9911796707
TMI Blog1969 (5) TMI 18X X X X Extracts X X X X X X X X Extracts X X X X ..... nufactured by Orient Paper Mills, Ltd. For the assessment year 1957-58 (the accounting year being the financial year ending on the 31st March, 1957), the assessee claimed deduction of a sum of Rs. 1,07,125 as business loss. This loss was due to purchases and sales of what are called renunciation letters. In March, 1957, the Indian Iron & Steel Co. Ltd. decided to issue 51,83,708 ordinary shares an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... essee purchased renunciation letters giving the right to allotment of 75,000 shares for a total sum of Rs. 5,04,296. Subsequently, the assessee sold these letters of renunciation for a total price of Rs. 3,97,171, suffering a loss of Rs. 1,07,125. The assessee admitted that it never had any intention of applying for the shares as per letters of renunciation, and merely dealt in those letters. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nunciation were neither "commodity" nor "scrip" but were more or less akin to pucca delivery orders used in the jute trade which were neither "goods" nor "commodity". The Appellate Assistant Commissioner sustained the Income-tax Officer's order. The Tribunal, following an earlier judgment, held that letters of renunciation were themselves a "commodity" in the nature of share scrips and were regula ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... us that a sale of letters of renunciation means a sale of shares which is not completed by actual delivery. But we are unable to accept this contention. Letters of renunciation are executed when a shareholder renounces his right to apply for shares in favour of some other person. They can be sold and traded in the stock exchange (see Palmer's Company Law, 21st edition, pages 146 and 673). They co ..... X X X X Extracts X X X X X X X X Extracts X X X X
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