TaxTMI 
TaxTMI 
2012 (12) TMI 256
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....ng Term Capital Gain as declared by assessee or as business income (adventure in the nature of trade) as held by AO but not accepted by the CIT (A). 3. Briefly stated, assessee was incorporated on 15.05.2002 as a 100% subsidiary of Primo Distributors Pvt. Ltd (PDPL). The assessee company is one of the group concerns of M/s Shaw Wallace Company Ltd (SWCL). Pursuant to the scheme of rearrangement in November 2000, there was a Shareholder's Agreement between Jumbo World Holdings Ltd (JWHL) and SWCL according to which JWHL, a major shareholder of SWCL shall through its nominee acquire equity in subsidiaries of SWCL. SWCL had two subsidiaries i.e. Shaw Wallace Distilleries Ltd (SWDL) and Shaw Wallace Breweries Ltd (SWBL). The Articles of Association of SWBL and SWDL were amended to give powers to JWHL or its nominees to have option to subscribe to the shares of SWDL/SWBL upto 26% of the post-issue capital at a fair price through issue of equity shares or equivalent share warrants or convertible preference at a price to be mutually agreed. Pursuant to the Shareholder's Agreement JWHL through one of its nominee company M/s Primo Distributors Pvt. Ltd (PDPL) exercised its option and subsc....
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....uisition (12341220 x 463/447) Date of Acquisition: May 15, 2002 (1,27,82,964) Less: Expenses in connection with sale of shares (Stamp duty - Rs.100362 + Stamp Paper - 400 + Notarization charges - Rs.2110/-) (1,02,872) ----------------- 199,37,44,164 Less: Deduction u/s 54EC (108,00,00,000) Long Term Capital Gains- (A) 91,37,44,164 2 Sale of 5,92,383 equity shares of SWBL 96,31,90,000 Date of Sale: June 25, 2003 Less: Indexed Cost of Acquisition (5923830 x 463/447) Date of acquisition: June 16, 2002 (61,35,869) Less: Expenses in connection with sale of shares (Stamp Duty - Rs.48659+Safe custody charges 67,500 + Consultants fees - Rs.30,000/-) (1,46,159) Long Term Capital Gains - (B) 95,69,07,972 Total Long Term Capital Gains (A+B) 187,06,52,136 6. AO treated the transaction of sale of shares giving rise to Long Term Capital Gains as an adventure in the nature of trade and taxed the entire sale consideration on sale of shares of Rs.295,06,52,136/- (199,37,44,164 + 95,69,07,972) as business income. AO has treated the said transaction as adventure in nature of trade mainly on the....
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....nly on the 'profit motive' on the 'occasion of acquisition' of shares as adventure in the nature of trade. This motive is not born out from the facts of the case as the appellant got 18,26,505 equity shares as a result of demerger of the entire beer distribution business of PDPL to its 100% subsidiary (the appellant) under the scheme as sanctioned by the Hon'ble Bombay High Court. Thus, the shares were not acquired by the appellant with profit motive. The appellant acquired the entire beer business under the scheme sanctioned by the Hon'ble High Court. The appellant did not purchase 18,26,505 equity shares of SWBL with the motive to earn profit. No motive of profit can be attributed from the above facts of the case and hence the transaction cannot be said as adventure in the nature of trade. (a) The appellant did not purchase 18,26,505 equity shares of SWBL and hence the appellant did not pay any consideration for the above shares separately to PDPL as the same were allotted to the appellant (PEPL) in accordance with the sanctioned scheme to transfer the entire assets/liabilities including those of employees of their present and past serv....
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....roup and Jumbo World holdings Ltd, Dubai group to control the beer business of this country. Therefore, no adverse motive to earn profit from sale of above shares can be attributed from the given facts of the case. Hence the transaction cannot be said as adventure in the nature of trade. Accordingly the ground of appeal is allowed. For statistical purpose, the appeal is ALLOWED". 9. Revenue is aggrieved and raised the grounds. 10. We have heard the learned DR and the learned Counsel in detail, the facts were explained and the order of AO and the CIT(A) were relied upon to support respective contentions. With reference to the ground No.2 we do not see any additional evidence being admitted by the CIT (A), nor the DR was able to point out any additional evidence being entertained by the CIT (A) without giving opportunity to AO. Therefore, Ground No.2 as raised by the Revenue does not arise out of the order of the CIT (A). Accordingly, Ground No.2 is dismissed. 11. With reference to the Ground No.1 treatment of gain earned on sale of shares is the main contentious issue. After going through the ....