Mumbai ITAT rules that conversion of cumulative and compulsory convertible preference shares (CCPS) into equity shares does not amount to \u2018transfer\u2019 u\/s. 2(47), deletes long-term capital gains (LTCG) addition.<\/p>\n
During relevant AY 2012-13, upon conversion of CCPS into equity shares, AO had assessed the difference in the market value of equity shares and the cost of CCPS as LTCG on account of the transfer of shares by way of exchange in the hands of the assessee co.<\/p>\n
The hon\u2019ble ITAT remarked that it \u201cis not a case where one form of share has been exchanged, bartered, swapped for another form of share.\u201d clarified that there is no exchange of any share as the pre-conversion security (i.e.CCPS) has ceased to exist.<\/p>\n
The hon\u2019ble ITAT further clarified that Revenue\u2019s interpretation if adopted would lead to double taxation and would be against the legislative intention.<\/p>\n
The hon\u2019ble ITAT relied on CBDT Circular of May 1964 and Co-ordinate bench ruling in Vijay M. Merchant wherein it was held that where one type of share is converted into another type, there is no \u2018transfer\u2019 of a capital asset, distinguished SC ruling in Motors & General Stores Pvt. Ltd. on facts.<\/p>\n
Jaipur Income Tax Appellate Tribunal (ITAT) upholds re-assessment for AY 2010-11 (initiated beyond 4 years period) as no disclosure was made by assessee co. regarding apportionment of any head office (HO) expenses while computing deduction u\/s 80IA in respect of its wind power generating undertakings.<\/p>\n
The hon\u2019ble ITAT noted that while claiming deduction u\/s. 80IA, the assessee had only considered direct operation and maintenance expenses without charging proportionate HO expenses, therefore rejected assessee\u2019s stand that since AO had examined assessee\u2019s claim u\/s. 80-IA during the original assessment, re-opening after the expiry of 4 years was not justified.<\/p>\n
The hon\u2019ble ITAT acknowledged that it could be assessee\u2019s position that HO expenses have no nexus with tax holiday units and therefore, there was no necessity to allocate these expenses at the first place, however, it observed that such a position of the assessee and the related facts were not disclosed by the assessee.<\/p>\n
The hon\u2019ble ITAT noted that the issue of allocation of HO expense was not examined at all during the course of original assessment, therefore held that the question of change of opinion doesn\u2019t arise, and distinguishes assessee\u2019s reliance on SC ruling in Techspan India on facts.<\/p>\n