TMI Blog2015 (11) TMI 1285X X X X Extracts X X X X X X X X Extracts X X X X ..... as investments to avoid tax on the gains. None of the Assessee’s actions in the previous year 1991-92 indicated any change in the Assessee’s intention regarding its holding in shares and debentures. The ITAT observed that there were hardly any transactions in the past and on that basis concluded that the Assessee was in substance 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 th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... spect of Assessment Year (AY) 1990-91. 2. The Appeal was admitted on 12th October, 2004 and the following 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 entitled to set off the alleged loss from the capital gains/income earned by the assessee? 3. However in the facts of the present case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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-right price of an equity share of JSL was ₹ 270/- as on 27th October, 1989 and the said share was quoted ex-rights at ₹ 208/-. The Assessee claimed that the cost of rights to subscribe to 35,000 FCDs was ₹ 43,40,000/- (i.e. ₹ 62 per share x 70,000 shares). Accordingly, the Assessee claimed that it had incurred a loss of ₹ 39,20,000/- ( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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