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2017 (11) TMI 1599 - ITAT DELHIDisallowance of debentures transferred in contravention of the directions of the Hon’ble High Court of Delhi - shares have been issued for consideration other than cash being OCDs - assets so transferred in the scheme of demerger - Held that:- As admitted by both the parties that the source of investment of ₹ 200 crores as OCDs is not the subject matter of examination u/s 68 of the Incometax Act, 1961 in the hands of the assessee company. The source has been explained being money received by CHPL from the sale of shares held by it to Indian Hotels Company Limited. The company has also paid the capital gains tax on the said transaction. The Department had not even challenged this issue and, therefore, the only issue before us is whether ₹ 128 crores received by the assessee company as OCDs between 01.04.2009 to 25.05.2010 is the income of the assessee u/s 2(24) of the Act. From the above discussion, we feel that it is merely a case where ₹ 128 crores of OCDs having been received by the assessee company against issuance of shares in the ratio of 1:6 to the owner of the said OCDs. It is thus a case of issuance of shares for consideration other than cash. We fail to understand how the consideration received can be said to be an income of the assessee company. The company has received debentures against which it has issued shares at a premium. As further observe that in AY 2009-10, there was no requirement in law even in section 56 or any other section, which mandates that the company would not issue shares at other than the fair market value. Hence a company was free to issue shares at a premium or at par based on the decision taken by its Board. Therefore, it is a simple case where shares have been issued for consideration other than cash being OCDs and this is a transaction clearly on capital account. The Ld. CIT(A) has extensively dealt with this issue and his findings of facts are accurate and correct. We find no reason to interfere with the order of Ld. CIT(A) and the addition of ₹ 200 crores made by the Assessing Officer has rightly been deleted by the ld. CIT(A) vide impugned order. - Decided against revenue
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