The Assessee has \u00a0sold the 49% of the shares in the joint venture company and offered the income as long term capital gains. The Assessee company issued bonus\u00a0 shares\u00a0 and sold the part of the \u00a0original and bonus shares to the Employee Welfare Trust . The cost of original shares were taken at cost and indexation and bonus shares were valued at nil cost . \u00a0The loss w set off \u00a0against the long term capital gains . The Assessing Officer assessed\u00a0 the sale of the shares of the joint venture company as business income . On appeal the CIT( A) held that the sale of the shares \u00a0were assessable as capital gains . On appeal by the Revenue , dismissing the appeal of the Revenue the Tribunal affirmed the order of the CIT(A) on the grounds that the shares were held as investments which were held for more than 8 years , the intention was to hold the shares as investment , accordingly the gains arising from the transfer of equity shares are\u00a0 rightly assessed as long term capital gains and allowed to claim of the \u00a0indexed cost of acquisition . Order of CIT( A) is affirmed . As regards the\u00a0 claim of short term capital loss on sale of shares to JM\u00a0 Financial Group Employees Welfare Trust\u00a0 is concerned the shares were\u00a0 sold at cost of Rs .10 per share\u00a0 after ignoring rounding off which was Rs . 10 . 40 per share on 31 -12 2007 . The purpose\u00a0 for sale of shares \u00a0sale to the Welfare Trust was explained as being administrative convenience and for grant of ESOP. The Assessing Officer held that the sale was colorable device to artificially created \u00a0, a loss to cancel \u00a0the part of profit earned on sale of 49% of joint venture and thereby evade the tax . The Assessing Officer relied on Macdowell & Co Ltd v. GTO (1985) 154 \u00a0ITR 148 ( SC)\u00a0 \u00a0disallowed the loss . Order of the CIT( A) was affirmed by the CIT( A). On appeal the Tribunal held that the financial position of the\u00a0 company was fully justified\u00a0 for the issue of bonus shares out of share premium account . The actual consideration was received from the JM\u00a0 Financial Group Employees Welfare Trust\u00a0 and the employees have exercised options to the extent of 14.82 % of the shares . The Honouable Tribunal followed the ratio in CIT v. Walfort\u00a0 Share & Stock Brokers (P) Ltd \u00a0(2010) 326 ITR 1 (SC). \u00a0\u00a0\u00a0\u00a0and held that loss is allowed to be set off . \u00a0(ITA NO . 3987\/Mum\/ 2015 \/ 3925 \/Mum\/ 2015 dt. 4-8 -2023 )( AY. 2008 -09 )<\/p>\n","protected":false},"excerpt":{"rendered":"
S. 45 : Capital gains \u2013 Sale of shares held as investment \u2013 Indexed cost of acquisition – Cannot be assessed as business income \u2013 Issue of bonus shares is held to be justified \u2013 Sale of shares at cost – Short term capital loss allowable to be set off against long term capital gains-Transaction cannot be held to be colourable device to set off the long term capital gains- Loss was allowed to be set off . [ S. 28(i) , 70, 71 ] <\/p>\n","protected":false},"author":3,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21],"tags":[],"class_list":["post-35366","post","type-post","status-publish","format-standard","hentry","category-income-tax-act"],"acf":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p9S2Rw-9cq","jetpack-related-posts":[],"jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/35366","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/comments?post=35366"}],"version-history":[{"count":2,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/35366\/revisions"}],"predecessor-version":[{"id":45632,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/posts\/35366\/revisions\/45632"}],"wp:attachment":[{"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/media?parent=35366"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/categories?post=35366"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/itatonline.org\/digest\/wp-json\/wp\/v2\/tags?post=35366"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}