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2015 (11) TMI 1215 - DELHI HIGH COURT

2015 (11) TMI 1215 - DELHI HIGH COURT - TMI - Sale consideration received by transfer of shares and sale of rights entitlement of partly convertible of partly convertible Debentures (PCDs) - ITAT held as income from capital gains and not income from business - Loss on sale of entitlement to acquire partly convertible debentures - ITAT held assessee is entitled to set off the alleged loss from the capital gains/income earned by the assessee - Held that:- The Assessee had held the shares of JISCO .....

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r held that the transaction of renunciation of rights were a sham transactions and a device to purchase notional losses.

At the outset, the learned counsel for the parties submitted that the material facts and issues in the present appeal were similar to the issues involved in Commissioner of Income Tax Delhi-I v. M/s Abhinandan Investment Ltd. - Decided in favour of the Revenue and against the Assessee. - ITA 174/2003 - Dated:- 19-11-2015 - S. Muralidhar And Vibhu Bakhru, JJ. For the .....

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ommissioner of Income Tax (Appeals) [hereafter 'CIT(A)'] whereby the Assessee s appeal against the assessment order dated 31st March, 1992 in respect of the Assessment Year (AY) 1992-93, was dismissed. 2. The present appeal was admitted on 10th May, 2006 and the following questions of law were framed:- 1. Whether the I.T.A.T. was right in holding that the sale consideration received by the assessee by transfer of shares and sale of rights entitlement of partly convertible of partly conve .....

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the Jindal Group of companies. Jindal Group is mainly engaged in the manufacturing and production of ferrous metals and alloys. Jindal Group includes investment companies - such as the Assessee - which, inter alia, hold and deal in shares of the operational companies of the group. The Assessee furnished the return of Income for the assessment year 1992-93 (Previous year ending 31st March, 1992) declaring an income of ₹ 25,37,330/- and claimed a carry forward of short term capital loss of .....

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(seven) PCDs for every 10 (ten) equity shares. JISCO also floated a rights issue in terms of which every shareholder was entitled to subscribe to 5 (five) PCDs for 4 (four) equity shares. 3.3 During the year in question the assessee company sold 50,000 equity shares of JSL and 141400 shares of M/s Saw Pipes Ltd which, according to the Assessee resulted in short term capital gains of ₹ 1,15,59,800/-. In addition, the Assessee declared income from business and profession of ₹ 57,02,340 .....

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4th December, 1991). Similarly the cum-right price of each share of face value of ₹ 10/- of JISCO was ₹ 625/- and ex right price was ₹ 425/-. On the aforesaid basis, the Assessee claimed that cost of acqusition of rights to subscribe to PCD was the dimunition in value of the share holding in JSL and JISCO computed at ₹ 140/- per share of JSL and ₹ 200 per share of JISCO. After accounting for the sale consideration for renunciation of rights to subscribe the PCDs, th .....

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