| COURT: | ITAT Bangalore |
| CORAM: | A. K. Garodia (AM), Sunil Kumar Yadav (JM) |
| SECTION(S): | 2(47), 45, 48 |
| GENRE: | Domestic Tax |
| CATCH WORDS: | capital gains, reduction of capital, transfer |
| COUNSEL: | S. Parthasarathy |
| DATE: | November 29, 2018 (Date of pronouncement) |
| DATE: | December 7, 2018 (Date of publication) |
| AY: | 2014-15 |
| FILE: | Click here to view full post with file download link |
| 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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