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2014 (12) TMI 793 - ITAT LUCKNOWViolation of section 40A(2A)(b) or not – Assessee being preference shareholder of Company – Claim of ampount on capital loss by assessee in sale of old shares not cleared - Held that:- Revenue contended that the purchase price paid by these assessees to SSAIL for purchase of shares on 07/12/2007 is excessive because only after 8 days, these shares were sold by the assessee at ₹ 3.15 per share - even if it is noted by the AO that the sale price in respect of fresh purchase of shares to the extent of 19 lac shares of SSAIL on 07/12/2007 on the face value of ₹ 10/- per share was excessive, then he can disallow the Short Term Capital Loss in respect of sale of 19 lacs shares but the loss in respect of remaining old shares has to be allowed as Long Term Capital Loss - It is not understandable as to when 19 lacs shares were acquired by the assessee on 07/12/2007, how the share held in SSAIL on 15/12/2007 was only 10.10 lac shares - the shar holding of Shri Yogendra Mohan Gupta is stated to be 21.60 lac shares including 19 lac shares acquired by the assessee on 07/12/2007 – it is not clear as to the correct figure regarding total shareholding and how much long term capital loss was claimed by the assessee in respect of sale of old shares held by the assessee and whether the same was allowed by the AO or not - The order of CIT (A) is without throwing any light on these aspects. The fresh shares should be considered as issued and thereafter sold on such market value per share of the old shares for raising same amount resulting in increase in number of shares issued because whatever loss is incurred by the company and consequently the shareholders, the same was incurred till this date and it cannot be said that further loss was incurred between 07.12.2007 to 15.12.2007 - the loss in the hands of the shareholder should also be in respect of old shares only held by him on 07.12.2007 - more shares were issued to garner enough funds for making repayment of preference shares along with the accumulated dividend and other liabilities - increased long term capital loss on sale of old shares should be allowed to the assessee as long term capital loss - CIT (A) should decide the issue in this manner - the purchase price paid by the assessee for acquiring new shares on 07/12/2007 has to be determined as per the market value of the shares of the company SSAIL on 07/12/2007 - new shares at a price below than the face value, such issue of shares at a discount is permissible as per the Companies Act and hence, there is no problem on that aspect - thus, the matter is remitted back to the CIT(A) for fresh consideration – Decided in favour of revenue.
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