M/s Jupiter Capital Pvt Ltd , Bangalore V. Deputy Commissioner of Income Tax Circle-11(5), Bangalore

ITA 445/BANG/2018

• Counselvise Citation: [2018] 119 COUNSELVISE.COM (IT) 0718 (ITAT-BANGALORE)
• Duration Of Justice: 9 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-11-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 14-02-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D SUDHAKARA RAO
• Keywords: Capital asset; Cost of acquisition; Fair market value
• Section: 92; 2(14)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH : BANGALORE BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI ARUN KUMAR GARODIA, ACCOUNTANT MEMBER ITA NO. 445 /BANG/201 8 ASSESSMENT YEAR : 20 14 - 15 M/S. JUPITER CAPITAL PVT. LTD., # 54, RICHMOND ROAD, BANGALORE 560 025. PAN: AABCJ5666R VS. THE ASSISTANT COMMISSIONER OF INCOME TAX, CIRCLE 4 (1) (1), BANGALORE. APPELLANT RESPONDENT ASSESSEE BY : SHRI S. PARTHASARATHI, ADVOCATE REVENUE BY : SHRI D. SUDHAKARA RAO, CIT (DR) DATE OF HEARING : 1 2 . 09 .2018 DATE OF PRONOUNCEMENT : 29 . 11 .2018 O R D E R PER SHRI A.K. GARODIA, ACCOUNTANT MEMBER THIS APPEAL IS FILED BY THE ASSESSEE AND THE SAME I S DIRECTED AGAINST THE ORDER OF LD. CIT (A)-4, BANGALORE DATED 14.12.2017FOR ASSESS MENT YEAR 2014-15. 2. THE GROUNDS RAISED BY THE ASSESSEE ARE AS UNDER. 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) (CIT) ERRED IN UPHOLDING THE ORDER OF THE ASSESSING OFFICER AND NO T ALLOWING THE CLAIM OF CAPITAL LOSS INCURRED BY THE APPELLANT DUE TO REDUCTION OF CAPITAL BY THE INVESTEE COMPANY. 2. THE CIT ERRED IN HOLDING THAT THE THERE IS NO TR ANSFER OF ASSETS IN DUE TO REDUCTION OF CAPITAL BASED ON THE ORDER OF T HE COURT. 3. THE CIT OUGHT TO HAVE APPRECIATED THE FACT THAT THERE IS AN EXTINGUISHMENT AND RELINQUISHMENT BY THE APPELLANT WHEN THE INVESTMENT IT HAD MADE STANDS REDUCED. 4. THE CIT ERRED IN HOLDING THAT AS THERE IS NO CHA NGE IN THE SHAREHOLDING OF ASIANET NEWS NETWORK P LTD, THE INV ESTEE COMPANY, THERE IS NO TRANSFER WITHIN THE MEANING OF SECTION 2(47) OF THE ACT. 5. THE CIT HAS MADE A GROSS MISTAKE IN ASSUMING THA T THE 'WORD 'EXTINGUISHED' IS MENTIONED IN THE PETITION OR COUR T ORDER, IT DOES NOT AMOUNT TO TRANSLATE THE MEANING OF THE WORD 'EXTING UISHMENT OF RIGHTS' AS PER SECTION 2(47) OF THE ACT'. ITA NO.445/BANG/2018 PAGE 2 OF 19 6. THE ASSUMPTION MADE IS CONTRARY TO THE PROVISION S OF LAW AND THE FINDINGS OF THE APEX COURT. 7. FOR THESE AND OTHER GROUNDS THAT MAY BE URGED AT THE TIME OF HEARING, THE APPELLANT PRAYS THAT THE HONORABLE COM MISSIONER OF INCOME TAX (APPEALS) MAY KINDLY: A. ALLOW THE CLAIM OF CAPITAL LOSS MADE BY THE APPE LLANT AMOUNTING TO RS 164,48,55,840. B. ANY OTHER RELIEF THAT THE HONORABLE COMMISSIONER OF INCOME TAX (APPEALS) DEEM FIT. THE APPELLANT FURTHER PRAYS THAT THE COMMISSIONER O F INCOME TAX (APPEALS) PASS NECESSARY ORDER TO STAY THE COLLECTI ON OF DEMAND TILL THE DISPOSAL OF THIS APPEAL, BASED ON THE POWERS CO NFIRMED ON THEM. 3. THE LD. AR OF ASSESSEE SUBMITTED THAT THE COPY O F WRITTEN SUBMISSIONS FILED BEFORE CIT(A) IS AVAILABLE ON PAGES 50 TO 69 OF PAP ER BOOK AND OUT OF THAT, THE RELEVANT PORTION IS AVAILABLE ON PAGES 64 TO 69 OF PAPER BOOK. HE FURTHER SUBMITTED THAT RELIANCE HAS BEEN PLACED BY ASSESSEE ON THE JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF KARTIKEY A V. SARABHAI VS. CIT AS REPORTED IN 228 ITR 163. BUT THIS JUDGMENT WAS NOT FOLLOWED BY CIT(A) ON SOME INVALID REASONS GIVEN BY HIM. HE SUBMITTED THAT THE ISSUE IN THE PRESENT CASE IS SQUARELY COVERED IN FAVOUR OF THE A SSESSEE BY THIS JUDGMENT OF HONBLE APEX COURT. THE LD. DR OF REVENUE SUPPO RTED THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. WE FI ND THAT ON THIS ISSUE, PARA NOS. 6 TO 7.3 OF THE ORDER OF CIT(A) ARE CONTAINING ENTIRE FACTS, DECISION OF THE AO, SUBMISSIONS OF THE ASSESSEE BEFORE CIT(A) A ND THE FINAL DECISION OF CIT(A) AND THEREFORE, THESE PARAS ARE REPRODUCED HE REIN BELOW FOR THE SAKE OF READY REFERENCE. 