Proportionate reduction in shareholding on subsidiary's share capital reduction amounts to transfer 2(47).

The Supreme Court ruled that a reduction in the share capital of a subsidiary, leading to a proportionate reduction in the shareholding of the parent company, constitutes a "sale, exchange, or relinquishment of the asset" under Section 2(47) of the Income Tax Act, 1961. This decision, referencing the Anarkali Sarabhai case, interprets the reduction or redemption of shares as a company's purchase of its own shares, thus qualifying as a transfer. The judgment favored the parent company. .....

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