Tribunal held that, CBDT vide its Circular dated 12.05.1964  has clarified the position that where one type of share is converted into another type of share, there is no transfer of capital asset within the meaning of S. 2(47) of the Act. The present case before us is not a case where one form of share has been exchanged, bartered, swapped for other form of share. In the present case, one type of share has been converted into other type and the earlier type of share has ceased to exist. Thus, there is no exchange of any share as the pre-conversion security has ceased to exist. From the above, it is evident that mere conversion of one type of share to other type of share will not be a transfer of a capital asset within the meaning of S. 2(47) of the Act. Even the jurisdictional Tribunal in the case of ITO v.  Vijay M. Merchant (1986) 19 ITD 510 (Mum) (Trib)  has clearly laid down that when shares, which are converted, are sold; capital gain is to be calculated on the basis of cost of original shares. The factum of conversion does not make any material difference in calculating the capital gain. The Tribunal relying on the Circular held that there is no transfer when one type of share is converted into any type of share. The facts before the Hon’ble Supreme Court in the case of CIT v.  Motors & General Stores Pvt. Ltd. (1967) 66 ITR 692(SC).  are that the assessee- company sold a cinema house and in lieu of the consideration, it had received 5% tax-free cumulative preference shares and the question before the Hon’ble Supreme Court was whether the above transaction would be treated as sale or exchange. The Hon’ble Supreme Court, in the above case, laid down the ratio that barter of one type of goods for other type of goods without consideration in monetary form will be treated as exchange and not as a sale. The Hon’ble Supreme Court held in favour of the assessee in that case stating that the exchange of cinema house to preference shares is not to be considered as a transfer for the purpose of taxability considering the provisions of S. 10(2)(vii) of the Income-tax Act, 1922 corresponding to S.41(2) of the present Income -tax Act, 1961. Accordingly, the decision of Hon’ble Supreme Court in the case of Motors & General Stores Pvt. Ltd. is entirely distinguishable on facts of the present case. 17. According to us, there is no leakage of revenue if such interpretation is adopted. Not only this interpretation would be in furtherance to the legislative intention but would also make the competition provision of capital gain work smoothly, in synchronization with other provisions, without any conflict with other provisions. On the other hand, if the view is adopted that capital gain tax liability arose upon conversion, the same would be not only against the legislative intention but also would make the composition of capital gain unworkable and would bring conflict with other provisions of the Act. In fact, the contrary interpretation would lead to double taxation in as much as, having taxed the capital gain upon such conversion, at the time of computing capital gain upon sale of such converted shares, the assessee would be still taxed again, as the cost of acquisition would still be adopted as the issue price of the CCPS and not the consideration adopted while levying capital gain upon such conversion. By so starch of imagination, such interpretation process is permissible. In view of the above factual discussion and legal propositions, we are of the view that conversion of CCPS into equity shares cannot be treated as ‘transfer’ within the meaning of S.2(47) of the Act and hence not liable to capital gains tax. ( Exlained the ratio in CIT v. Santosh L. Chowgule and Ors. (1993) 234 ITR 787 (Bom.)(HC), CIT v. Trustees of H.E.H. Nizam’s Second Supplimentary Family Trust (1976) 102 ITR 248 (AP) (HC)  (ITA No. 1944/Mum/2018, dt. 09.11.2018) (AY. 2012-13)