9911796707
TMI Blog1998 (7) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... 5. The difference between the amount and the cost of acquisition of those shares was assessed as short-term capital gains by the Income Tax Officer. The assessee claimed that no capital gain is involved as it was a case of amalgamation. The claim so made was rejected by the Income Tax Officer. Aggrieved by that order, the assessee preferred appeal before the Appellate Assistant Commissioner, who allowed the appeal. The Appellate Assistant Commissioner found that the transaction in the assessee's case did not fall within any limbs of section 2(47) of the Income Tax Act and the transaction did not involve transfer or sale or exchange or relinquishment. On appeal to the Tribunal, the Tribunal set aside the order of the Appellate Assistant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny transfer by a shareholder, in a scheme of amalgamation of a capital asset being a share or shares held by him in the amalgamating company, if- the transfer is made in consideration of the allotment to him of any share or shares in the amalgamated company; and the amalgamated company is an Indian company; Counsel for the revenue further pointed out that the transaction of the assessee amounts to transfer in terms of section 2(47) of the Act. Section 2(47) of the Act reads as follows: transfer , in relation to a capital asset, includes, the sale, exchange or relinquishment of the asset; or the extinguishment of any rights therein., or the compulsory acquisition thereof under any law; ....... 4. Counsel for the ass ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the preference shares. Section 87(2)(c) of the Companies Act, inter alia, provides that where the holder of any preference share has a right to vote on any resolution in accordance with the provisions of this subsection, his voting right on a poll, as the holder of such share, shall, subject to the provisions of section 89 and sub-section (2) of section 92 be in the same proportion as the capital paid up in respect of the preference share bears to the total paid-up equity capital of the company . Hence, when as a result of the reducing of the face value of the share, the share capital is reduced, the right of the preference shareholder to the dividend on his share capital and the right to share in the distribution of the net assets upon li ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ace value of ₹ 50 only. This reduction had taken place in two stages, firstly, when the face value was reduced from ₹ 1,000 to ₹ 500 per share and, secondly, when the face value was reduced from ₹ 500 per share and, secondly, when the face value was reduced from ₹ 500 per share to ₹ 50 per share. The appellant had originally purchased the preference shares of the face value of ₹ 1,000 per share at a price of ₹ 420 per share. At the time of the first reduction, he got back ₹ 500 per share in cash. At the time of the second reduction, the appellant got a further sum of ₹ 450 per share in cash. The Income Tax Officer was of the opinion that a sum of ₹ 450 per share, which was re ..... X X X X Extracts X X X X X X X X Extracts X X X X
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