6. DISALLOWANCE OF CAPITAL LOSS OF RS. 164,48,55,84 0/- :- THE BRIEF FACTS OF THE CASE ARE THAT, THE APPELLANT CLAIMED AN AMOUNT OF RS. 1,64.48,55,840/- AS LONG T ERM CAPITAL LOSS FROM SALE OF SHARES. THIS LOSS WAS STA TED TO ACCRUE AGAINST THE REDUCTION IN SHARE CAPITAL OF M/ S ASIANET NEWS PVT. LTD (ANNPL) EFFECTED UNDER A CAPITAL REDU CTION SCHEME. THE AO DISAGREED WITH THE ASSESSEE'S CLAIM OF LONG TERM CAPITAL LOSS, CONTENDING THAT, THE REDUCTION I N SHARES OF ANNPL, DID NOT RESULT IN TRANSFER OF CAPITAL ASS ET AS ENVISAGED U/S 2(47) OF THE I.T. ACT. THE AO CAME TO THIS CONCLUSION, IN LIGHT OF THE FINDING THAT, EVEN THOU GH THE NUMBER OF SHARES HAS REDUCED, THE FACE VALUE AS WEL L AS THE ITA NO.445/BANG/2018 PAGE 3 OF 19 SHAREHOLDING PATTERN REMAINED THE SAME. THE ASSESSE E ON THE OTHER HAND. HAS ARGUED THAT THERE WAS REAL TRANSFER OF ASSET. AS THE SCHEME RESULTED IN EXTINGUISHMENT / RELINQUI SHMENT OF PART OF THE ASSESSEE'S RIGHTS, IN THE SHARES OF ANN PL. AND THEREFORE THE TRANSACTION FELL WITHIN THE PURVIEW O F SECTION 2(47) OF THE I.T. ACT, RESULTING IN CONSEQUENT CLAI MABLE LONG TERM CAPITAL LOSS. THE OBSERVATIONS / FINDINGS OF THE AO AND THE ASSESSEE'S DETAILED WRITTEN SUBMISSIONS HAVE BEEN D ULY PERUSED. THE JUDICIAL POSITION ON THE ISSUE UNDER CONSIDERATION AND THE JUDGMENTS HIGHLIGHTED BY THE AO AS WELL AS THE APPELLANT HAVE BEEN TAKEN INTO DUE CONS IDERATION, IN THE GIVEN FACTUAL MATRIX OF THE PRESENT CASE. TH E APPRAISAL OF THE RIVAL CONTENTIONS AND FINDING ON THE ISSUE A T HAND IS ACCORDINGLY DISCUSSED AS HEREUNDER: 6.1 AO'S OBSERVATION:- THE AO HAS DISCUSSED THE RELEVANT ISSUES AND RECORDED HER FINDINGS, IN A SUCCINCT MANNER, IN THE ORDER UNDER CONSIDERATION. THE RELEVANT PORTION OF THE AO 'S ORDER ON THIS POINT IS REPRODUCED AS UNDER:- '8. THE ISSUE OF CONTENTION HERE IS WHETHER A REDUC TION IN SHARE CAPITAL, BY REDUCING THE NUMBER OF SHARES, WI THOUT REDUCING THE FACE VALUE. AMOUNTS TO A TRANSFER OF A CAPITAL ASSET. FURTHER, WHETHER SUCH REDUCTION AMOUNTS TO T RANSFER OF RIGHTS? THE ISSUE IS ANALYSED A FOLLOWS. AN ANAL YSIS OF THE ASSESSEE'S SHAREHOLDING PATTERN IS SHOWN AS UNDER: SHAREHOLDING PATTERN AS PER ASSESSEE'S SUBMISSION: PARTICULARS NO. OF SHARES AMOUNT OPENING BALANCE OF INVESTMENT IN ANNPL 149544130 1495441300 PURCHASE OF ANNPL SHARES FROM OTHER PARTIES 3806758 38067585 LOSS ON EXTINGUISHMENT OF SHARES 153340900 1533409000 CLOSINGBALANCEASON31.03.2014 9988 99885 9. THE ASSESSEE COMPANY INVESTED IN TOTAL EQUITY SH ARES OF 153340900 AT FACE VALUE (RS. 10) ON DIFFERENT DATES , IN ITS SUBSIDIARY COMPANY, ASIANET NEWS NETWORK PRIVATE LI MITED. THE TOTAL NUMBER OF SHARES, OF ASIANET NEWS NETWORK WAS 153505750 OUT OF WHICH THE ASSESSEE'S SHARE WAS 99.89%. AS A RESULT OF THE ORDER OF HIGH COURT OF BOMBAY, THERE WAS A REDUCTIO N IN SHARE CAPITAL OF ASIANET NEWS NETWORK FROM 153340900 TO 1 0,000 AND CONSEQUENTLY THE SHARE OF THE ASSESSEE WAS REDUCED PROPORTIONATELY FROM 153505750 TO 9988. THE FACE VALUE OF THE SHARE S REMAINED THE SAME AT RS. 10 EVEN AFTER THE REDUCTION. IT IS PERT INENT TO NOTE THAT THE SHAREHOLDING PATTERN OR THE PERCENTAGE OF THE S HARES OF THE ITA NO.445/BANG/2018 PAGE 4 OF 19 ASSESSEE DID NOT REDUCE. I.E. PRIOR TO REDUCTION TH E PERCENTAGE OF ASSESSEE'S SHARE WAS 99.89% AND EVEN AFTER REDUCTIO N THE PERCENTAGE OF ASSESSEE'S SHARES REMAINED UNCHANGED AT 99.89%. THIS MEANS THAT THE ASSESSEE DID NOT RELINQUISH ITS VOTING POWER OR EXTINGUISH ITS RIGHTS IN THE SHARES AS THE SHAREHOL DING PATTERN REMAINED UNAFFECTED. THIS PROVES THAT THERE WAS NO RELINQUISHMENT OR EXTINGUISHMENT OF RIGHTS THAT HAS TAKEN PLACE WH ICH WOULD HAVE EVENTUALLY RESULTED IN A TRANSFER OF A CAPITAL ASSE T. THE FOLLOWING TABLE DEPICTS THE SHAREHOLDING PATTERN OF THE ASSES SEE AT ASIANET NEWS NETWORK PERIOD TOTAL NUMBER OF SHARES NUMBER OF SHARES HELD BY THE ASSESSEE VALUE PER SHARE (RS.) % OF HOLDING PRIOR TO REDUCTION 153505750 153340900 10 99.88% AFTER REDUCTION 10000 9988 9988 99.88%. 