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TMI Blog2019 (12) TMI 981X X X X Extracts X X X X X X X X Extracts X X X X ..... in this appeal are as under:- 1. The order passed by the learned Commissioner of Income Tax (Appeals) ['CIT(A)'] - 12, is bad in law. Transaction of buyback of shares is covered under section 47(iv) of the Act 2. The learned CIT(A) has erred in law to conclude that section 46A of the Act is a charging provision for gains arising from buy-back of shares and would prevail over the general provision of section 45 of the Act for taxation of capital gains arising on transfer of capital asset. 3. The learned CIT(A) ought to have appreciated that the definition of income under section 2(24) of the Act includes gains chargeable under section 45 of the Act and therefore erred in law to conclude that gains arising on buy-back of shares is taxable under section 46A of the Act and not under section 45 of the Act which is the charging section to bring capital gains to tax under the Act. 4. The learned CIT(A) has erred in law by concluding that section 47 of the Act is limited in its application only to section 45 of the Act and does not apply to buy-back of shares to which provisions of section 46A of the Act also applies. 5. The learned CIT(A) has erred in law by providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... section 46A is applicable in the present case which is regarding capital gain on purchase by company of its own shares or other specified securities. In this regard, he submitted that section 46A is not a charging section and charging section is section 45 and therefore section 47(iv) is applicable in the present case. He placed reliance on the judgment of Hon'ble Bombay High Court rendered in the case of Cadell Wvg. Mill Co. (P.) Ltd., Vs. CIT as reported in 116 Taxmann 77 (Bom). He filed a copy of this judgment and pointed out that para 11 of this judgment is relevant. As against this, learned DR for the Revenue supported the order of CIT(A). He submitted that section 46A is a charging section and, in this regard, he placed reliance on the Tribunal order rendered in the case of Goldman Sachs (India) Securities (P.) Ltd., Vs. ITO (International Taxation) as reported in 70 taxmann.com 46 (Mumbai - Trib.). He submitted a copy of this Tribunal order. He also submitted that otherwise also, section 47(iv) is not applicable because as per this section, the parent company or its nominees should hold the whole of the share capital of the subsidiary company whereas in the present case, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... le of the shares should be held by the parent company or its nominees. Hence, even if there are two or more shareholders and the other shareholder is different than the parent company then also requirement of this section can be complied with if other shareholder/s is/are a nominee/s of the parent company. This is not the case in the present case that the other shareholder i.e., M/s. Acciona Energia SA, Spain is a nominee of the parent company M/s. Acciona Energia International S.A, Spain. The judgment cited by learned AR of the assessee having been rendered in the case of CIT Vs. Papilion Investments (P.) Ltd., (supra) is not applicable. Moreover, in that case, 2 shares out of shares issued and subscribed were held by assessee company with a person, who was Director of the assessee company and this was the only objection in that case that entire shares were not held by the parent company in its own name and hence, it appears that in that case, the requirement of section 47(iv) was being satisfied because the remaining shares were held jointly by the assessee company along with its Director. 6. We have seen that section 47(iv) of the Act is not applicable in the present case for t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 48, the difference between the acquisition and the value of consideration received by the shareholder shall be deemed to be capital gains arising to such shareholder. Hence, in our considered opinion, sections 45 and 46A operates in a different field. Section 45 of the Act is applicable regarding transfer of a capital asset whereas section 46A is applicable in respect of receipt of consideration from any company for purchase of its own shares. Since there is no requirement in section 46A of the Act that there has to be a transfer of shares, section 47(iv) of the Act is not applicable in connection with the issue covered by section 46A of the Act and hence, there is no merit in the argument that because of section 47(iv) of the Act, the capital gain in the present case is not chargeable to tax. Now we deal with the applicability of the judgment of the Hon'ble Bombay High Court rendered in the case of Cadell Wvg. Mill Co. (P.) Ltd., Vs. CIT (supra) on which reliance has been placed by the learned AR of the assessee. In our considered opinion, this judgment is not applicable in the present case because in that case, the issue in dispute was as to whether the amount of Rs. 1.40 Crore ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of acquisition and the value of consideration received by the holder of specified securities or by the shareholder, as the case may be deemed to be the capital gains. Such capital gains will be charged to tax in the year in which such shares or other specified securities were purchased by the company. 9. As per the tribunal order cited by the learned DR of the revenue, section 46A of I T Act was considered and it was held that for the consideration received by a shareholder on buy back of shares by the company concerned, capital gain tax is payable and such receipt of shareholder is not a deemed dividend. This judgment is an authority regarding applicability of section 46A in respect of receipt by shareholder on account of buy back of shares from the concerned company but there was no argument or decision about applicability of section 47 (iv) of I T Act. We have already noted and decided that section 47 (iv) is not applicable in the present case for two reasons. First reason given by us is this that in the present case, the assessee is not holding whole of the shares of the subsidiary company by itself or along with its nominee or nominees as required by section 47 (iv) of I. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of a capital asset by a company to its subsidiary company if the parent company or its nominees hold the whole of the share capital of the subsidiary company. We have noted above that section 45 and section 46A operate in different fields. Section 45 covers actual capital gain on transfer of a capital asset but section 46A is about Deemed Capital gains on buy back of shares. 11. In view of the above discussion, we hold that in the facts of the present case, section 46A is applicable and therefore, we find no reason to interfere in the order of the CIT(A). 12. In the result, the appeal of the assessee in ITA No.1783/Bang/2018 is dismissed. 13. Now we take up the second appeal in ITA No.1784/Bang/2018. In this appeal, the issue in dispute is regarding chargeability of interest under section 201(1A) of the Act. It is now a settled position of law that interest under section 201(1A) of the Act is mandatory and therefore, on this issue also, we find no reason to interfere in the order of the learned CIT(A). 14. In the result, the appeal of the assessee in ITA No.1784/Bang/2018 is also dismissed. 15. In the combine result, both the appeals of the assessee are dismissed. P ..... 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