute and what the assessee tried to do was to was to explain how this amount was made up and in that behalf gave a break-up of the amount and represented that Rs. 41,517 represented lawyer's fees, etc. The terms and contents of the release deed do not support this. The Income-tax Officer specifically found that this explanation was an after-thought and there was no evidence in support of the same. We are unable to construe the order of the Appellate Assistant Commissioner as admitting or accepting the correctness of the break-up or that Rs. 41,517 represented lawyer's fees, etc. His reasoning was clearly that even on the assumption that what the assessee represented was true, the claim could not be allowed. The break-up of the amount given by the assessee itself implies that the amount was part of the consideration for the release, though she tried to apportion a part of the total there is any evidence on record in support of the plea that Rs. 41,517 represented lawyer's fees, etc., apart from her own assertion to that effect. In the circumstances referred to by the Income-tax Officer in his order. Such a plea could not be accepted. The Tribunal was, therefore, correct in proceeding on the basis that there was no evidence in support of the assessee's contention.
8. The contention urged that she was not claiming a deduction under section 48(i) of the Income-tax Act in computing the capital gains is untenable. The question framed is also on the basis that a deduction of expenses was being claimed and the plea taken in the course of the proceedings before the authorities below also is to the same effect. On the ground that there was no evidence to support the contention that Rs. 41,517 represented expenses, the assessee's claim for deduction was rejected, which was justified.
9. Even assuming that what the assessee represented was correct, the deduction was not permissible in terms of section 48(i). According to the assessee, Rs. 41,517 represented 'Lawyer's fees and travelling expenses and damages for mental worry and suffering on account of wrongful with holding and detention of my property,' Section 48(i) of the Income-tax Act, 1961, is as follows :
'48. Mode of computation and deductions. - 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 asset the following amounts, namely :- (i) expenditure incurred wholly and exclusively in connection with such transfer;...'
10. What can be deducted under section 48(i) is expenses incurred wholly and exclusively in connection with the transfer. The damages for mental worry and suffer in on account of wrongful withholding and detention of her property cannot, by any stretch of imagination, be said to be expenses incurred wholly and exclusively in connection with the transfer. The claim in respect of lawyer's fees is also indefinite and vague and is not specific that it was in connection with the transfer, like, for example, drafting of the deed or such purpose intimately connected with the transfer. Similarly, regarding the travelling expenses, it is not specific that it was in connection with the transfer.
11. Therefore, the nature of expenses as represented by the assessee would not bring them within the ambit of section 48(i) of the Income-tax Act, 1961, so as to be a permissible deduction. We, therefore, answer the question in the affirmative and against the assessee, i.e., that the Tribunal was justified in not deducting Rs. 41,517 while computing the capital gains.
12. The petitioner shall pay the costs of the respondent. Advocate's fee, Rs. 250.
13. Question answered in the affirmative.