10. THE AR HAS HIMSELF SAID THAT THE SHARES STANDS REDUCED AND THAT THE COMPANY, ASIA NET NEWS NETWORK HAD EXTINGUISHED THE NUMBER OF SHARES HELD BY REDUCING TERN. HOWEVER, THE QUESTION OF EXTINGUISHMENT OF RIGHTS WITH RELATION TO THE SHARE HOLDERS DOES NOT ARISE. IT WAS ONLY REDUCTION OF SHARES BY WAY OF EX TINGUISHING THE NUMBER OF SHARES AND NOT EXTINGUISHING THE RIGHTS O F THE SHAREHOLDERS. FOR THE REASON THAT THE WORD 'EXTINGUISHED' IS MENT IONED IN THE PETITION OR THE COURT ORDER, IT DOES NOT AMOUNT TO TRANSLATE THE MEANING OF THE WORD 'EXTINGUISHMENT OF RIGHTS' AS P ER SECTION 2(47) OF THE ACT. A PLAIN READING OF SECTION 2(47) OF THE ACT PROVIDES WHAT AMOUNT TO A TRANSFER OF A CAPITAL ASSET' 'TRANSFER IN RELATION TO A CAPITAL ASSET INCLUDES (I) THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASS ET; OR (II) THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR (III) THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; OR (IV) IN A CASE WHERE THE ASSET EXTINGUISHMENT OF RIGHTS WOULD MEAN THAT THE ASSESS EE HAS PARTED WITH THOSE SHARES OR SOLD OFF THOSE SHARES TO A SEC OND PARTY. HERE, THE ASSESSEE HAS NOT SOLD OFF ANY SHARES OR HAS NOT PAR TED WITH THE SHARES AS THE IT STILL HOLDS THE PROPORTIONATE PERCENTAGE WHICH HE INITIALLY HELD IS STILL SHOWN AS AN INVESTMENT. THE AR HAS REFERRED TO THE CASE OF KARTIKEYA V. SAR ABHAI' -1997(9) TMI 2 SUPREME COURT WHEREIN IT WAS HELD THAT, THE REDUCTION IN THE FACE VALUE OF SHARES AMOUNTED TO 'EXTINGUISHMENT' W ITHIN THE MEANING OF SECTION 2(47) AND HENCE THE AMOUNT RECEIVED ON S UCH REDUCTION WAS TAXABLE AS CAPITAL GAIN. HOWEVER, WITH DUE REGARD, THE FACTS OF THE CASE ARE CONTRARY TO THIS CASE AS THERE WAS NO REDU CTION IN THE FACE VALUE OF THE SHARES. ITA NO.445/BANG/2018 PAGE 5 OF 19 11. THE AR ALSO REFERRED TO THE CASE OF DCIT V BPL SANYO FINANCE LTD 312 ITR 63 (KAR) WHEREIN IT WAS HELD THAT THE C ANCELLATION OF ALLOTMENT OF SHARES LEADING TO FORFEITURE OF SHARE APPLICATION MONEY ON THE TAXPAYERS FAILURE TO DEPOSIT CALL MONEY RESU LTED INTO SHORT TERM CAPITAL LOSS WITH DUE REGARD, THE FACTS AND CI RCUMSTANCES OF THE CASE ARE DIFFERENT HENCE NOT APPLICABLE. CONVERSELY IT IS SEEN IN THE CASE OF BENNETT COLEMA N & CO. LTD V ALIT (TS-580-ITAT-2011 (MUM) HAD ACCEPTED THE REVEN UE'S CONTENTION THAT THERE IS NO TRANSFER AND THAT THE E ARLIER SHARES WERE REPLACED BY ANOTHER KIND OF SHARES AND THAT THE PER CENTAGE OF SHAREHOLDING IMMEDIATELY BEFORE THE REDUCTION OF SH ARE CAPITAL AND IMMEDIATELY AFTER HE REDUCTION, REMAINED THE SAME. EVEN IN THE CASE OF CIT V. RASIKLAL MANEKIAL (HUF) -1989 (3) TMI 3 SUPREME COURT: IT WAS HELD THAT IN CASE OF EXCHAN GE THAT ONE PERSON TRANSFERS A PROPERTY TO ANOTHER PERSON IN EX CHANGE OF ANOTHER PROPERTY THE PROPERTY CONTINUES TO BE IN EXISTENCE. IN THE LIGHT OF THE ABOVE, A TOTAL CAPITAL LOSS CLA IMED OUT OF THE SALE OF SHARES IS HEREBY DISALLOWED AND ADDED BACK TO THE R ETURN OF INCOME.' 6.2 ASSESSEE'S SUBMISSION:- THE ASSESSEE HAS STRONGLY OBJECTED TO THE ABOVE DIS ALLOWANCE PRIMARILY ON THE GROUND THAT THE DULY-APPROVED SHAR E-REDUCTION SCHEME CLEARLY RESULTED IN TRANSFER OF ASSET AND CO NSEQUENTIAL LONG TERM CAPITAL LOSS. THE RELEVANT PORTIONS OF THE ASS ESSEE'S WRITTEN SUBMISSION DATED 12.07.2017 ARE REPRODUCED AS UNDER :- 'DISALLOWANCE OF CAPITAL LOSS OF RS. 164,48.55,840/ - THE APPELLANT HAD MADE AN INVESTMENT IS THE SHARES OF ASIANET NEWS P LTD. [ANNPLJ, THE COMPANY IS A SUBSIDIARY CO MPANY AND ENGAGED IN THE BUSINESS OF TELECASTING NEWS. THE AP PELLANT HAD INVESTED IN 12,22,44,130/- EQUITY SHARES FOR RS. 12 2,24,41,300. THE COMPANY HAD INCURRED LOSSES AND THE NET-WORTH O F THE COMPANY WAS TOTALLY ERODED THE COMPANY ANNPL FILED A PETITION BEFORE THE HIGH COURT OF BOMBAY FOR REDUCTION OF CAPITAL TO SET OFF THE LOSS AGAINST THE PAID UP EQUITY. THE COURT WAS PLEASED TO GRANT APPROVAL FOR THE SCH EME AND THE CAPITAL OF THE COMPANY WAS REDUCED TO RS. 99,885/- REPRESENTED BY 9988 EQUITY SHARES OF RS. 10 EACH. THE COURT ALSO O RDERED FOR PAYMENT OF RS. 3,17,83,474 AS CONSIDERATION, WHICH WAS DULY RECEIVED BY THE APPELLANT COMPANY. WE GIVE BELOW DETAILS OF THE INVESTMENT, SALE AND L OSS CLAIMED ITA NO.445/BANG/2018 PAGE 6 OF 19 NO: OF SHARES INVESTED 12,22,44,130 VALUE OF INVESTMENT 122,24,41,300 INDEXED COST 167,66,39,315 CONSIDERATION RECEIVED 3,17,83,474 LOSS CLAIMED 164,48,55,840 THE AO HAS IN