TMI Blog2021 (10) TMI 114X X X X Extracts X X X X X X X X Extracts X X X X ..... Assessee by : Sh. V.K. Jain, CA Revenue by : Ms. Nidhi Srivastava, CIT-DR ORDER PER KUL BHARAT, JM This appeal filed by the assessee is directed against the order dated 31.03.2016 of the learned CIT(A), New Delhi, relating to Assessment Year 2009-10. The assessee has raised following grounds of appeal:- 1). That, the order of the Ld. Commissioner of Income Tax - (Appeals) - 2, New Delhi is bad in law, wrong on the facts and against the principles of natural justice. 2). That on the facts and in the circumstances of the case, the Ld. CIT-(A) erred in confirming the disallowances in the impugned assessment order framed u/s 153C of the act on the issues which has no nexus with the alleged material unearthed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction. 2. At the time of hearing, the learned counsel for the assessee submitted that he does not wish to press ground no.2. Therefore, the ground no. 2 of the assessee s appeal is dismissed as not pressed. 3. Ground no. 1 is general in nature needs no separate adjudication. 4. The only effective ground no. 3 to 3.3 is against confirming disallowance of Short Term Capital Loss on forfeiture of convertible share warrants amounting to ₹ 4,18,50,000/-. 5. The facts giving rise to this ground are that a search and seizure operation u/s 132 of the Income Tax Act, 1961 (hereinafter the Act ) was conducted at the Monnet Group including the assessee. During the course of search, certain documents belonging to the assessee was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on the forfeiture of convertible share warrants amounting to ₹ 4,18,50,000/- was disallowed. The Ld. A.O. in the assessment order u/s 153C/143(3) of the Act, dated 28/3/2013 while disallowing the loss on forfeiture of share warrant had stated as under at para 5(2)(iv):- ..v In view of the above facts, it is clear that forfeiture of share warrant is not genuine and bonafide transaction. It is a colorable transaction entered with a malafide motive to evade tax which creates a Loss in one company without getting it taxed in another group company. It will be pertinent to mentioned here that addition on this issue has already been confirmed by the Ld. CIT-(A) in the same proup company namely, M/s Pavitra Commercials Ltd for the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s nothing but a share in the ownership of the company. While the right of the assesse to share in the ownership of the company BLB Ltd. Stands extinguished on account of the forfeiture, the company, with all its assets, continue to exist. The forfeiture only results in one less shareholder. It is not as if the asset in which a share was being claimed was also extinguished. Thus, the second point urged by the Ld. counsel for the Revenue is also not tenable. In view of the foregoing reasons no substantial question of law arises for our consideration. The appeal is dismissed. 7.4 Respectfully following the judgement of the Jurisdictional High Court, we allow the claim of the assesse. Ground no. 2(e) is allowed Photocopy of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Hon ble Delhi High Court. The learned counsel took us through the relevant finding of the Tribunal as enclosed with the written synopsis. Further, the learned counsel for the assessee also took us through the judgment of the Hon ble Delhi High Court dated 14/10/2015 in ITA No.782/2015 in Pr. CIT vs M/s Pavitra Commercials Ltd. 9. On the contrary, the Ld. DR supported the orders of the authorities below and submitted that the Assessing Officer in the assessment order at para 5D has recorded that the payment of 10% amount towards share warrant cannot be treated as creating a substantial right in the share when the major amount is yet to be paid. At the best it can be treated as advance towards acquisition of shares which are subject ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ls P.Ltd. (1991) 191 ITR 647 has been over ruled by the larger Bench of the Supreme Court in the case of Mrs.Grace Collis (2001) 248 ITR 323. In the present case, we find that the forfeiture of the convertible warrant has resulted in extinguishment of the right of the assessee to obtain a share in BLB Ltd. It is not a case where the asset itself has been extinguished or destroyed. A share in a company is nothing but a share in the ownership of the company. While the right of the assessee to share in the ownership of the company BLB Ltd. Stands extinguished on account of the forfeiture, the company, with all its assets, continues to exist. The forfeiture only results in one less shareholder. It is not as if the asset in which a share w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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