TMI Blog2011 (6) TMI 887X X X X Extracts X X X X X X X X Extracts X X X X ..... L cost for 50,000 bonus shares. However, in respect of 14,50,000 shares the assessee claimed fair market value of ₹ 39.50 per share as on 1-4-1981. The assessee also claimed benefit of indexation after 1996-97 and accordingly claimed the cost of acquisition at ₹ 17,46,88,750/-. It was also informed that even 14,50,000 shares had been received by the assessee out of bonus shares issued by Kirloskar Cummins Ltd., prior to 1-4-1981. On these facts, the A.O opined that the cost of acquisition of the entire shares should be taken at NIL. In response to show cause notice issued by the A.O he assessee submitted that even though the provisions of section 55(2)(aa) were changed w.e.f. 1-4-1996, the change was subject to provisions mentioned in clause (i) and (ii) of sub-clause (b) of section 55(2). According to the assessee, clause )(i) of section 55(2)(b) gave the option to substitute fair market value as on 1-4-1981 in place of actual cost and these provisions had a overriding effect over the provisions of section 55(2)(aa). However, the A.O did not accept this submissions of the assessee and not allowed the indexed cost of acquisition of ₹ 17,46,88,750/- claimed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion to the assessee, in respectI of a capital asset Which, becomes property of the assessee before 1st April, 1981, to take fair market value (FMV) as on 1st Apri1, 1981 as the cost of acquisition. This substitution option is available only for the assets covered by sec. 55(2)(aa) and does not extend to the assets covered by the provisions of s. 55(2}(a), i.e., tenancy rights, stage carriage Permits and 100m hours, and goodwill, etc. The scope of sec. 55(2)(aa) extends to, inter alia, bonus shares as well as the same are 'allotted 'without any payment and on the basis of ho1ding of any other financial asset' and are specifically Covered by S.' 55(2)(aa)(iiia). The provisions of the statute are unambiguous Accordingly, to the extent bonus shares were issued to the assessee prior to 1st Apii1,198l, the option is With the assessee to take its cost of acquisition as its FMV as on 1st April, 1981. Even otherwise, makes no sense to decline the option of FMV as on 1st April 1981 to bonus shares and restrict this option only to original shares. When bonus shares are issued, there is corresponding fall in the market value of shares because the same valuation of company sprea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rtion of s. 55(2)(aa)(iiia), for the purpose of computing capital gains on transfer of the said bonus shares, the assessee has an option to take their fair market value as on 1st Apri1, 1981 as the cost acquisition. . The computation of capital gains on sale of shares is to be divided in three parts-far sale of 25,000 original shares for which cost of acquisition is to be taken at DM 2,17,175; (b) sale of 55,000 bonus shares for which cost of acquisition is to be taken FMV as on 1st April, 1981; and (c) sale of remaining, i.e. 33,333 bonus shares, [or which cost of shares is to be taken as nil. The onus of furnishing the fair market value of shares as on 1st Apri1, 1981, however, is on the assessee and the assessee will furnish the same to the AD for verification. Accordingly, the AD is directed to recompute the capital gains in the light of above observations. So, following the aforesaid decision of the Tribunal in the case of Heinrich dE Fries GmbH (supra) we hold that the CIT(A) was not justified in agreeing with the view of the A.O in computing the capital gains at ₹ 60,75,00,000/- as against ₹ 43,28,11,250/- returned by the assessee and decide this issue in favo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ee. 7. Ground no. 6 and 7 relate to disallowance out of vehicle maintenance expenses and telephone expenses. Undisputedly the assessee is a limited company. Both these issues are covered in favour of the assessee by the decision of Gujarat High Court in the case of Sayaji Iron and Engg. Co. Vs. CIT (2002) 253 ITR 749 and also in the case of Dinesh Mills Ltd. Vs. CIT (2002) 254 ITR 673. So, following the said judgments of the Hon ble Gujarat High Court, we direct the authorities below to delete the impugned disallowances. 8. Ground no. 8 relates to disallowance of depreciation. The authorities below in the orders for the earlier years confirmed the disallowances. During the course of hearing of this appeal, the learned counsel for the assessee has pointed out that identical issue has been decided in favour of the assessee by this Tribunal in ITA No. 429/PN/1997 and 606/PN/1999 for A.Y. 1993-94 and 1994-95 wherein following its earlier decision in the case of the assessee for A.Y. 1992-93 in ITA No. 667/PN/1996 decided the issue in favour of the assessee by observing as under: The ground no. 7 is directed against the disallowance of depreciation as a result of foreign exch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) wherein this issue has been set aside to the file of the A.O for examining and verifying the details of lumpsum consideration paid by erstwhile amalgamating company for acquiring know how. For the detailed discussions given in the aforesaid order, for the year under consideration as well, we restore this issue to the file of the A.O who shall examine and verify the details of lump sum consideration paid by the amalgamating company for acquiring know how in earlier years and shall ascertain the amount of deduction u/s 35AB of the Act allowable in the remaining years. The A.O shall provide reasonable opportunity to the assessee while quantifying the amount available to the assessee u/s 35AB on pro rata basis and while ascertaining the number of remaining years for which the amount is continued to be deducted to the present assessee. We order accordingly. 10. Ground no. 10 is with regards foreign travel expenses of ₹ 2,15,865/-. The A.O found that an amount of ₹ 2,15,865/- had been incurred on the traveling expenses of Mrs. Arti Kirloskar and Mrs. N.S. Chitnis wives of senior executives of the company. Since the explanation furnished by the assessee was not found sati ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t pressed. ITA No. 82/PN/2001 (department s appeal) 16. The only ground raised by the revenue in this appeal reads as under: In the facts and circumstances of the case he learned CIT(A) has erred in holding that special capital incentive amounting to ₹ 20,00,000/- received by M/s. Prashant Khosla Pneumatics Ltd. From Government of Maharashtra (through SICOM) was a capital receipt in the hands of the assessee 17. The A.O observed that the assessee had received ₹ 20 lakhs as special capital incentive from SICOM. In response to the question raised by the A.O as to why this amount should not be treated as revenue expenditure, the assessee explained that M/s. Prashant Khosla Pneumatics Ltd., is a registered company. Under the various incentive packages offered by the Government of Maharashtra for setting up new industries in the State, the company applied for special capital incentive from the SICOM. Accordingly SICOM sanctioned a loan of ₹ 20 lakhs in 1992. Since the actual disbursement of the loan was to take place from receipt of funds from the Govt. of Maharashtra, Prashant Khosla Pneumatics Ltd. Took a bridge loan of ₹ 15 lakhs from SICOM. C ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