PARA 8 HAS OBSERVED THAT 'THE ISSUE O F CONTENTION HERE IS WHETHER A REDUCTION OF SHARE CAPITAL BY RED UCING THE NUMBER OF SHARES, WITHOUT REDUCING THE FACE VALUE, AMOUNTS TO A TRANSFER OF CAPITAL ASSET. FURTHER, WHETHER SUCH A REDUCTION AMOUNTS TO TRANSFER OF RIGHTS? THE AO HAS OBSERVED IN PARA 9 THAT THE SHARE HOLDIN G PATTERN CONTINUES TO BE SAME AND THE APPELLANT DID NOT RELI NQUISH ITS VOTING RIGHTS OR EXTINGUISH ITS RIGHT IN THE SHARES . OUR SUBMISSION IS THAT DETAILS OF SHARE CAPITAL OF ANNPL PA R TICULARS NO. OF SHARES AMOUNT OPENING BALANCE OF INVESTMENT IN ANNPL 149,544,130 1,495,441,300 PURCHASE OF ANNPL SHARES FROM OTHER PARTIES 3,806,758 38,067,585 LOSS ON EXTINGUISHMENT OF SHARES 153,340,900 1,533,409,000 CLOSING BALANCE AS ON 31- 03 - 2014 9,988 99,885 THERE IS REDUCTION IN SHARE CAPITAL OF ANNPL UNDER CAPITAL REDUCTION SCHEME. THE SCHEME PROVIDES FOR SETTING O F LOSSES INCURRED BY THE COMPANY AGAINST ITS PAID UP EQUITY SHARE CAPITAL. THE COURTS HAVE RULED THAT THE NUMBER OF SHARES SHA LL BE REDUCED, WHILE THE FACE VALUE OF THE SHARES CONTINUE TO REMA IN AT RS. 10 EACH FULLY PAID. THERE IS NO REDUCTION OF FACE VALU E OF THE SHARES BUT ONLY A REDUCTION IN NUMBER OF OUTSTANDING EQUIT Y SHARES. THIS WOULD RESULT IN VALUE OF INVESTMENT OF JUPITER CAPI TAL IN ANNPL, REDUCTION IN VALUE OF SUCH ASSETS IS REFLECTED AS A LOSS. SECTION 45 IS THE CHARGING SECTION, UNDER SECTION 4 5(1) OF THE ACT, PROFITS AND GAINS ARISING FROM THE TRANSFER OF A CA PITAL ASSET EFFECTED IN THE PREVIOUS YEAR IS CHARGEABLE TO TAX. SECTION 48 OUTLINES THE METHODOLOGY FOR COMPUTING C APITAL GAINS. EXISTENCE OF A CAPITAL ASSET OWNED BY THE ASSESSEE SECTION 2(14) DEFINED A CAPITAL ASSET. AS PER THE D EFINITION CAPITAL ASSET MEANS PROPERTY OF ANY KIND SAVE CERTAIN SPECI FIED EXCLUSIONS. THE EXPRESSION PROPERTY OF ANY KIND IS OF SUCH WIDE AMPLITUDE SO ITA NO.445/BANG/2018 PAGE 7 OF 19 AS TO TAKE IN TANGIBLE AND INTANGIBLE ASSETS OF ANY KIND OTHER THAN THOSE COMPRISED IN THE EXCEPTIONS CARVED OUT IN THE DEFINITION ITSELF, EQUITY SHARES ARE COVERED WITHIN THE DEFINI TION OF CAPITAL ASSETS. TRANSFER OF SUCH ASSETS DURING THE YEAR THE SCHEME OF CAPITAL GAIN TAXATION PRE SUPPOSES TR ANSFER OF CAPITAL ASSET, THE TERM TRANSFER IS DEFINED IN AN INCLUSIVE MANNER U/S 2(47) OF THE ACT. SECTION 2(47) OF THE ACT DEFINES TRANSFER TO INCLUDE AMONG OTHER RELINQUISHMENT OF ASSET OR EXTINGUISHMENT OF ANY RIGHTS CONTAINED THEREIN. IN THE CASE OF THE ASSESSEE, ITS INVESTMENT IN ASIANET NEWS NETWORK P LTD STANDS REDUCED. THERE IN AN EXTI NGUISHMENT OF ITS SHARES HELD IN THAT COMPANY. CONSEQUENTLY, THE ASSE SSEE HAS REDUCED ITS INVESTMENT VALUE AND NUMBER OF SHARES HELD IN I TS FINANCIALS. THE LOSS SO INCURRED HAVE BEEN CLAIMED AS A CAPITAL LOS S. THE APEX COURT HAS LAID DOWN WITH REGARD TO THE MEA NING OF 'TRANSFER' AND SCOPE OF SECTION 2(47) OF THE ACT IN KARTIKEYA V. SARABHAIL V. CIT(1998) 288 ITR 163(SC). IT HAS BEEN LAID DOWN IN THAT DECISION THAT, 'SECTION' 2(47) OF THE INCOME TAX ACT,1961, D EFINES 'TRANSFER' IN RELATION TO A CAPITAL ASSET. IT IS AN INCLUSIVE DEF INITION WHICH, INTER CILIA, PROVIDES THAT RELINQUISHMENT OF AN ASSET OR EXTINGUISHMENT OF ANY RIGHT THERE IN AMOUNTS TO A TRANSFER OF A CAPIT AL ASSET. IT IS NOT NECESSARY FOR A CAPITAL GAIN TO ARISE, THAT THERE M UST BE A SALE OF A CAPITAL ASSET. SALE IS ONLY ONE OF THE MODES OF TRA NSFER ENVISAGED BY SECTION 2(47) OF THE ACT. RELINQUISHMENT OF THE ASSET OR EXTINGUISHMENT OF AN Y RIGHT IN IT, WHICH MAY NOT AMOUNT TO A SALE, CAN ALSO BE CONSIDE RED AS A TRANSFER AND ANY PROFIT OR GAIN WHICH ARISES FROM T HE TRANSFER OF A CAPITAL ASSET IS LIABLE TO BE TAXED UNDER SECTION 4 5. A COMPANY, UNDER SECTION 100(1) (C) OF THE COMPANIES ACT, 1956 , HAS A RIGHT TO REDUCE THE SHARE CAPITAL AND ONE OF THE MODES WHICH CAN BE ADOPTED IS TO REDUCE THE SHARE CAPITAL AND ONE OF T HE MODES WHICH CAN BE ADOPTED IS TO REDUCE THE FACE VALUE OF THE P REFERENCE SHARES. SECTION 87(2)(C) OF THE COMPANIES ACT, INTER ALIA, PROVIDES THAT 'WHERE THE HOLDER OF ANY PREFERENCE SHE HAS A RIGHT TO VOTE ON ANY RESOLUTION IN ACCORDANCE WITH