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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 ..... . M. V. Seshachala for the appellant. S. Parthasarathi for the respondent . JUDGMENT The judgment of the court was delivered by DEEPAK VERMA J. - Heard Sri M. V. Seshachala, learned counsel for the appellant and Sri S. Parthasarathi, learned counsel for the respondent. 2. This appeal under section 260A of the Income-tax Act, 1961 (hereinafter shall be referred to in short as "the Act"), is at the instance of the Revenue against the order dated January 31, 2003, passed by the 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: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares in its favour. Despite sending of several notices by the IDBI Limited to the assessee for remitting the balance and outstanding allotment money, the assessee did not pay the same. Accordingly, as per the terms of the issue, the non-payment of allotment money rendered the allotted shares and the money paid as share application money liable for forfeiture by the investee company. Thus, the IDBI Limited cancelled the allotment and forfeited the share application money of Rs. 32,50,000 as deposited 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, whi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... its favour, thus giving rise to the Revenue to prefer this appeal under section 260A of the Act. 6. Record shows that even though the assessee was informed by the IDBI Limited to deposit the balance amount of the share application money from time to time, but it did not take any action in this regard. Ultimately, vide letter dated July 20, 2000, the IDBI Limited cancelled the allotment of shares of the assessee and directed that the amount of the share application money stands forfeited with effect from August 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot of specific shares, but of a certain number of shares." 9. The above passage has been quoted in the Commentary of the Companies Act mentioned herein above from a decision in Florence Land and Public Works Co., In re [1885] 29 Ch D 421 at 426. 10. On account of the aforesaid fact that the binding contract existed between the assessee and the investee company, the irresistible conclusion that can be drawn on the aforesaid facts and circumstances is that as soon as the allotment is made, the assessee would be deemed to have 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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