TMI Blog2007 (7) TMI 230X X X X Extracts X X X X X X X X Extracts X X X X ..... r the appellant. JUDGMENT The judgment of the court was delivered by P. D. DINAKARAN, J. - Whether the capital loss can be claimed in respect of transfer of rights issue in a case where the assessee sold its right to subscribe to partially convertible debentures is the substantial question of law raised by the Revenue for our consideration in this appeal preferred against the order of the Income-tax Appellate Tribunal in ITA No.1403/Mds/2001 dated 22.12.2006, under the following facts and circumstances of the case. 2. The relevant assessment year is 1994-95. The assessee filed its return of income on 30.11.94 showing 'Nil' income. The case was processed on 26.10.95 accepting the same. In response to the notice under Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the facts of the present case, as it is beyond any imagination that any asset in the form of right can have a negative value. However, he applied the judgment of the Apex Court to the extent of not computing any capital gain at all. 5. Aggrieved by the said order of the assessing officer dated 8.11.1996, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals), who, by order dated 18.9.2001, held that the market value of the rights issue has to be reckoned with regardless of whether the sale contribution of the rights is less than the notional loss or not. On appeal at the instance of the Revenue, the order of the Commissioner was confirmed by the Appellate Tribunal by order dated 22.12.2006 holding that the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessing officer held that since the assessee was holding the old shares as stock-in-trade, he is not entitled to claim loss under the head "Capital Gains", which, on appeal, was reversed by the Tribunal, held that the balance-sheet, profit and loss account and the computation tendered by the assessee before the Assessing Officer indicated that the old shares held as stock-in-trade were valued at cost and not at market price and thus, the Tribunal was right in allowing the loss. 8. In view of the decision of the Apex Court in Miss. Dhun Dadabhoy Kapadia v. Commissioner of Income-tax [(1967) 63 I.T.R. 651 (SC)] and the decision of the Bombay High Court in Commissioner of Income-tax v. Motichand Construction Co. Pvt. Ltd. [( ..... X X X X Extracts X X X X X X X X Extracts X X X X
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