9911796707
TMI Blog2023 (2) TMI 564X X X X Extracts X X X X X X X X Extracts X X X X ..... e narrating facts of the case submits that the assessee / appellant had made investment of Rs.309,25,64,760/- in equity shares of Teleperformance Global Services Pvt. Ltd. (formerly known as Intelnet Global Services Pvt. Ltd) ( in short 'TGSPL'). During the period relevant to the assessment year under appeal, TGSPL carried out capital reduction. The scheme of reduction of share capital and share premium of TGSPL was approved by Hon'ble Bombay High Court vide order dated 01/07/2016. The copy of the order approving the scheme is at page 200 to 212 of the paper book. In the light of said capital reduction the assessee had written off investments costing Rs.309,24,63,225/- in the books of account as capital reduction by TGSPL. The said writ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onvertible Debentures(FCDs) to Serco Netherlands BV in December, 2008 amounting to Rs.848,23,00,000/- i.e. 84,82,300 FCDs having face value of Rs.100/- each and Serco International SARL in November 2011 amounting to Rs.1918,23,32,920/- i.e. 191,82,33,292 FCDs having face value of Rs.10/- each. After reduction in share capital, TGSPL converted FCDs held by Serco International SARL into 7,09,45,945/- equity shares of Rs.10/- each, having a Fair Market Value(FMV) of Rs.148/- per share. The Assessing Officer applying FMV of the shares on the share written off by the assessee in TGSPL made addition of Rs.496,25,40,000/- . The Assessing Officer has erred in coming to the conclusion that reduction in share capital by TGSPL of the shares allotted t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t would apply on the facts, it would be imperative to first examine the provisions of section. For the sake of completeness the relevant provisions are reproduced herein below: Section 60: "All income arising to any person by virtue of a transfer whether revocable or not and whether effected before or after the commencement of this Act shall, where there is no transfer of the assets from which the income arises, be chargeable to income-tax as the income of the transferor and shall be included in his total income." Provisions of section 60 are contained in Chapter-V of the Act, which deals with "Income of other persons, included in assessee's total income." A bare perusal of section 60 would show that the section will come into operat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e fail to comprehend as to how said reduction in share capital and share premium results in transfer of profit by the assessee to Serco International SARL, to whom equity shares have been allotted after conversion of fully convertible Debentures. As is evident from records, FCDs were issued by TGSPL to Serco International SARL much prior to reduction in share capital. Since, there is no generation of income there can be no question of transfer of income to any other person. The Assessing Officer and the CIT(A) have erred in invoking the provisions of section 60 of the Act for making addition of Rs.496,25,40,000/-. Consequently, the impugned order is liable to be set aside on this ground alone. We hold and direct accordingly. Ground No.3 of ..... X X X X Extracts X X X X X X X X Extracts X X X X
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