TaxTMI 
TaxTMI 
2026 (8) TMI 1167
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....ax Officer-17(3)(5), Mumbai, for the assessment year 2014-15. 2. The assessee has raised the following grounds of appeal: "1. The learned CIT(A) has erred in upholding the action of the AO in substituting the sale price of 79,625 9% non-cumulative preference shares of M/s M. Manifold Pvt. Ltd. at Rs. 325 per share as against the actual price of Rs. 100 per share while computing long-term capital gain on redemption of the said preference shares. On the basis of the facts and circumstances of the case, the sale price per share ought to be accepted at Rs. 100 per share and the addition made by the Ld. AO and confirmed by the CIT(A) ought to be deleted. 2. The appellant craves leave to add, alter, amend and/or rescind any g....
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..... The Ld. CIT(A) upheld the substitution of Rs. 325/- per share on the reasoning that the value of a share of the same company could not vary merely because it was described as an equity share or a preference share and that different yardsticks could not be adopted for contemporaneous acquisition and redemption. The Ld. CIT(A), however, directed the AO to grant indexation on the cost of acquisition and apply the tax rate of 20%. The separate addition of Rs. 4,85,550/- was restored to the AO for verification. The assessee is in appeal only against the confirmation of the substituted redemption value. 6. The Ld. Authorised Representative submitted that equity shares and preference shares are commercially and legally distinct instruments. P....
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....tional Thermal Power Co. Ltd. v. CIT [229 ITR 383 (SC)]. 8. The Ld. Departmental Representative supported the orders of the authorities below. In respect of the additional ground, the Ld. DR objected to its admission on the ground that the claim was not borne out of the record available before the lower authorities and required examination of fresh facts concerning the original acquisition, reduction of capital and consolidation of shares. 9. We have heard the rival submissions and perused the material available on record. The primary issue is whether, for A.Y. 2014-15, the actual redemption consideration of Rs. 100/- per preference share could be replaced by Rs. 325/-, being the price at which equity shares of the same company were a....
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....O. We have extracted the submissions made by the assessee before the AO in the preceding paragraph explaining the difference between Equity shares and Preference shares. We notice that the AO has failed to appreciate the same. We agree with the submissions of the assessee that the Equity shares and Preference shares stand on different footing. While the equity share-holders are the real owners of the company, the preference share-holders are not in fact, the owners of the company. They get preference over the equity share-holders for payment of dividend and repayment of equity. Hence the Net asset value of the company really represents the value of Equity shares and not 'Preference shares'. Hence, in our view, the AO has misdirected himself....