TaxTMI 
TaxTMI 
2019 (2) TMI 1544
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....100020 (hereafter 'the Property'). 2. The petitioner is a company and states that there is no transfer of the property or any significant change in its shareholding warranting the imposition of unearned increase. 3. Briefly stated, the relevant facts necessary to address the aforesaid controversy are as under: 3.1 The property was allotted to M/s. Control and Switchgear Company, a partnership firm constituted by three individuals of a family. A perpetual lease deed dated 10.08.1970 was also executed in favour of the said firm. 3.2 On 25.06.1971, the said partnership firm ‒ M/s Control and Switchgear Company ‒ was converted into a private limited company ‒ M/s. Control & Switchgear Co. Pvt. Ltd (the petitioner herein an....
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....itial shareholders of the company. In addition, 1.47% of the total shareholding of the company was allotted to another company namely, M/s Neeru Holdings Pvt. Ltd., which the petitioner asserts were also held by the same set of family members. 5. On 14.07.2008, the company allotted 3,36,984 shares to a private equity investor ‒ GE Equity International, Mauritius. The said shares constituted 9.52% of the diluted shareholding of the company. As a result of this equity dilution, an aggregate 10.23% of the outstanding shareholding capital of the company was held by persons other than the family members of the promoters. On 20.03.2009, the company applied for conversion of the leasehold plot into freehold. Since it is the company's case t....
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....ned increase. It is relevant to note that in that case, the original promoters had divested 42.36% of the total outstanding share capital, out of which a substantial part was towards their respective spouses. The Court noted that 28.248% of the shares transferred by the promoters were held by non-family members. Indisputably, the petitioner's case is on a better footing as only 10.23% of the shareholding is held by persons other than the original promoters. 10. It is also relevant to note that the aforesaid decision clearly rested on the principle that change in the shareholding of a company would not amount to transfer of its assets. It is relevant to note that the aforesaid decision was carried on in an appeal by the respondents before t....