Law:

Section:

I. Section 2(47) of the Income-tax Act, 1961 - Capital gains - Transfer - Assessment year 2002-03 - Whether redemption of preference shares amounts to transfer within meaning of section 2(47) - Held, yes Section 48 of the Income-tax Act, 1961 - Capital gains - Computation of - Assessment year 2002-03 - Whether redeemable preference shares are not bonds or debentures and, therefore, at time of redemption of those shares, assessee would be entitled to benefit of indexation under section 48 - Held, yes [In favour of assessee] II. Section 41(1) of the Income-tax Act, 1961 - Remission or cessation of trading liability - Assessment year 2002-03 - Assessee was engaged in business of share-broking and was also dealing in shares - For assessment years 1994-95 to 1997-98, assessee had outstanding brokerage - Assessee pointed out that during course of assessment year 2004-05, amount of outstanding brokerage was written back in profit and loss account and same was offered as income for assessment year 2004-05 and taxes were paid thereon - However, Assessing Officer concluded that liability did not exist for current assessment year 2002-03 and brought amount to tax for this year - Whether since there was no remission or cessation of liability in question during current assessment year, addition made by Assessing Officer was to be deleted - Held, yes [In favour of assessee] FACTS - I The assessee was engaged in business of share broking and also dealing in shares. It had purchased 4 lakh preference shares of Rs. 100 each from a company 'E'. The preference shares were to carry a dividend of four per cent per annum and were redeemable after the expiry of ten years from the date of allotment. During the course of assessment year 2001-02, the assessee redeemed three lakh shares at par and claimed a long-term loss after availing of benefit of indexation. The Assessing Officer disallowed the claim of set off of long-term capital loss that arose on redemption against long-term capital gain on the sale of other shares on the grounds that - (i) both the assessee and the company in which the assessee held the preference shares, were managed by the same group of persons; (ii) that…

Deprecated: trim(): Passing null to parameter #1 ($string) of type string is deprecated in /home/digixyei/sldsystempk.com/view/master-layout/view_case.php on line 492