THE PROVISIONS OF THI S SUBSECTION, HIS VOTING RIGHT ON A POLL, AS THE HOLDER OF SUCH SHARE , SHALL, SUBJECT TO THE PROPORTION OF SECTION 89 AND SUB SECTION (2) OF SECTION 92 BE IN THE SAME PROPORTION AS THE CAPITAL PAID UP IN RESPE CT OF THE PREFERENCE SHARE BEARS TO THE TOTAL PAID-UP EQUITY CAPITAL OF THE COMPANY'. HENCE, WHEN AS A RESULT OF THE REDUCING O F THE FACE VALUE OF THE SHARE, THE SHARE CAPITAL IS REDUCED, T HE RIGHT TO SHARE IN THE DISTRIBUTION OF THE NET ASSETS UPON LIQUIDAT ION IS EXTINGUISHED PROPORTIONATELY TO THE EXTENT OF REDUCTION IN THE C APITAL. SUCH REDUCTION OF THE RIGHT IN THE CAPITAL ASSET WOULD C LEARLY AMOUNT TO A TRANSFER WITHIN THE MEANING OF THAT EXPRESSION IN S ECTION 2(47) OF THE INCOME TAX ACT,1961. ITA NO.445/BANG/2018 PAGE 8 OF 19 'SECTION 2(47) OF THE ACT PROVIDES THAT RELINQUISHM ENT OR EXTINGUISHMENT OF ANY RIGHT IN THE CAPITAL ASSET AM OUNTS TO TRANSFER OF A CAPITAL ASSET. IN THE INSTANT CASE, THE ASSESS EE HAS RECEIVED CASE IN LIEU OF 150 SHARES AND ON RECEIPT OF THAT C ASH, THERE IS EXTINGUISHMENT OF THE RIGHTS OF THE ASSESSEE IN THO SE SHARES. SAME IS ONE OF THE MODES OF TRANSFER ENVISAGED BY SECTION 2 (47) OF THE ACT. EXTINGUISHMENT OF THE ASSESSEE'S RIGHT IS A TRANSFE R AND ANY PROFIT OR GAIN WHICH ARISES FROM SUCH TRANSFER IS LIABLE T O BE TAXED, UNDER SECTION 45 OF THE ACT. AANPL HAS HUGE LOSSES. THE FAIR MARKET VALUE OF THE AANPL SHARES IS LESS THAN FACE VALUE. A SALE CONSIDERATION AS DETER MINED HAS BEEN PAID. THE KARNATAKA HIGH COURT OF DCIT V BPL SANYO FINANC E LTD 312 ITR 63(KAR) HELD THAT CANCELLATION OF ALLOTMENT OF SHARES LEADING TO FORFEITURE OF SHARE APPLICATION MONEY ON THE TAXPAYER'S FAILURE TO DEPOSIT CALL MONEY RESULTED INTO SHORT T ERM CAPITAL LOSS. THE COURT ALLOWED A CLAIM OF CAPITAL LOSS EVEN IN A BSENCE OF CONSIDERATION. THE TRANSACTION IS TREATED AS A TRAN SFER. THE GUJARAT HIGH COURT DECISION IN CASE OF CIT JAYA KRISHANA HARIVALLAHH DAS (1998) 231 ITR 108 (GUJ) OBSERVED T HAT FULL VALUE OF CONSIDERATION COULD BE NIL. THE MUMBAI HIGH COURT IN CASE OF CIT V SURAT COTTON SPINNING & WEAVING MILLS PVT. LTD CONCURRED WITH THE PROPOSITI ON THAT FULL VALUE OF CONSIDERATION COULD BE NIL. IT IS RELEVANT TO QUOTE THE OBSERVATIONS OF GUJARAT HIGH COURT DECISION IN CASE OF CIT V JAYAKRISHNA HARIVALLABHA DAS IN TH E PRESENT CONTEXT. THERE IS, THEREFORE, NO REASONS WHY A SHARE HOLDER WHO IN DISTRIBUTION OF ASSETS HAS, EVEN IF, NOT RECEIVED ANY DEEMED CON SIDERATION IN SATISFACTION OF HIS RIGHTS AND INTERESTS IN THE HOL DING AND HAS THEREBY SUFFERED TOTAL LOSS, CANNOT CLAIM THE BENEFIT OF SE TOFF OR CARRY FORWARD LOSSES SUFFERED BY HIM. OTHERWISE A STARTLING AND UNJUST SITUATION MAY ARIS E WHERE THE RECEIPT OF EVEN ONE PULSE WOULD ENABLE HIM CLAIM SE TOFF OR CARRY FORWARD LOSSES AS WORKED OUT UNDER SECTION 48, WHIL E A SHAREHOLDER WHO IS A SHADE WORSE OFF AND GETS NOTHING IN THE EV ENT OF SUCH TOTAL LOSS SHOULD BE DENIED THE EFFECT OF SECTION 46(2) R EAD WITH SEC 71 AND 74 OF THE ACT AND BE PUT TO A PERPETUAL LOSS. T HEREFORE EVEN WHERE RECEIPT IS NIL ON THE DATE OF DISTRIBUTION ON THE LIQUIDATION OF THE COMPANY, THE CASE OF SUCH SHAREHOLDER WILL FALL U/S 46(2) AND THE DEEMED FULL VALUE OF THE CONSIDERATION FOR THE PURP OSE OF SEC 48 WILL BE REGARDED AS NIL AND ON THAT BASIS THE INCOME CHA RGEABLE UNDER THE HEAD CAPITAL GAINS HAS TO BE COMPUTED U/S 48. ITA NO.445/BANG/2018 PAGE 9 OF 19 THE SENTIMENTS EMERGING FROM THE AFORESAID OBSERVAT IONS OF HIGH COURT IS APPLICABLE TO THE ASSESSEE TO CONCLUDE THA T EVEN A NIL CONSIDERATION ON CAPITAL REDUCTION CANNOT DEFEAT TH E COMPUTATION MECHANISM U/S 48. WE ALSO DRAW YOUR ATTENTION TO THE FOLLOWING JUDGME NTS: CIT V G. NARASIMHAN & OTHER 236 ITR 327 (SC) ANARKALI SARABHAI V CIT 224 ITR 422 SHISHIR KUMAR R MEHTA V CIT 154 CTR 70 WE ALSO DRAW YOUR ATTENTION TO THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE OF CIT V GRACE COLLIS & OTHERS 24 8 ITR 323 AND VANIA SILK MILLS P LTD V CIT 191 ITR 647. THE HON'BLE BENCH HAS OBSERVED THAT THE DEFINITION OF TRANSFER CLEARLY CONTEMPLATES EXTINGUISHMENT OF RIGHTS IN A CAPITAL ASSET DISTINCT