Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2013 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2013 (5) TMI 614 - ITAT MUMBAIValuation of shares - section 48 - Difference between value of share on the date of its allotment and the price of warrant paid as per letter of allotment - whether be treated as Long Term Capital Gain - CIT(A) deleted the addition - Held that:- AO not only wrongly interpreted the provisions of the I.T.Act, but also over extended the meaning of the same, so as to bring the amount in dispute into the taxable income of the assessee without any legal basis. The conversion of warrant into shares by paying the remaining 90% amount was neither any extinguishment nor relinquishment of any rights in the assets. It may be observed that the assessee had purchased the warrants by paying 10% of the pre-determined price of the shares. There was an option for the assessee to get the said warrants converted into shares by paying 90% of the amount within the stipulated period, the non-payment of which would have resulted in forfeiture of the money. While computing the income of the assessee, the AO has wrongly and illegally interpreted proviso (iv) to section 48 of the I.T. Act. A bare perusal of the said proviso reveals that the same is attracted in case the shares, debentures or warrants are transferred by the assessee to some other person without receiving any consideration in terms of money and in that event market value of the asset on the date of such transfer is deemed to be the value of consideration received as a result of transfer. In the case in hand, the assessee has not transferred any warrant or share to any other person rather he has just exercised his option to purchase the shares at a stipulated rate by paying the remaining 90% amount, which in clear term falls in the definition of investment and not in the definition of sale or transfer on his part. - Decided in favor of assessee.
|