ACIT v. Privi Speciality Chemicals Ltd. (2023) 152 taxmann.com 105 / 102 ITR 1 (SN)/ 222 TTJ 367(Mum) (Trib)

S. 45 : Capital gains-Charge of tax-Convertible preference shares-Preference shares transferred by original allottees-Shares redeemed and issue of equity shares by assessee against credit to security premium account-Gains on conversion of preference shares into equity shares accrue in hands of shareholder-Not in hands of assessee. [S. 2(47)]

Held that the conversion of preference shares into equity shares was in the hands of the shareholder, S. Thus, gains, if any, arising from such a conversion would only be taxable in the hands of the shareholder. Therefore, there was no infirmity in the findings of the Commissioner (Appeals). Followed Anarkali Sarabhai v. CIT (1997)224 ITR 422 (SC) Kartikeya  V. Sarabhai v. CIT (1997) 228 ITR 163 (SC)  (AY.2011–12)