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TMI Blog2021 (7) TMI 759X X X X Extracts X X X X X X X X Extracts X X X X ..... The loss incurred by the assessee on the said transaction is a bonafide loss and deserves to be allowed as such claimed by the assessee. - Decided in favour of assessee. - ITA No.5443/Del/2017 (Assessment Year: 2014-15) - - - Dated:- 17-6-2021 - SH. N. K. BILLAIYA, ACCOUNTANT MEMBER AND SH.AMIT SHUKLA, JUDICIAL MEMBER Appellant by Sh. C. S. Aggarwal, Advocate And Sh. R. P. Mall, Advocate Respondent by Sh. Prakash Dubey, Sr. DR. ORDER PER N. K. BILLAIYA, AM: This appeal by the assessee is preferred against the order of the CIT(A)-30, New Delhi dated 19.06.2017 pertaining to A.Y. 2014-15. 2. The grievance of the assessee read as under :- 1. That the learned CIT (A) has erred both on facts and in law in upholding the order of assessment. He has further erred in holding the loss suffered by the assessee of ₹ 2,20,43,350/- cannot be held either as long term capital loss or even business loss. 2. That the learned CIT (A) having not disputed that the assessee had been allotted shares by M/s Gurgoan Recreation Park Limited and held 32,68,620 shares since 31.03.2008, out of which only 1288438 shares had been transferred by it, there rema ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... /- 3. 19.01.2007 2,20,00,000/- 4. 05.11.2007 70,00,000/- 5. 24.12.2007 1,00,00,000/- 6. 20.04.2012 35,00,000/- 7. 01.04.2013 100/- 8. Total 7,75,00,1007/- Share allotment Date No. of Shares Share Price 01.04.2002 10 100.00 08.12.2002 24,960 2,49,600.00 01.04.2007 4,75,000 47,50,000.00 12.06.2007 27,68,650 2,76,86,500.00 27.02.2008 3,58,390 25,83,900.00 27.05.2013 41,23,000 4,12,30,000.00 77,50,010 7,75,00,100.00 8. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... perty. According to the authorities below the allotment of such shares to the assessee and M/s. Unitech Holdings Limited was void ab initio. 14. The observation of the AO that M/s. GRPL could have issue extra shares to correct the error in allotment and make the holding of HSIDC 15% then the question of any loss to the assessee would not have arisen does not have any legs to stand. 15. We are of the considered view that assessment could not be made on surmises and conjectures and have to be based on the facts of the case under consideration. 16. There is not dispute that the assessee was owner of the shares on the date of transfer by it. It is also not in dispute that the assessee had held the investment for more than 12 months. It is not the case of the revenue that the entire purchase and sale of shares transaction is a sham transaction. 17. The act itself u/s. 47 has specifically provided the transactions which are not regarded as transfer. The provisions read as under :- 47. Nothing contained m section 45 shall apply to the following transfers : - (i) any distribution of capital assets on the total or partial partition of a Hindu undivided family; (ii) [* ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction (15) of section 45 of the Banking Regulation Act, 1949 (10 of 1949); (viab) any transfer, in a scheme of amalgamation, of a capital asset, being a share of a foreign company, referred to in the Explanation 5 to clause (i) of sub-section (1) of section 9, which derives, directly or indirectly, its value substantially from the share or shares of an Indian company, held by the amalgamating foreign company to the amalgamated foreign company, if- (A) at least twenty-five per cent of the shareholders of the amalgamating foreign company continue to remain shareholders of the amalgamated foreign company; and (B) such transfer does not attract tax on capital gams m the country in which the amalgamating company is incorporated: (vib) any transfer, in a demerger, of a capital asset by the demerged company to the resulting company, if the resulting company is an Indian company; (vic) any transfer in a demerger, of a capital asset, being a share or shales held in an Indian company, by the demerged foreign company to the resulting foreign company, if- (a) the shareholders holding not less than three-fourths m value of the shares of the demerged foreign company continue to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n consideration of the allotment to him of any share or shares in the amalgamated company except where the shareholder itself is the amalgamated company, and (b) the amalgamated company is an Indian company: viia) any transfer of a capital asset, being bonds or Global Depository Receipts referred to in sub-section (1) of section 115AC , made outside India by a non- resident to another non-resident; viiaa) any transfer, made outside India, of a capital asset being rupee denominated bond of an Indian company issued outside India, by a non-resident to another non-resident; viiab) any transfer of a capital asset, being - (a) bond or Global Depository Receipt referred to in sub-section (l) of section 115AC ; or (b) rupee denominated bond of an Indian company; or 27 [(c) derivative; or (d) such other securities as may be notified by the Central Government in this behalf,] made by a non-resident on a recognised stock exchange located in any International Financial Services Centre and where the consideration for such transaction is paid or payable in foreign currency. Explanation.