2010 (4) TMI 110

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.... the Cross Appeal filed by Revenue, being ITA No. 3099/Del/2005. 2. The respondent company, which is engaged in the business of leasing of equipments, filed a return declaring loss of Rs.4,71,54,210/- for the assessment year 2000-2001. Since 1st January, 2000, the appellant company amalgamated with Gillette Diversified Operations Private Limited (GDOPL). The assessee company had purchased shares of WSIL on 4th April, 1996 for a sum of Rs.7,92,70,381/-. Those shares were sold on 30th December, 1999 for a consideration of Rs.7,88,76,000/-. However, due to application of cost index, the cost of these shares for the purpose of computation of capital gain worked out to Rs.10,11,02,224/-, thereby resulting in capital loss of Rs.2,22,26,224/-. ....

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....ad been raised before it to justify disallowance of loss on share of shares of WSIL. The Tribunal, therefore, upheld the order of Commissioner of Income Tax(Appeals), allowing the loss incurred by the assessee on sale of shares of WSIL. 7. As regards sale of shares of GDOPL, which were purchased on 4th April, 1996 and sold to GGIPL on 30th December, 1999, the Tribunal was of the view that the transaction of sale of these shares was quite similar to the transaction of sale of shares of WSIL. The Tribunal noted that no benefit of capital loss had been taken by the assessee till date by adjusting it against other Long Term Capital Gains. It was also noted that even in the assessment of 2002-2003 the amalgamated company had brought forward t....

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....ell the shares as the assessee itself had received back share application money or advance for shares from GGIPL/WISL/GDOPL and the sale proceeds were used to reduce liabilities prior to amalgamation of assessee with GDOPL. He was also influenced by the fact that the sale proceeds were used to repay outstanding liability of GGIPL which was a group company. If the sale of shares was not illegal, it could have been made to any one, including a group company. It is immaterial that the purpose of sale of shares was to reduce the outstanding liabilities of the assessee company. There was nothing illegal in the assessee company selling shares held by it, for the purpose of reducing its liabilities. It is also absolutely immaterial that the liabil....