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TMI Blog1978 (12) TMI 90X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer for computation of capital gains or loss. The assessee's contention is that when the company went into voluntary liquidation, the assessee's rights in the shares held by it in the company became extinguished and the value of the shares amounting to Rs. 1,36,000 was reduced to 'nil' and the capital loss should be computed under s. 45 and set off against capital gains arising out of sale of shares by the assessee in M/s Omega Industrial Insulation Cables (India) Ltd. 2. The important rights which the assessee had in the shares held by it in the company are (a) The dominion which the assessee had over the shares itself. (b) The right to receive dividends. (c) The right to vote. (c) The right to participate in the distributio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of right in the capital asset. There is no element of consideration received or accrued to the assessee for the extinguishment of the right to receive dividends." 4. The learned Judicial Member held " When a company is liquidated, obviously, there is no question of declaration of dividend because, no business will be carried on and no profits will be earned. Likewise, there is no question of voting at the meeting of members for the purpose of carrying on the administration of the company. It is true that after liquidation also a shareholder will be entitled to participate and perhaps vote at the meetings convened by the liquidator, but that will be only relating to the affairs arising out of liquidation. On the facts and circumstances ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the managing agency or for any other purpose, is one and the same and the apportionment of the cost of acquisition by bifurcating the various bundle of rights in a share like the right to receive dividends, the right to secure the managing agency, etc., is not warranted. 7. The learned departmental representative contended that so long as the company was not dissolved, there is no extinguishment of any right in the shares held by the assessee in the company and there is no bar under law for the shareholders to deal with the shares in any manner they like as the liquidation proceedings are not complete, the High Court can set aside the liquidation on coming to know that there are other assets and the possibility of declaring dividends is n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eting or the liquidator may sanction(vide s.491 of the Companies Act). s. 512(1)(a) provides that in the case of members' voluntary winding up, the liquidator may, with the sanction of the company by special resolution carry on the business of company so far as may be necessary for the beneficial winding up. So, the rights of the shareholders are not extinguished when the company, that has gone for voluntary liquidation, has not been dissolved. Since no rights of the assessee in the shares held by it in the company are extinguished, there is no transfer within the meaning of s.45. 9. The Gujarat High Court in CIT vs. R.M. Amin (1) has held: "The transfer that is contemplated by s.45 read with s.2 (47) is, therefore, a transfer as a resu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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