-For the purposes of this clause, - (a) International Financial Services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which the share or unit or interest was held by such shareholder or unit holder or interest holder in such original fund, in lieu of their shares or units or interests in the original fund; or (ii) the original fund, in the same proportion as referred to in sub- clause (i), in respect of which the share or unit or interest is not issued by resultant fund to its shareholder or unit holder or interest holder; (c) resultant fund means a fund established or incorporated in India in the form of a trust or a company or a limited liability partnership, which - (i) has been granted a certificate of registration as a Category I or Category II or Category III Alternative Investment Fund, and is regulated under the Securities and Exchange Board of India (Alternative Investment Fund) Regulations, 2012 made under the Securities and Exchange Board of India Act, 1992 (15 of 1992) or International Financial Services Centre Authority Act, 2019 (59 of 2019); and (ii) is located in any International Financial Services Centre as referred to in sub-section (1A) of section 80LA; (viiae) any transfer of capital asset by India Infrastructure Finance Company Limited to an institution est ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on or before the 31st day of December, 1998 by a person (not being a company) of a capital asset being membership of a recognised stock exchange to a company m exchange of shares allotted by that company to the transferor. Explanation. -For the purposes of this clause, the expression membership of a recognised stock exchange means the membership of a stock exchange in India which is recognised under the provisions of the Securities Contracts (Regulation) Act, 1956 (42 of 1956); (xii) any transfer of a capital asset, being land of a sick industrial company, made under a scheme prepared and sanctioned under section 18 of the Sick Industrial Companies (Special Provisions) Act, 1985 (1 of 1986) where such sick industrial company is being managed by its workers' co-operative: Provided that such transfer is made during the period commencing from the previous year in which the said company has become a sick industrial company under sub-section (1) of section 17 of that Act and ending with the previous year during which the entire net worth of such company becomes equal to or exceeds the accumulated losses. Explanation.-For the purposes of this clause, net worth shal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter m this clause referred to as the company) to a limited liability partnership or any transfer of a share or shares held in the company by a shareholder as a result of conversion of the company into a limited liability partnership in accordance with the provisions of section 56 or section 57 of the Limited Liability Partnership Act, 2008 (6 of 2009): Provided that- (a) all the assets and liabilities of the company Immediately before the conve13ion become the assets and liabilities of the limited liability partnership; (b) all the shareholders of the company immediately before the conversion become the partners of the limited liability partnership and their capital contribution and profit sharing ratio in the limited liability partnership are in the same proportion as their shareholding in the company on the date of conversion; (c) the shareholders of the company do not receive any consideration or benefit, directly or indirectly, in any form or manner, other than by way of share in profit and capital contribution in the limited liability partnership; (d) the aggregate of the profit sharing ratio of the shareholders of the company in the limited liability partners ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capital asset in a transaction of reverse mortgage under a scheme made and notified by the Central Government; (xvii) any transfer of a capital asset, being share of a special purpose vehicle to a business trust in exchange of units allotted by that trust to the transferor. Explanation.-For the purposes of this clause, the expression special purpose vehicle shall have the meaning assigned to it in the Explanation to clause (23FC) of section 10 ; (xviii) any transfer by a unlit holder of a capital asset, being a unit or units, held by him in the consolidating scheme of a mutual fund, made in consideration of the scheme of the mutual fund: Provided that the consolidation is of two or more schemes of equity oriented fund or of two or more schemes of a fund other than equity oriented fund Explanation.-For the purposes of this clause, (a) consolidated scheme means the scheme with which the consolidating scheme merges or which is formed as a result of such merger; (b) consolidating scheme means the scheme of a mutual fund which merges under the process of consolidation of the schemes of mutual fund in accordance with the Securities and Exchange Board of Ind ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ies 59,69,92,083 PE= Total amount of paid up capital 18,65,00,000 PV= Paid Up value of shares 10 Formula (A-L) ---------------- * (PV) (PE) Thus, value of shares issued works out as under:- [213,51,04,932 (-) 244,60,77,552] --------------------------------------------- *10 18,65,00,000 (-) 31,09,72,620 ------------------------ *10 = (-) 16.67 18,65,00,000 Sir, as against a negative value of the shares at ₹ 16.67, the appellant company has charged ₹ 0.01 per share from HSIIDC. It is thus submitted, the appellant has, in fact, recovered a portion of loss occurred by transferring these shares at ₹ 0.01 per share. 20. Considering the facts in totality that the assessee did purchase the shares from M/s. GRPL and have actually sold the shares and the s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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