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TMI Blog1990 (1) TMI 94X X X X Extracts X X X X X X X X Extracts X X X X ..... dertaking in the priority sector as enumerated in the IXth Schedule of the IT Act, totalling to Rs. 10,11,686-50. The WTO denied the aforesaid exemption to the assessee mainly on the following grounds : (i) She is a dealer in shares as is evident from her income-tax assessments. Such exemption is available only to an investor in shares and not to a dealer in shares. (ii) The WTO has the option to determine the value of business assets either in accordance with section 7(1) or to value the business assets as a whole, on the basis of global valuation as provided in section 7(2)(a), after making necessary adjustments as per Rules 2A to 2G. When valuation of business asset is done on global valuation basis, the assessee will not be entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fit to non-dealers only and accordingly he allowed the assessee's claim with regard to such exemption in respect of eligible shares owned by her in 14 companies out of 17 companies claimed by the assessee. With regard to shares in the three remaining companies (mentioned in para 2.1 above), the learned CWT(A) restored the matter back to the WTO to look into the evidence produced by the assessee and to examine the assessee's claim for grant of exemption under section 5(1)(xxa). 4. The revenue is aggrieved by the aforesaid order of the CWT(A) and contends that the CWT(A) has erred in allowing exemption under section 5(1)(xxa) to the assessee in respect of the shares worth Rs. 10,11,686. The learned D.R. relied upon the detailed reasons give ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and it is not meant for the initial purchase of such shares by an assessee. The provisions of section 5(1)(xxa) does not prescribe any condition that such exemption will be granted only if the assessee purchased such shares out of the initial issue directly from the company. He invited our attention towards section 5(3) of the Act to further support his contention that it is not necessary for the assessee to directly purchase such shares from the company or that such shares should be for the first time registered in the name of the assessee and the assessee cannot purchase it from other persons. Section 5(3) provides that exemption in respect of eligible shares under section 5(1)(xxa) will be allowed from the date on which such shares were ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9th Schedule of the IT Act. This exemption is for five successive assessment years following the year of initial issue. The section does not prohibit grant of such exemption in respect of eligible shares owned by an assessee in his capacity as a dealer. It is nowhere provided that in order to avail the said exemption the investment should be made by the assessee in his capacity as an investor and not as a dealer. Exemption has been granted in respect of the initial issue of the shares issued by those companies which are engaged in manufacture of priority items in order to promote the growth of such industries. It does not discriminate between the assessee who owned such shares either as a dealer or as an investor. Such exemption has been g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ified in allowing the assessee's claim for exemption in respect of such shares under section 5(1)(xxa). 6.1 As regards the contention of the learned WTO that such exemption should be allowed only in the case of those assessees who have purchased such shares out of the initial issue directly from the company, a careful perusal of section 5(1)(xxa) reveals that exemption in respect of such shares is dependent on the nature and qualifying conditions of the shares and it has not been prescribed in the aforesaid section that in order to avail the exemption under this section the eligible shares should be purchased by the assessee directly from the company. The exemption is attached to the qualifying initial issue of shares for a qualifying per ..... X X X X Extracts X X X X X X X X Extracts X X X X
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