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Computation of capital gain of transfer of shares. Analysis: The appeals revolve around the computation of capital gain arising from the transfer of shares held by the assessee. The dispute arose between two groups, namely T.N.K. Group and P.S.R. Group, regarding the management and control of two public limited companies. An arbitration award was issued, directing the transfer of equity shares between the groups at specified values. Subsequently, an agreement was reached between the groups, leading to the transfer of shares between the parties. The assessee belonging to the P.S.R. Group transferred shares of one company and received shares of the other company in return. The Assessing Officer determined the market value of the transferred shares on a yield basis, while the CIT(A) arrived at the fair market value of the shares at a different amount. The dispute centered around the deduction for the cost of shares transferred in the computation of capital gain. The assessee contended that the exchange of shares was part of a family settlement and hence not chargeable to tax. However, the Departmental Representative argued that the cost of shares acquired after the transfer should not be deducted as it does not represent the cost incurred by the assessee in connection with the transfer. The tribunal observed that the transaction being a family arrangement was not raised as a ground of appeal and thus did not delve into the taxability aspect on that basis. It was established that the capital gain was chargeable due to the transfer of shares. The full value of consideration received as a result of the transfer was undisputed. The tribunal upheld the decision of the CIT(A) that the fair market value of shares received in exchange should not be considered as the cost of shares transferred. The cost of acquisition of the asset transferred should be based on the value appearing in the balance sheet. Regarding the charging of interest under sections 234A and 234B, the tribunal found the assessee liable for the delay in filing the return of income and upheld the validity of charging interest under the said sections. Consequently, both appeals were dismissed based on the above analysis.
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