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2021 (9) TMI 68 - AT - Income TaxShort Term Capital Gain arising out of transfer of equity shares - FCCBs/GDRs which were subsequently converted to equity shares - cost of acquisition of underlying shares - whether capital gain has to be computed by adopting the cost of acquisition of the GDRs/FCCBs under clause 7(3) and 7(4) of the 1993 scheme or it has to be computed under section 49(2A) r.w.s. 47(x) and 47(xa) of the Act, as held by the Departmental Authorities? - HELD THAT:- The cost of acquisition of underlying shares of GDRs shall be the price of the ordinary shares of the issuing company prevailing in the BSE or the NSE on the date of the advice of redemption by the Overseas Depository Bank to the Domestic Custodian Bank - the cost of acquisition of underlying shares of FCCBs would be the conversion price determined on the basis of the price of shares at the BSE or NSE on the date of conversion of FCCBs. In case of Kingfisher Capital COL Ltd. vs. CIT [2019 (4) TMI 106 - BOMBAY HIGH COURT] has held that the cost of acquisition of equity shares on conversion from FCCBs/GDRs has to be determined as per clause 7(3) and 7(4) of the 1993 scheme. Same view has been expressed by the Hon’ble Karnataka High Court in case of DIT vs. Intel Capital Corporation [2020 (10) TMI 521 - KARNATAKA HIGH COURT]. Assessee has adopted the cost of acquisition in terms of clause 7(3) and 7(4) of 1993 scheme, based on the data available in public domain. Thus, respectfully following the decision of the Hon’ble jurisdictional High Court noted above, we direct the AO to compute capital gain by following the method prescribed under clause 7(3) and 7(4) of the 1993 scheme (supra).
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