Home Case Index All Cases Income Tax Income Tax + HC Income Tax - 2015 (2) TMI HC This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2015 (2) TMI 778 - HC - Income TaxShort term capital gain derived from foreign exchange asset - whether on sale of bonus shares investment income within Section 115E of the Act accrued? - Assessee is a nonresident under the Act - ITAT extended the benefit of Section 115E of the Act to the Respondent-Assessee, as the issue stands covered by virtue of its decision in Trishala Jain (1990 (8) TMI 196 - ITAT DELHI-E) - Held that:- The words “derived from” was a subject matter of consideration in Cambay Electric Supply Industrial Company Ltd v/s. CIT [1978 (4) TMI 1 - SUPREME Court] wherein held that the expression “attributable” to wider then the expression “derived from”. Thus, the sale of old machinery was held not to be a profit and gains derived from the conduct of the business of generation of electricity. It was held in the above case that whenever Parliament wanted to give a restricted meaning, they use the word 'derived from'. This also support the Revenue's contention that any income earned by the sale of the investment cannot be said to be derived from a Foreign Exchange Assets. The words 'derived from' would normally indicate in case of shares, the dividend received on shares and not the sale of the shares. The amount received on sale of shares is not derived from it as it is received on the transfer of shares leading to extinguishment of all rights in the shares so sold. Thus the interpretation by the Revenue also find support from the fact that Section 115E of the Act specifically indicates income by way of long term capital gains to be entitled to the benefit of Section 115E of the Act as it is not considered to be an income derived from an investment. Chapter XIIA of the Act itself makes a distinction between income derived from an asset and an income arising on sale of assets, leading to long term capital gains. The later is a case of income being attributable to sale of assets. We hold that the income arising on sale of assets leading to short term capital gains is not income derived from foreign exchange asset so as to qualify as investment income within the meaning of Section 115E of the Act. - Decided in favour of the Revenue
|