Held that the facts on record did not suggest that the sale price of the optionally convertible preference shares was artificially deflated as supported by an independent report of a merchant banker and later on, the same investment was sold at a lower price to a third party. There was no infirmity in the sale consideration of the optionally convertible preference shares. The Assessing Officer had mixed up both the transactions in arriving at the conclusion that the investment made by WEP in the optionally convertible preference shares issued by WEC was also sham even though it was an independent transaction. The Assessing Officer was not justified in disallowing the claims of both long-term and short-term capital loss. The order of the Commissioner (Appeals) deleting the disallowance is affirmed. (AY.2017-18)
Dy. CIT v. Welspun Steel Ltd. (2024)114 ITR 107 (Mum)(Trib)
S. 28(iv) : Business income-Value of any benefit or perquisites-Converted in to money or not-Capital Gains-Loss-Conversion of loan given to subsidiary to optionally convertible preference shares at face value-Merchant Banker’s valuation report-Not tax avoidance-Cost of acquisition tenable.[S. 41(1)]
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