TMI Blog1999 (4) TMI 32X X X X Extracts X X X X X X X X Extracts X X X X ..... Best and Co. (Pondicherry) Private Limited, is to be excluded from the computation of long-term capital gains on the ground that part of the consideration does not represent the value of the shares sold but constitutes the consideration, for the sale of right to control the company with the aid of the shares sold. The shares held in these two companies by one or the other of these assessees who are all members of the family of one C. R. Rajendran were agreed to be sold by them and others with the said Rajendran acting on their behalf to one Ganesh Narayan Jattiya under an agreement dated July 6, 1981. By that agreement, the shares held by the vendors in Anglo French Textile Limited were agreed to be sold at the rate of Rs. 601 per share a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or their shares was very much above the prevailing market price for those shares, and the difference between the market price then prevailing and the amounts actually received could not properly be regarded as part of the price for the shares that were sold, as had those shares been sold in the open market, the shares would have fetched only the market price then prevailing and no more. The amount received by the assessees in excess of the market price, it was contended by counsel, represented the consideration for the transfer of the conrolling interest for which there was no cost of acquisition and that amount there fore could not be subjected to levy of tax. Learned counsel relied upon the decision of the Patna High Court in the case o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... istence. Similar view was taken by the Madhya Pradesh High Court in the case of Smt. Maharani Ushadevi v. CIT [1981] 131 ITR 445, wherein also it was pointed out that the controlling interest in a company is an incident arising from holding of a particular number of shares in the company and that such controlling interest cannot be transferred without transferring shares. It is by reason of control over the shares, that the person controlling those shares is enabled to exercise control over the management. It is when he is in a position to control the management, that the interest held by him in the company is generally referred to as controlling interest. Without control over the shares there can be no question of any controlling interes ..... X X X X Extracts X X X X X X X X Extracts X X X X
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