Law:

Section:

Section 45 of the income-tax act, 1961-capital gains-chargeability of-assessee sold shares at a loss to transferee-transfer forms duly signed by transferor along with share certificate had been handed over to transferee and transfer sought to be registered in company's books-company had not refused to recognise transfer but had stated that registration could not be done immediately as register of shares were not available to record transfer of shares-whether tribunal correct in holding that irrespective of fact that transfer of shares was not registered in company's books, ownership of shares stood transferred from assessee to transferee and, therefore, assessee was entitled to claim adjustment of capital loss-held, on facts, yes Facts The assessee sold some shares of a mill at a loss. The ITO observed that since the alleged transferee did not find a place in the share certificate register maintained by the company, the sale could not be considered as complete and in view of that the assessee continued to be the owner of the shares in question. Accordingly, the ITO rejected the assessee's claim for adjustment of 'capital loss' on said sale as against 'capital gains'. On appeal, the AAC upheld the ITO's decision. On further appeal, the Tribunal followed the decision of the Supreme Court in V.R. Shelat v. P.I. Thakur [1945] 45 Comp. Cas. 43 and held that the ownership of the shares stood transferred from the assessee to the transferee, notwithstanding the fact that the transfer of shares had not been registered in the company's books and, therefore, the assessee was entitled to claim adjustment of the capital loss. On reference under section 256(2): Held According to the decision of the Supreme Court in V.R. Shelat v. P.J. Thakur [1945] 45 Comp. Cas. 43, if the transferor has transferred the right to get the share certificate from the company in the name of the donee, then as between the transferor and the transferee, the transfer is complete, though the transferee cannot exercise his rights as a shareholdervis-a-vis the company, until the transfer of shares is recorded in the registers of shareholders of the company. In the present case, the transfer forms duly…

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