AND INDEPENDENT OF SUCH EXTINGUISHMENT CONSEQUENT UPON TRANSFER THEREOF THE COURT FURTHER OBSERVED THAT THE EXPRESSION 'EXT INGUISHMENT OF ANY RIGHT THERE IN' CAN BE EXTENDED TO MEAN EXTINGUISHM ENT OF RIGHT INDEPENDENT OF OR OTHERWISE THAN ON ACCOUNT OF TRAN SFER. THUS, EVEN EXTINGUISHMENT OF RIGHT IN A CAPITAL ASSET WOULD AM OUNT TO TRANSFER AND IN THE CASE BEFORE US SINCE THE ASSESSEE 'S RIG HT GOT EXTINGUISHED PROPORTIONATELY, TO THE REDUCTION OF CAPITAL, IT WO ULD AMOUNT TO TRANSFER. IT WAS HELD THAT REDUCTION OF CAPITAL AMOUNT TO TRA NSFER AND ACCORDINGLY CAPITAL LOSS WAS HELD TO BE ALLOWABLE I N THE FOLLOWING DECISION TOO: ZYMA LABORATORIES LTD V ADDL. CIT 7 SOT 164 [MUM] DCIT V M/S POLYCHEM LTD ITA NO: 4212/M/07 GINNERS & PRESSER LTD V ITO ITA NO. 398/M/07 & 4193 /M/07. FURTHER WE ALSO WISH TO BRING TO YOUR ATTENTION THA T ONE OF THE ASPECTS CONSIDERED WAS WHETHER THE HAS RECEIVED CONSIDERATI ON OR NOT. IN THE CASE OF THE APPELLANT, WE STATE THAT THE APPELLANT HAD RECEIVED A CONSIDERATION. THIS FACT IS CONCEDED IN THE ASSESSM ENT ORDER ITSELF WE RELY ON THE DECISION OF THE SUPREME COURT IN THE CASE OF ADDL. CIT V MOHAN BHAI 165 ITR 166 AND SUNIL SIDHRATH BHAI V CIT 156 ITR 509. WE ALSO BRING TO YOUR ATTENTION TO THE FACT THAT TH E APPELLANT HAS IN FACT REDUCED THE COST OF INVESTMENTS IN ITS BOOKS O F ACCOUNTS AND HAS WRITTEN DOWN THE VALUE TO THE FACE VALUE OF SHARES HELD AND OWNED BY IT. ITA NO.445/BANG/2018 PAGE 10 OF 19 WE ALSO DRAW YOUR ATTENTION TO THE PROVISIONS OF SE CTION 47 WHICH PROVIDES FOR TRANSACTION WHICH ARE NOT CONSIDERED A S A TRANSFER AND REDUCTION OF SHARE CAPITAL IS NOT ONE AMONG THEM. BASED ON THE ABOVE FACTS AND JUDICIAL PRONOUNCEMENT S, WE PRAY THAT THE LOSS CLAIMED BY THE APPELLANT BE ALLOWED IN THE INTEREST OF JUSTICE.' 6.3 THE ASSESSEE HAS MADE FURTHER DETAILED WRITTEN SUBMISSION VIDE ITS LETTER DATED 25/10/2017, PLACING RELIANCE ON NUMERO US JUDICIAL PRONOUNCEMENTS. THE JUDICIAL PRONOUNCEMENTS CITED B Y THE APPELLANT HAVE BEEN DULY ANALYSED. THE OBSERVATIONS / FINDINGS OF THE AO AND THE ASSES SEE'S DETAILED WRITTEN SUBMISSIONS HAVE BEEN DULY PERUSED. THE JUD ICIAL POSITION ON THE ISSUE UNDER CONSIDERATION AND THE JUDGMENTS HIG HLIGHTED BY THE AO AS WELL AS THE APPELLANT HAVE BEEN TAKEN INTO DU E CONSIDERATION, IN THE GIVEN FACTUAL MATRIX OF THE PRESENT CASE. THE ISSUE IS ACCORDINGLY ADJUDICATED AS UNDER: 6.4. THE APPELLANT CLAIMED AN AMOUNT OF RS. 1,64,48 ,55,840/- AS LONG TERM CAPITAL LOSS FROM SALE OF SHARES. THIS LOSS WAS STATED TO ACCRUE AGAINST THE REDUCTION IN SHARE CAP ITAL OF M/S ASIANET NEWS PVT. LTD (ANNPL) EFFECTED UNDER A CAPI TAL REDUCTION SCHEME. THE AO DISAGREED WITH THE ASSESSE E'S CLAIM OF LONG TERM CAPITAL LOSS, CONTENDING THAT, THE RED UCTION IN SHARES OF ANNPL, DID NOT RESULT IN TRANSFER OF CAPI TAL ASSET AS ENVISAGED U/S 2(47) OF THE I.T. ACT. THE AO COME TO THIS CONCLUSION, IN LIGHT OF THE FINDING THAT, EVEN THOU GH THE NUMBER OF SHARES HAS REDUCED. THE FACE VALUE AS WELL AS TH E SHAREHOLDING PATTERN REMAINED THE SAME. THE ASSESSE E ON THE OTHER HAND, HAS ARGUED THAT THERE WAS REAL TRANSFER OF ASSET. AS THE SCHEME RESULTED IN EXTINGUISHMENT / RELINQUISHM ENT OF PART OF THE ASSESSEE'S RIGHTS, IN THE SHARES OF ANNPL, A ND THEREFORE THE TRANSACTION FELL WITHIN THE PURVIEW OF SECTION 2(47) OF THE I.T. ACT, RESULTING IN CONSEQUENT CLAIMABLE LONG TE RM CAPITAL LOSS. 6.5 THE CORE ARGUMENTS OF THE APPELLANT IN A NUTSHE LL ARE AS FOLLOWS: THE ASSESSEE HAS HIGHLIGHTED THE FACT THAT, THERE I S REDUCTION IN SHARE CAPITAL OF ANNPL UNDER A DULY APPROVED CAPITAL REDUCTION SCHEME. THE SCHEME PROVI DES FOR SETTING-OFF LOSSES INCURRED BY THE COMPANY AGAI NST ITS PAID UP EQUITY SHARE CAPITAL. IT IS CONTENDED THAT THE NUMBER OF SHARES STOOD REDUCED, EVEN WHILE THE FACE VALUE OF THE SHARES CONTINUED TO REMAIN AT RS. 10 E ACH FULLY PAID. THE ASSESSEE CLAIMS THAT SINCE THE SCHE ME RESULTED IN DECREASE IN VALUE OF INVESTMENT OF JUPI TER CAPITAL IN ANNPL, SUCH REDUCTION IN VALUE OF ASSETS WAS ACCORDINGLY CLAIMABLE AS A LOSS. ITA NO.445/BANG/2018 PAGE 11 OF 19 THE ASSESSEE HAS MADE REFERENCE