TaxTMI 
TaxTMI 
2016 (2) TMI 829
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....ithout the actual delivery of shares and therefore, the entire premium forfeited and retained by the assessee constitutes speculation gains liable for tax.? ii. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in treating the amount forfeited by the assessee company on share warrants as capital receipt and thus not taxable without appreciating the fact that forfeited shares are available for reissue and thus, forfeited amount is a windfall for company..? ii. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in treating the amount forfeited by the assessee company on share warrants as capital receipt and thus not taxable without appreciating the fact that the amount forfeited by the assessee in the form of option premium is a speculation gain received by the company as the allottees did not exercise the option within the stipulated period of 18 months to purchase equity shares of the assessee company. iv. Whether on the facts and in the circumstances of the case and in law, the learned CIT(A) erred in deleting the disallowance of deduction of Rs. 1,11,14,473/- u/s 80....
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....ipt and is not chargeable to tax. That the issue of shares not being business of the assessee, the amount cannot be treated as receipt in the normal course of business. The relevant findings of the Tribunal in the said case are reproduced as under: "7. We have heard the rival submissions and perused the orders of the lower authorities and the material available on record. In the instant case, the assessee was to receive call money in respect of shares as per the terms of prospectus and the allotment letters, but the same were not received from some of the shareholders. In this case, the share application money was for feited as per the terms of the prospectus. The above facts are not in dispute. The short question which falls for our consideration is whether the above forfeiture amount is taxable under the provisions of IT Act, 1961 or not. The learned Departmental Representative vehemently placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT vs. T.V. Sundaram Iyengar & Sons Ltd. (supra) for his contention that forfeited amount is taxable as revenue receipt. However, we find that the facts of the case that were before the Hon'ble Supreme ....
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....r relied upon the decision of the co-ordinate bench of the Tribunal in the case of "Prism Lt. vs. JCIT" (2006) 101 ITD 103 (Mum.) wherein the Tribunal has held that the amount received on account of forfeiture of NCDs for non payment of call money was to be treated as capital in nature as the issuance of NCDs (non convertible debentures) was not a business of the assessee and hence such amount cannot be charged to tax even under section 41(1) of the Act. 6. We find that the issue in the case in hand is identical to the issue involved in the above cited decisions by the Ld. A.R. In the case in hand also, the assessee had forfeited the advance/application money of Rs. 1,78,50,000/- received from the warrant holders after the expiry of the date for converting the same into the shares and the same had been credited to the capital reserve account in the balance sheet. The issue, thus, is squarely covered by the above decisions cited by the Ld. A.R. The Ld. D.R. has also fairly agreed that the issue is squarely covered in favour of the assessee by the above decisions (supra) cited by the Ld. A.R. 7. So the issue raised vide ground Nos.1 to 3 of the Revenue's appeal is decided in....
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....n of the quantum of deduction under section 80IA of the Act has to be computed after deduction of notional brought forward losses and depreciations of eligible units, even though they have been allowed set off against other income in earlier years. He observed that it is the mandate of law that losses of earlier years though already adjusted against income from other sources, the same are once again to be notionally brought forward and set off against profits of the eligible unit to compute eligible deduction. 9. The Ld. CIT(A) however allowed the claim of the assessee. The Revenue is thus in appeal before us. 10. At the outset, the Ld. A.R. of the assessee submitted that assessee is eligible for deduction u/s 80IA of the Act in respect of the profits out of the generation of electricity out of windmill activity and the unabsorbed depreciation and losses of the earlier years to the initial year in which the assessee started to claim the benefit under section 80IA, since already set off with the ineligible profits of the assessee from other business, could not be reduced from profits of eligible business for computing deduction u/s 80IA of the Act. The Ld. A.R. of the assessee....