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TMI Blog2017 (3) TMI 1384X X X X Extracts X X X X X X X X Extracts X X X X ..... ts effect in the hands of the assessee. Therefore, the tax treatment in the hands of ECL cannot be a deciding factor for the loss incurred and subsequently claimed by assessee. Therefore, the allegation framed by AO against the assessee is baseless and it was also seen that a notice was issued by the AO u/s 133(6) of the Act to ECL for the verification of loss incurred and claimed by assessee. The ECL in response thereto as clearly submitted that the original allottee was MDCPL but subsequently it was transferred to assessee. The copy of the letter is placed on page 6 and 7 of the paper book. Besides the above, ECL has duly recorded in its record the transfer of 50 lakh convertible warrants from MDCPL to assessee and the confirmation of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see in the present case is a Limited Company and is also a Non-Banking Financial Company registered with Reserve Bank of India. The assessee acquired 50 lakhs share warrant of Electrosteel Castings Limited (ECL for short) from M/s Diwakar Commercials (P) Ltd. (MDCPL for short) on 24.03.2008 at a price of ₹ 76/- per share warrant. The price of share warrant of ₹76/- was inclusive of premium i.e. ₹75/- per share warrant. The assessee at the time of purchase of shares warrant was required to make 10% of the total payment of the share warrant and the balance amount was to be paid at the time of conversion of share warrant into equity shares. Therefore, assessee at the time of purchase paid ₹ 7.60 per share warrant being ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubmission of the appellant and perused the assessment order. I have also gone through the documents filed by the appellant company. It is observed that M/s Electro Steel Castings Ltd. issued a warrant certificate to M/s Diwakar Commercials Pvt. Ltd. for fifty lakh warrants on 19.01.2008. The said warrants were purchased by the appellant company from M/s Diwakar Commercials Pvt. Ltd. and on 24.03.2008 the appellant company lodged the warrants with Elecro Steel Castings Ltd., for transfer of the same in the name of appellant company. As per the evidence submitted by the appellant company, M/s Electro Steel Castings Ltd., transferred the warrants in the name of appellant company on 24.03.2008 itself. However, surprising, M/s Electro Steel Cast ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of ₹ 3.80 crore claimed by the appellant company did not appear to be a genuine loss. Hence, the action of the appellant company did not appear to be a genuine loss. Hence, the action of the AO making disallowance of loss claimed by the appellant company as well as denying of carry forward of loss is upheld. The Ground no. 1 2 are dismissed. Being aggrieved by this, assessee came in second appeal before us on the following grounds:- 1. THAT, THE LD. C.I.T.(A)-II, KOLKATA WAS NOT JUSTIFIED IN CONFIRMING THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS OF ₹ 3,80,00,000/- ON FORFEITURE OF SHAREWARRANTS. 2. THAT, THE LD. CIT(A),C-II, KOLKATA WAS NOT JUSTIFIED IN NOT ALLOWING CHARRY FORWARD OF SHORT TERM CAPITAL LOSS O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tinent to note that what will be the tax treatment of the forfeited amount in the hands of ECL is not the concern of the AO whether it is taxable receipt or revenue receipt. The AO has to see the transactions and its effect in the hands of the assessee. Therefore, in our considered view, the tax treatment in the hands of ECL cannot be a deciding factor for the loss incurred and subsequently claimed by assessee. Therefore, the allegation framed by AO against the assessee is baseless and it was also seen that a notice was issued by the AO u/s 133(6) of the Act to ECL for the verification of loss incurred and claimed by assessee. The ECL in response thereto as clearly submitted that the original allottee was MDCPL but subsequently it was trans ..... X X X X Extracts X X X X X X X X Extracts X X X X
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