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TMI Blog2008 (2) TMI 386X X X X Extracts X X X X X X X X Extracts X X X X ..... he Income-tax Appellate Tribunal, Bangalore Bench "A" in the respondent's I. T. A. No. 454/ Bang/2002 for the assessment year 1998-99. The following substantial questions of law arise for consideration of this court, which are reproduced herein below: "1. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the loss on account of forfeiture of share application money of the assessee to the tune of Rs. 32,50,000 is a short-term capital loss for the assessment year 1998-99 ? 2. Whether, on the facts and circumstances of the case, the Tribunal was justified in holding that the forfeited share application money of the assessee to the tune of Rs. 32,50,000 claimed by the assessee as short-term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ited by the assessee earlier towards the share application money. It resulted the loss of Rs. 32,50,000 to the assessee on account of such forfeiture which was claimed by it as short-term capital loss in its return. The Assessing Officer, while framing the assessment had disallowed the same. The main reason for disallowance was that the allotment of shares were to be made only after receipt of the balance amount and on the date of forfeiture, shares in question were not yet allotted to the assessee. The assessee had only received an allotment letter-cum-advice requiring it to deposit the balance amount for allotment of shares. It was further held that the allotment of shares was to be made only after the receipt of the amount which ultimat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gust 17, 2000, as on or before August 17, 2000, the assessee had failed to deposit the balance amount of Rs. 83,46,000. In this view of the matter, the amount of Rs. 32,50,000 deposited towards share application money is forfeited. 7. To decide the question of law as formulated herein above, it is necessary to look into the definition of transfer as appearing in section 2(47) of the Act, relevant portion thereof is reproduced herein below: "2.(47) 'transfer', in relation to a capital asset, includes,- (i) the sale, 'exchange' or relinquishment of the asset ; or (ii) the extinguishment of any rights therein ; or (iii) the compulsory acquisition thereof under any law ; or (iv) in a case where the asset is converted by the owner thereof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ave acquired a right in such shares even if the call monies or the full face value of the shares has not been paid. Thus, in a case where only share application money is paid and the balance is yet to be paid on actual allotment of shares, the holder of such allotment would be recognised as a member of the investee company. Thus, it cannot be said that the assessee had not acquired right in such shares on account of its failure to deposit the balance amount for allotment of shares. The aforesaid view would attract the provisions of section 2(47) of the Act. The extinguishment of any rights therein as appeared in section 2(47) of the Act, covers every possible transaction resulting in the destruction, annihilation, extinction, termination, c ..... X X X X Extracts X X X X X X X X Extracts X X X X
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