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2018 (12) TMI 317 - AT - Income TaxDisallowing the claim of capital loss incurred by the appellant due to reduction of capital by the investee company - an extinguishment and relinquishment by the appellant - transfer u/s 2(47) - face value of shares remains the same - Held that:- The face value per share remains same i.e. ₹ 10 per share before reduction of share capital and after reduction of share capital but the total number of shares has been reduced from 153505750 to 10000 and out of this, the present assessee was holding prior to reduction 153340900 shares and after reduction 9988 shares. In addition to this reduction in number of shares held by the assessee company in ANNPL, the assessee received an amount of ₹ 3,17,83,474/- from ANNPL. Hence it is seen that in the facts of present case, on account of reduction in number of shares held by the assessee company in ANNPL, the assessee has extinguished its right of 153340900 shares and in lieu thereof, the assessee received 9988 shares at ₹ 10/- each along with an amount of ₹ 3,17,83,474/-. As per this judgment of Kartikeya V. Sarabhai Vs. CIT [1997 (9) TMI 2 - SUPREME COURT], there is no reference to the percentage of share holding prior to reduction of share capital and after reduction of share capital and hence, in our considered opinion, the basis adopted by the CIT(A) to hold that this judgment of Hon’ble Apex Court is not applicable in the present case is not proper and in our considered opinion, this is not proper. In our considered opinion, in the facts of present case, this judgment of Hon’ble Apex Court is squarely applicable and by respectfully following this judgment we hold that the assessee’s claim for capital loss on account of reduction in share capital in ANNPL is allowable.- Decided in favour of assessee
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