TO THE RELEVANT SEC TIONS OF THE I.T. ACT. IT IS EXPLAINED THAT, SECTION 45 B EING THE CHARGING SECTION, UNDER THE SAID SECTION, PROFITS A ND GAINS ARISING FROM THE TRANSFER OF A CAPITAL ASSET AFFECT ED IN THE PREVIOUS YEAR, WAS THEREFORE CHARGEABLE TO TAX. IT IS FURTHER STATED THAT, SECTION 48 OUTLINES THE METHOD OLOGY FOR COMPUTING CAPITAL GAINS. THE APPELLANT THEREFOR E CLAIMS THAT, THE EXERCISE OF REDUCTION OF SHARES BETWEEN THE ASSESSEE AND M/S ANNPL. WAS EXIGIBLE TO SECTION 45 AS WELL AS THE SECTION48, INVOLVING TRAN SFER O& CHARGEABILITY. THE APPELLANT STATES THAT, SECTION 2(14) DEFINES A CAPITAL ASSET. AS PER THE SAID DEFINITION CAPITAL ASSET MEA NS PROPERTY OF ANY KIND SAVE CERTAIN SPECIFIED EXCLUSI ONS. THE APPELLANT SUBMITS THAT, THE EXPRESSION PROPERTY OF ANY KIND IS OF SUCH WIDE AMPLITUDE SO AS TO RAKE IN TANGIBLE AND INTANGIBLE ASSETS OF ANY KIND OTHER TH AN THOSE COMPRISED IN THE EXCEPTIONS CARVED OUT IN THE DEFINITION ITSELF. IT IS EXPLAINED BY THE ASSESSEE THAT, EQUITY SHARES ARE COVERED WELL WITHIN THE DEFINITIO N OF CAPITAL ASSETS. THE ASSESSEE HAS FURTHER CONTENDED THAT, THE IMPUGN ED TRANSACTIONS OF SHARE-REDUCTION CONSTITUTED 'TRANSF ER' AS ENVISAGED IN SECTION 2(47) OF THE I.T. ACT. IT IS E XPLAINED THAT, THE SCHEME OF CAPITAL GAIN TAXATION PRE SUPPO SES TRANSFER OF CAPITAL ASSET. THE TERM TRANSFER IS DEF INED IN AN INCLUSIVE MANNER U/S 2(47) OF THE ACT. SECTION 2 (47) OF THE ACT, DEFINES TRANSFER TO INCLUDE AMONG OTHERS, RELINQUISHMENT OF ASSET OR EXTINGUISHMENT OF ANY RI GHTS CONTAINED THEREIN. IN THE CASE OF THE ASSESSEE, THE APPELLANT SUBMITS THAT, ITS INVESTMENT IN ASIANET N EW NETWORK P LTD STANDS REDUCED. THERE IS THUS AN EXTINGUISHMENT OF ITS SHARES HELD IN THAT COMPANY. CONSEQUENTLY, THE ASSESSEE HAS REDUCED ITS INVESTME NT VALUE AND NUMBER OF SHARES HELD IN ITS FINANCIALS. THE ASSESSEE THEREFORE CONTENDS THAT, THE LOSS SO INCUR RED HAVE BEEN CORRECTLY CLAIMED AS A CAPITAL LOSS. RELIANCE HAS ALSO BEEN PLACED ON FOLLOWING JUDICIAL DECISIONS: KARTIKEYA V. SARABHAIL V. CIT (1998) 1 DTC 219 (SC) ; (1997) 288 ITR 163(SC); DCIT V BPL SANYO FINANCE LTD 312 ITR 63 (KAR); CIT V SURAT COTTON SPINNING & WEAVING MILLS PVT. LT D; CIT V JAYAKRISHNA HARIVALLABHA DAS (1998) 231 ITR 1 08 (GUJ); 6.6 HAVING CONSIDERED THE RIVAL SUBMISSIONS AND THE JUDICIAL POSITION IN LIGHT OF THE FACTUAL MATRIX OF THE PRESENT CASE. I DO NOT FIND MYSELF IN AGREEMENT WITH THE ASSESSEE'S CASE IN VIEW OF THE F OLLOWING DISCUSSION AND FOR REASONS SUMMARIZED AS UNDER: ITA NO.445/BANG/2018 PAGE 12 OF 19 (I) IT IS SEEN FROM THE IMPUGNED ORDER OF THE AO TH AT, THE CONTENTIONS OF THE ASSESSEE ON BOTH QUESTIONS OF FA CT AS WELL AS THE JUDICIAL POSITION HAVE BEEN ADEQUATELY ADDRESSED. T HE AO AFTER HAVING ANALYSED THE SHARE-REDUCTION SCHEME, AND THE SHAREHOLDING PATTERN (PRIOR AND SUBSEQUENT) TO THIS EVENT, CONCL UDED THAT, THERE WAS NO EFFECTIVE SHARE-REDUCTION, AS ENVISAGED IN T HE SECTION 2(47) OF THE I.T. ACT. THE CASES RELIED UPON BY THE APPEL LANT HAVE ALSO BEEN DISTINGUISHED BY THE AO, IN HER IMPUGNED-ORDER . (II) THE FACTUAL POSITION AND THE APPLICABILITY OF THE JUDICIAL DECISIONS IN THE PRESENT CASE, CLEARLY REV EALS THAT THE ASSESSEE'S CLAIM OF CAPITAL LOSS, IS NOT ACCEPT ABLE IN VIEW OF CERTAIN CRUCIAL QUESTIONS, EMERGING FOR CONSIDERATION IN THE PRESENT CASE. THE AO HAS ANALY SED THE ASSESSEE'S SHAREHOLDING PATTERN, IN THE IMPUGNED OR DER, WHICH HAS BEEN PERUSED. A COMPARATIVE-ANALYSIS OF THE OPE NING / CLOSING BALANCES OF ANNPL SHARES AND THE CONSEQUENT REDUCTION IN NUMBERS / FACE VALUE AND THE PERCENTAG E RATIO OF SHARE-HOLDING, REVEALS A CLEAR POSITION THAT, THERE WAS NO EFFECTIVE TRANSFER, RESULTING IN LONG TERM CAPITAL LOSS. IT WOULD BE APPROPRIATE IN THIS REGARD, TO EXTRACT THE CHART, FROM THE IMPUGNED-ORDER, WHICH REVEALS THE POSITION AS U NDER: PARTICULARS NO. OF SHARES AMOUNT OPENING BALANCE OF INVESTMENT IN ANNPL 149544130 1495441300 PURCHASE OF ANNPL SHARES FROM OTHER PARTIES 3806758 38067585 LOSS ON EXTINGUISHMENT OF SHARES 153340900 1533409000 CLOSING BALANCE AS ON 31.03.2014 9988 99885 PERIOD TOTAL NUMBER OF SHARES