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2015 (11) TMI 1285 - DELHI HIGH COURT

2015 (11) TMI 1285 - DELHI HIGH COURT - TMI - Sale consideration received by the assessee by transfer of shares and sale of rights entitlement of Partly Convertible Debentures (PCDs) - income from capital gains OR income from business? - Held that:- As relying on Commissioner of Income Tax Delhi-I v. M/s Abhinandan Investment Ltd. [ 2015 (11) TMI 1219 - DELHI HIGH COURT] the Assessee appears to have claimed a change in the nature of his holdings depending on the tax incidence in the year in ques .....

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stance an investment company. However, the ITAT failed to appreciate that the Assessee had consciously held itself out as a company engaged in sale and purchase of shares; it was also assessed on the income earned from business and also claimed deduction on account of business expenses incurred by the Assessee. The shares in question were, concededly, held as stock-in-trade. All that happened in the year in question is that the Assessee sold substantial shares and renounced rights to subscribe t .....

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see. - ITA 305/2002 - Dated:- 19-11-2015 - DR. JUSTICE S. MURALIDHAR AND MR. JUSTICE VIBHU BAKHRU For the Appellant : Mr Kamal Sawhney, Senior Standing Counsel with Mr Raghvendra Singh and Mr Shikhar Garg. For the Respondent : Mr. Ajay Vohra, Senior Advocate with Ms. Kavita Jha JUDGMENT VIBHU BAKHRU, J 1. The Revenue has filed this appeal under Section 260A of the Income Tax Act, 1961 (hereafter the Act ) impugning an order dated 14th March, 2002 passed by the Income Tax Appellate Tribunal (here .....

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questions of law were framed:- 1. Whether the Income Tax Appellate Tribunal was right in holding that the sale consideration received by the assessee by transfer of shares and sale of rights entitlement of Partly Convertible Debentures (PCDs) is income from capital gains and not income from business? 2. Whether the Income Tax Appellate Tribunal was right in holding that the assessee had incurred loss on sale of its entitlement to acquire partly convertible debentures and the assessee is entitle .....

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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 transact in shares of the operational companies of the Group. 4.2 The Assessee filed its return of income on 28th December, 1990 declaring an income of ₹ 75,510/-. In the computation of income, the Assessee had claimed a loss of ₹ 40,22,350/-. The return was picked up for scrutiny and the AO passed an assessment orde .....

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he said issue, every shareholder would be entitled to subscribe to FCDs in the ratio of 2:1, that is, 1 FCD for every 2 equity shares held by the shareholders. Accordingly, the Assessee was offered 97,000 FCDs. Out of the aforesaid entitlement, the Assessee renounced rights to subscribe to 35,000 FCDs in favour of M/s Saw Pipes Ltd. (another company of the Jindal Group) at ₹ 12/- per FCD, that is, at an aggregate consideration of ₹ 4,20,000/-. 4.4 The Assessee claimed that the cum-ri .....

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