TMI Blog2022 (7) TMI 1289X X X X Extracts X X X X X X X X Extracts X X X X ..... aside and dealt with in a summary manner. An amount was indeed received on behalf of the assessee and this amount has been reinvested in the debentures. The debentures were not bonus debentures and the nomenclature given by the AO is thus incorrect. The taxes were duly paid on the deemed dividend in question, and it did constitute income of the assessee, even though received by a merchant banker on behalf of the assesse. The scheme under which the amount is received by the merchant banker, on behalf of the shareholders-including the assessee, and reinvested on behalf of these shareholders, is duly approved by the Hon ble High Court, vide order dated 19th September 2014. The fact of, and bonafides of, the transaction cannot thus be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o as the learned Assessing Officer) on the following grounds: 1. In treating the cost of acquisition of the bonus debentures received from Blue Dart Express Limited (BDEL) in the nature of dividend [as defined under section 2(22)(b) of the Act, on which dividend Distribution Tax had been discharged] as Nil while computing the capital gains arising on the sale of these debentures, instead of treating the cost of acquisition as the amount of dividend, which was, issued in the form of bonus debentures. The Appellant craves leave to add, alter, vary, omit, substitute or amend any or of the above grounds of appeal, at any time before or at the time of the appeal, so as to enable the Hon ble Income Tax Appellate Tribunal to decide t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isition of these debenture should be taken as NIL because these are bonus debenture and appellant has not incurred any cost for its acquisition. Hence this ground of appeal is dismissed. 4. The assessee is not satisfied and is in further appeal before us. 5. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 6. We have noticed that the assessee had made specific submissions explaining the cost of acquisition of the debentures of BDEL but none of the authorities below has dealt with these contentions by way of a speaking order. These contentions have been simply brushed aside and dealt with in a summary manner. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The balance amounts (representing the pro-rata distribution of assets) should be treated as a capital receipt. It further held that in order to compute capital gains, if any, in the hands of the shareholder, the portion attributable towards accumulated profits (dividend) should not be considered and the balance amount, if any should be taken into account while computing capital gains, if any. 2.3 Given the above ruling, since the bonus debentures allotted by BDEL is regarded as 'deemed dividend' and taxed accordingly, it should be excluded while computing capital gains, if any, at the time of sale of such debentures. Further, unless the amount considered for the purpose of DDT is reduced from the capital gain earned on the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gh Court on September 19, 2014, the Company delivered an amount of Rs. 33,219 Lacs being the amount equal to the aggregate value of the Debentures to a merchant banker appointed by the Board on behalf of and as agent and trustee of the Members as deemed dividend within the meaning of the term under Section 2(22)(b) of the Income tax Act, 1961 ( the Act ) and also discharged its liability thereon under section 115-O of the Act. The Merchant Banker immediately following receipt of funds pursuant to the above, paid to the Company, for and on behalf of and as trustee of the Members entitled to Debentures, as and by way of subscription for allotment of requisite number of Debentures. The said payment for and on behalf of the Members by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the merchant banker, on behalf of the shareholders-including the assessee, and reinvested on behalf of these shareholders, is duly approved by the Hon ble High Court, vide order dated 19th September 2014. The fact of, and bonafides of, the transaction cannot thus be disputed. The amount of Rs. 13,85,580/- so reinvested, out of dividend, was the consideration paid for debentures. In the light of these discussions, as also bearing in mind entirety of the case, we uphold the plea of the assessee that the Assessing Officer erred in declines the claim of the assessee with respect to cost of acquisition of Rs. 13,85,580/- in respect of these debentures. The assessee, therefore, must get the relief accordingly. We order so. 9. In the resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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