Search Results For: reduction of capital


Jupiter Capital Pvt. Ltd vs. ACIT (ITAT Bangalore)

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DATE: November 29, 2018 (Date of pronouncement)
DATE: December 7, 2018 (Date of publication)
AY: 2014-15
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CITATION:
S. 2(47) Transfer: The reduction of share capital of a company by way of reducing the face value of each share from Rs. 1,000 to Rs. 500 amounts to "extinguishment of rights" and is a "transfer" u/s 2(47) of the Act. The assessee is eligible to claim a capital loss therefrom (Kartikeya V. Sarabhai vs. CIT 228 ITR 163 (SC) & other judgements followed)

Sec. 2(47) which is an inclusive definition, inter alia, provides that relinquishment of an asset or extinguishment of any right there in amounts to a transfer of a capital asset. While, it is no doubt true that the appellant continues to remain a shareholder of the company even with the reduction of a share capital but it is not possible to accept the contention that there has been no extinguishment of any part of his right as a shareholder qua the company. It is not necessary that for a capital gain to arise that there must be a sale of a capital asset. Sale is only one of the modes of transfer envisaged by s. 2(47) of the Act. Relinquishment of the asset or the extinguishment of any right in it, which may not amount to sale, can also be considered as a transfer and any profit or gain which arises from the transfer of a capital asset is liable to be taxed under s. 45 of the Act

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Goldman Sachs (India) Securities Pvt. Ltd vs. ITO (ITAT Mumbai)

COURT:
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DATE: February 12, 2016 (Date of pronouncement)
DATE: February 13, 2016 (Date of publication)
AY: 2011-12
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CITATION:
S. 2(22)(d)/ 46A: A buyback of shares u/s 77A of the Companies Act is not a reduction of capital u/s 100 - 104 of that Act. A buyback cannot be regarded as a "colourable transaction" and cannot be assessed as "deemed dividend" u/s 2(22)(d). The capital gains on buy-back are exempt under the India-Mauritius DTAA

Section 100-105 r.w.s. 391of the CA deal with reduction of capital and obtaining permission of the Court. Clearly, both deal with different situations. The Hon’ble Jurisdictional High Court has dealt with the schemes of buyback of shares and reduction of capital in the case of Capgemini India Private Limited (Company Scheme Petition No.434 of 2014 dated 28.04.2015) where it was held that it is open to a company to buy back its own shares by following the procedure prescribed under section 77A/Section 68 or by following the procedure prescribed under section 391 read with Sections 100 to 104 of the 1956, Act. The observations of the Hon’ble Court does not leave any doubt that buyback of shares cannot be equated with reduction of capital

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