TaxTMI 
TaxTMI 
TaxTMI 
2014 (12) TMI 793
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....s common, all these appeals are being disposed of by way of this common order for the sake of convenience. 2. It was agreed by both the sides that the appeal filed by the Revenue in the case of Shri Yogendra Mohan Gupta i.e. I.T.A. No.221/Lkw/2012 may be considered first and the decision in this appeal may be followed in the remaining appeals. Hence, we reproduce the grounds raised in I.T.A. No.221/Lkw/2012, which are as under: "1. Whether on the facts and in the circumstances of the case, Ld. CIT(A) was right in deleting the addition made by A.O in spite of the fact that these shares were purchased by the assessee on an extraneous consideration for the benefit of preferen....
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....to do so." 3. Learned D.R. of the Revenue supported the assessment order. He also submitted that the company i.e. Shakumbari Sugar and Allied Industries Limited (SSAIL) was not a listed company. He further submitted that the shares of this company were purchased by the assessee @Rs.10/- per share on 07/12/2007 and these shares were sold after few days @Rs.3.15 per share. He submitted that the purchase price paid by the assessee is excessive and, therefore, the disallowance is justified u/s 40A(2A)(b) of the Act. He placed reliance on the following judicial pronouncements: (i) Kerala Small Industries Development Corporation Ltd. Vs Commissioner of Income-tax [20....
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....ted out that after repayment of preference shares and accumulated unpaid dividend (arrear of dividend), the net equity share value as on 31/10/2007 has been worked out at Rs. 1085.37 lacs and accordingly, the buyer i.e. M/s India Glycol Ltd. (IGL), paid the amount of Rs. 1000 lac for purchase of 31724200 shares and balance amount of Rs. 85.37 lac was withheld as per clause number 5.9 of the agreement to be paid on transfer of remaining 4 lac shares. The sale price was worked out at 3.15216 on the basis of sale consideration of Rs. 1000 lacs for 31724200 shares. 5. We have considered the rival submissions, perused the material available on record and the judgments cited by both the sides. We find that the objection of the Assessing Officer ....
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.... the Short Term Capital Loss in respect of sale of 19 lacs shares but the loss in respect of remaining old shares has to be allowed as Long Term Capital Loss. In course of hearing, it was required by the Bench and the Learned A.R. of the assessee was directed to file copy of computation of income filed by the assessee along with the return of income in which the assessee has claimed short term capital loss of Rs. 1,30,10,881/- as per noting of the Assessing Officer in Para 4 of the assessment order because it is not clear from the assessment order as to how much long term capital loss was claimed by the assessee in the return of income in respect of old shares of the same company held by the assessee prior to 07/12/2007. In Para 4.4 of the ....
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....ld be worked out on the basis of net assets value of the company SSAIL on 07/12/2007 by dividing total net assets value on that date by total number of shares of that company before further issue of shares on that date. The fresh shares should be considered as issued and there after sold on such market value per share of the old shares for raising same amount resulting in increase in number of shares issued because whatever loss is incurred by the company and consequently the share holders, the same was incurred till this date and it cannot be said that further loss was incurred between 07.12.2007 to 15.12.2007. Hence, the loss in the hands of the share holder should also be in respect of old shares only held by him on 07.12.2007. It should....
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....because complete facts are not available before us as discussed above and therefore, we have held as per the facts of the present case, as discussed above that the purchase price paid by the assessee for acquiring new shares on 07/12/2007 has to be determined as per the market value of the shares of the company SSAIL on 07/12/2007 and these judgments are not on this aspect. So far the issue of new shares at a price below than the face value is concerned, we find that such issue of shares at a discount is permissible as per the Companies Act and hence, there is no problem on that aspect. Accordingly, the order of CIT(A) is set aside and the matter is restored to his file for fresh decision in the light of the above discussion. The assessee s....