Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (10) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (10) TMI 427 - AT - Income TaxAddition on account of capital loss - whether the share warrant which is optional convertible into shares are capital asset as per Sec. 2(14) of the Act - Held that:- There was a binding contract between assessee and WCPM with the option to the assessee to acquire the equity share. The assessee, in the instant case, has paid only 10% of the total consideration and the balance was to be paid by assessee within the specified time. However, the market value of the share of WCPM came down drastically and assessee decided not to make further payment for the purchase of share warrant. As a result of non-payment of balance amount for the purchase of share warrant, the company forfeited the amount. In the instant case, share warrant is a capital asset within the meaning of Sec. 2(14) of the Act. From a bare reading of Sec. 2(14) of the Act and we find that share warrant is a capital asset. So the loss generated from the forfeiture of share warrant is nothing but a capital loss and chargeable under the head “capital gain”. In view of the above, the loss acquired from the forfeiture of share warrants is nothing but STCL. Hence, this loss should be allowed in favour of assessee. Therefore, we find no reason to interfere into the order of Ld. CIT(A). Adjustment of STCL based on STT paid transactions with Short Term Capital Gain (STCG for short) where Securities Transaction Tax (STT for short) was not paid - whether the transactions on which the provision of Sec. 111A of the Act is attracted is to be treated separately from other transactions of capital gains where no STT has been paid? - Held that:- We find that assessee in the instant case has incurred loss from STCL on the sale-purchase of share on which STT was paid but AO observed that there is a special rate of tax u/s 111A of the Act for charging tax in case of sale-purchase of share on which STT has been paid. Therefore, such loss was disallowed by AO to adjust the income under the same head i.e., capital gains against the income of share sales & purchase on which no STT was paid. From a plain reading of said Section 70(2) we find that said Act does not make any distinction between the income under the head “capital gain” on which STT was paid or STT was not paid. We further find that loss under the same head then set off from one source to another source is allowed if it is computed under the similar computation made for the relevant year. The word “similar computation” connotes that income should have been computed within the relevant Chapter i.e. Sec. 45 to 55A of the Act. - Decided in favour of assessee Section 14A disallowance - Held that:- We find the investments which are not capable of yielding the dividend income needs to be excluded and accordingly several courts have decided this issue in favour of assessee
|