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TMI Blog2023 (2) TMI 175X X X X Extracts X X X X X X X X Extracts X X X X ..... d to consider the following questions of law: "1. Whether the learned Income Tax Appellate Tribunal was justified in holding that the Respondent- Assessee cannot be subjected to capital gains tax relevant to A.Y. 2008-09 even though under the Memorandum of Understanding between the Transferors Shareholders the Assessees dated 16.06.2007 with purchasers and the substantial part of consideration of Rs.40,00,00,000/- [Rupees Forty Crores] was also paid by the purchasers to the Assessees/Transferors in the Financial Year relevant to A.Y.2008-09, even though the shares also be transferred to the purchasers finally only in the year 2013 i.e., 02.04.2013 which transfer was registered by the Registrar of Companies on 04.02.2013? 2. Whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceived by her and held that she was also liable to pay Long Term Capital gains. Feeling aggrieved, assessees challenged AO's orders before CIT(A) and the same stood dismissed. On further appeal, the ITAT, by the impugned order has held that the Share Certificates were not delivered to the transferee during the previous year relevant to assessment year namely 2007-08. Hence, these appeals. 6. Shri. K. V. Aravind, learned Senior Standing Counsel for the Revenue submitted that: * admittedly, the assessees had received a sum of Rs.35 Crores (Rs.17.5 Crores each) before 16.10.2007; * letter dated 13.06.2007 was addressed to the KIADB [Karnataka Industrial Area Development Board] stating that the Board of Directors had decided to relinq ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y the ITAT, no interference is called for. 9. We have carefully considered rival contentions and perused the records. 10. The AO's view is, assessees are liable to pay Capital gains tax for A.Y. 2007-08. The law on the point with regard to the transfer of shares in this case, is governed by Section 108 of Companies Act, 1956 which reads as follows: "108. TRANSFER NOT BE REGISTERED EXCEPT ON PRODUCTION OF INSTRUMENT OF TRANSFER (1) A company shall not register a transfer of shares in, or debentures of, the company, unless a proper instrument of transfer duly stamped and executed by or on behalf of the transferor and by or on behalf of the transferee and specifying the name, address and occupation, if any, of the transferee, has be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies Act 1913 enables the making of "an application for the registration of the transfer of shares in a company ... either by the transferor or the transferee". A share certificate is a prima facie evidence, under Section 29 of the Act, of the title to a share. Section 34 of the Act does not really prescribe the mode of transfer but lays down the provisions for "registration" of a transfer. In other words, it presupposes that a transfer has already taken place. The manner of transfer of shares, for the purposes of Company law, has to be provided, as indicated by Section 28, by the articles of the Company, and, in the absence of such specific provisions on the subject, regulations contained in Table 'A' of the 1st Schedule of the Companies Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1. The Parties of the First Part shall transfer the shares and the parties of the Second Part shall purchase the shares in the company namely M/s.Shailendra Techno Park(P) Ltd., held by the parties of the First Part free and clear of the encumbrances upon the terms mutually agreed to in accordance with the terms and conditions of the MOU dt.16.6.2007. 2. The aggregate consideration for the purchase of all the equity shares held by the Party of the First Part for a sum of Rs.37,50,00,000/- (Rupees Thirty Seven Crores Fifty Lakhs only). 3. The First Party of the Second Part - Purchaser had made payment of Rs.35,00,00,000/- to the parties of the First Part as provided herein below. Sl.No Date. Cheque/DD No Amount 1. 08.06.2007 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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