| COURT: | ITAT Mumbai |
| CORAM: | Amarjit Singh (JM), M. Balganesh (AM) |
| SECTION(S): | 2(47), 45, 48 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | capital gains, capital reduction, extinguishment of rights, transfer |
| COUNSEL: | Nitesh Joshi |
| DATE: | February 6, 2020 (Date of pronouncement) |
| DATE: | February 22, 2020 (Date of publication) |
| AY: | 2011-12 |
| FILE: | Click here to view full post with file download link |
| CITATION: | |
| S. 2(47)/45: A reduction of capital results in an "extinguishment of rights" in the shares and constitutes a "transfer‟. The fact that the percentage of shareholding remains unchanged even after the reduction is irrelevant. The loss arising from the cancellation of shares is entitled to indexation and is allowable as a long-term capital loss (Bennett Coleman 133 ITD 1 (Mum)(SB) distinguished, all imp verdicts referred) | |
The ld DR vehemently argued that the percentage of shareholding remains the same because reduction of shares had happened for all shareholders. We find that the ld DR relied on para 24 of the judgement of Special Bench of Mumbai Tribunal in 133 ITD 1 supra to support his proposition. In this regard, we hold that the percentage of shareholding has got no bearing for chargeability of capital gains under the Act. We further find that the provisions of section 55(2)(v) of the Act were applied in the Mumbai Special Bench decision also in para 28 thereon. We find that in the case before us, the provisions of section 55(2)(v) of the Act will have no application at all and if the assessee is not given the benefit, it will never get it and none of the clauses of section 55(2)(v) of the Act would be applicable to the assessee in the instant case. Hence reliance placed on para 28 of the judgement of Special Bench of Mumbai Tribunal does not advance the case of the revenue
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