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TMI Blog2014 (12) TMI 793X X X X Extracts X X X X X X X X Extracts X X X X ..... s not clear as to the correct figure regarding total shareholding and how much long term capital loss was claimed by the assessee in respect of sale of old shares held by the assessee and whether the same was allowed by the AO or not - The order of CIT (A) is without throwing any light on these aspects. The fresh shares should be considered as issued and thereafter sold on such market value per share of the old shares for raising same amount resulting in increase in number of shares issued because whatever loss is incurred by the company and consequently the shareholders, the same was incurred till this date and it cannot be said that further loss was incurred between 07.12.2007 to 15.12.2007 - the loss in the hands of the shareholder should also be in respect of old shares only held by him on 07.12.2007 - more shares were issued to garner enough funds for making repayment of preference shares along with the accumulated dividend and other liabilities - increased long term capital loss on sale of old shares should be allowed to the assessee as long term capital loss - CIT (A) should decide the issue in this manner - the purchase price paid by the assessee for acquiring new shares ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n in the case of Bharat Hari Singhania Vs. ACIT, ITAT (CAL) 58 ITD 189 and M/s Kerela Small Industrial Development Corporation Ltd. Vs. CIT (Kerla) 270 ITR 452 where the capital loss arising out of sales of shares under the same facts and circumstances were disallowed by the Hon'ble Court. 4. That the order of Ld. Commissioner of Income Tax (A) -I, Kanpur being erroneous in law and on the facts deserves to be vacated and that the order of Assessing Officer is restored. 5. The appellant craves leave to modify any of the grounds of the appeal given above and or add any fresh grounds as and when it is considered to do so. 3. Learned D.R. of the Revenue supported the assessment order. He also submitted that the company i.e. Shakumbari Sugar and Allied Industries Limited (SSAIL) was not a listed company. He further submitted that the shares of this company were purchased by the assessee @Rs.10/- per share on 07/12/2007 and these shares were sold after few days @Rs.3.15 per share. He submitted that the purchase price paid by the assessee is excessive and, therefore, the disallowance is justified u/s 40A(2A)(b) of the Act. He placed reliance on the followi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 is excessive because only after 8 days, these shares were sold by the assessee at ₹ 3.15 per share. The Assessing Officer did not find the explanation of the assessee satisfactory and consequently, he held that this transaction of purchase and sale of shares is bogus in respect of fresh 19 lacs shares purchased on 07/12/2007 for ₹ 190 lacs, which were sold on 15/12/2007 for a sale consideration of ₹ 59,84,119/- resulting in loss of ₹ 1,30,10,881/-. However, it seems that the Assessing Officer allowed the Long Term Capital Loss in respect of sale of old shares at the same price @Rs.3.15 per share but this is also not clear because of specific direction of the bench, the learned AR of the assessee has not furnished the copy of computation of income and this aspect is not discussed at all in the assessment order or in the order of learned CIT (A). It is noted by the Assessing Officer on page No. 3 of the assessment order that the total holding of the shares of SSAIL with the assessee as on 15/12/2007 (date of sale) was 10.10 lacs shares valuing ₹ 101 lac including 19 lacs shares acquired on 07/12/2007 for ₹ 190 lac. In our considered opinion, even ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are correct) before acquiring further shares of SSAIL, the market value of these shares should be worked out on the basis of net assets value of the company SSAIL on 07/12/2007 by dividing total net assets value on that date by total number of shares of that company before further issue of shares on that date. The fresh shares should be considered as issued and there after sold on such market value per share of the old shares for raising same amount resulting in increase in number of shares issued because whatever loss is incurred by the company and consequently the share holders, the same was incurred till this date and it cannot be said that further loss was incurred between 07.12.2007 to 15.12.2007. Hence, the loss in the hands of the share holder should also be in respect of old shares only held by him on 07.12.2007. It should be presumed that more shares were issued to garner enough funds for making repayment of preference shares along with the accumulated dividend and other liabilities. Thereafter, the sale of shares on 15/12/2007 should be presumed at the same price because the market value of the assets/shares of the company will remain same because increase in share capit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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