Allowing the appeal of the assessee the Court held that ; payment of liquidated damages in discharge of liability under earlier agreement to sell is held to be allowable expenditure-The expression “expenditure” used in clause (i) in S 48 should be given the same meaning as used in S.37(1) , except that the expenditure may also be capital in nature. Settlement of a claim and payment made can amount to expenditure .( AY.1994 -95)
Kaushalya Devi (Dec) Through LR v. CIT (2018) 404 ITR 136/166 DTR 258 / 255 Taxman 417/ 304 CTR 961(Delhi) (HC)
S. 48 : Capital gains – Computation -Payment of liquidated damages in discharge of liability under earlier agreement to sell is held to be allowable expenditure-The expression “expenditure” used in clause (i) in S 48 should be given the same meaning as used in S.37(1) , except that the expenditure may also be capital in nature. Settlement of a claim and payment made can amount to expenditure [ S. 37(1),45 ]