NUMBER OF SHARES HELD BY THE ASSESSEE VALUE PER SHARE (RS.) % OF HOLDING PRIOR TO REDUCTION 153505750 153340900 10 99.88% AFTER REDUCTION 10000 9988 9988 99.88%. (III)FROM THE ANALYSIS OF THE ABOVE CHARTS, IT CLEA RLY EMERGES, THAT THERE WAS NO EFFECTIVE TRANSFER, WHICH COULD RESULT IN ANY REAL LONG TERM CAPITAL LOSS AS CLAIMED BY THE APPELLANT IN THE PRESENT CASE. IT TRANSPIRES THAT THE APPELLANT COMPANY INVE STED IN TOTAL EQUITY SHARE OF RS. 153340900/- AT FACE VALUE OF (R S. 10) ON ITA NO.445/BANG/2018 PAGE 13 OF 19 DIFFERENT DATES, IN ITS SUBSIDIARY COMPANY ANNPL). THE TOTAL NUMBER OF SHARES OF ANNPL WAS 153505750 OUT OF WHIC H THE ASSESSEE'S SHAREHOLDING WAS 99.88%. PURSUANT TO THE SHARE REDUCTION SCHEME THERE WAS A REDUCTION IN SHARE CAP ITAL OF ANNPL FORM 153340900 TO 10000 AND THUS THE SHARES O F THE ASSESSEE WERE REDUCED FROM 153505750 TO 9988. THE F ACE VALUE OF THE SHARES-REDUCED REMAINED UNCHANGED AT RS. 10, EV EN AFTER THE REDUCTION. THE SHAREHOLDING RATIO OF THE ASSESSEE C OMPANY ALSO REMAINED CONSTANT EVEN AFTER IMPLEMENTATION OF THE SHARE- REDUCTION SCHEME. THIS PERCENTAGE CONTINUED TO BE A T THE PREVIOUS SHAREHOLDING FIGURES OF 99.88%. (IV) IT IS APPARENT FROM THE AFORESAID-COMPARATIVE ANALYSIS THAT, THE TOTAL SHAREHOLDING OF THE ASSESSEE'S COMPANY RE MAINING THE SAME, DID NOT EFFECTIVELY RESULT IN ANY RELINQUISHM ENT OR EXTINGUISHMENT OF THE APPELLANTS RIGHTS IN THE AFO RECITED SHARES IN ANNPL. IN THESE FACTS & CIRCUMSTANCES, THE AO HAS H ELD THAT THERE WAS NO QUESTION OF TRANSFER OF RIGHTS AND THA T. THE SCHEME ONLY RESULTED IN EXTINGUISHMENT OF NUMBER OF SHARES AND NOT THE RELINQUISHMENT IN THE REAL DEGREE / OR QUANTUM OF T HE RIGHTS, OF THE SHAREHOLDING COMPANY, AS A WHOLE. THE AO HAS REASON ED THAT, FOR A VALIDLY ACCEPTABLE 'TRANSFER' AS PER THE LETTER A ND SPIRIT OF SECTION 2(47), THE TRANSACTION OUGHT TO INVARIABLY INVOLVE THE SALE, EXCHANGE OR RELINQUISHMENT OF THE ASSET; OR THE EXTINGUISHMENT OF ANY RIGHTS THEREIN; OR THE COMPULSORY ACQUISITION THEREOF UNDER ANY LAW; / OTHERS. THE ASSESSEE'S DOES NOT SQUARELY FALL INTO ANY ONE OUT OF THESE CONDITIONALITIES. HAVING CONSIDERED THE PECULIAR FACTUAL POSITION AND IN BACKGROUND OF THE REQUIREMENTS OF LAW LAID DOWN IN SECTION 2(47), IT IS CLEAR THAT. ANY EXTINGUISHMENT OF RIGHTS WOUL D INVOLVE PARTING I SALE OF PERCENTAGE OF SHARES TO ANOTHER PARTY OR THE DIVESTING OF RIGHTS THEREIN, IN THE PRESENT CASE, THE APPELLANT HAS NEITHER PARTED WITH NOR SOLD THE SHARES, AS THERE WAS NO CHANGE IN THE OVERALL PERCENTAGE OF TOTAL-SHAREHOLDING WHICH REMAINED AT 99.88% I.E. THE SAME PERCENTAGE HELD PRIOR TO THE IMPLEMENTATIO N OF THE SHARE- REDUCTION SCHEME. THERE IS ALSO NO EXTINGUISHMENT O F RIGHTS IN AS MUCH AS THE REDUCTION WAS ONLY IN THE NUMBER OF SHA RES AND NOT THE FACE VALUE. I AM IN AGREEMENT WITH THE AO IN HE R FINDING THAT. THERE IS NO REAL-TRANSFER AS ENVISAGED UNDER SECTIO N 2(47) AS THERE WAS NO EFFECTIVE RELINQUISHMENT / EXTINGUISHMENT OF RIGHTS AS CLAIMED BY THE APPELLANT. IN BACKGROUND OF ABOVE DETAILED DISCUSSION AND FACT S & CIRCUMSTANCES OF THE CASE. I AM OF THE CONSIDERED V IEW THAT THE LONG TERM CAPITAL LOSS CLAIMED DOES NOT FALL WITHIN THE PURVIEW OF CAPITAL-GAINS PROVISIONS ENVISAGED UNDER THE I.T . ACT. THE AO'S ACTION THEREFORE CANNOT BE INTERFERED WITH, ON THIS ACCOUNT. 7. THE ASSESSEE IN ITS WRITTEN SUBMISSION FROM TIME TO TIME BEFORE THE AO AND DURING THE CURRENT APPEAL-PROCEEDING HAS PLACED ITA NO.445/BANG/2018 PAGE 14 OF 19 RELIANCE ON CERTAIN JUDICIAL PRONOUNCEMENTS, WHICH HAVE BEEN DULY PERUSED. WITH DUE REGARD TO THE RATIO OF THE J UDGMENTS AS INVOKED, IT IS NECESSARY TO APPRECIATE THAT THE PEC ULIAR FACTS & CIRCUMSTANCES OBTAINING IN EACH CASE, ARE OF PARAMO UNT IMPORTANCE; FOR THE APPLICABILITY OF THE SAME. IN T HIS VIEW OF THE MATTER, I FIND CLEAR DISTINGUISHING FACTORS, IN THE PRESENT CASE, WHICH RENDERS THE SAID JUDGMENTS INAPPLICABLE TO TH E FACTUAL- MATRIX OF THE PRESENT CASE UNDER CONSIDERATION. 7.1 THE ASSESSEE, IN ITS WRITTEN SUBMISSION HAS PLA CED RELIANCE ON THE RATIO OF JUDGMENT IN THE CASE OF KARTIKEYA V. S ARABHAIL - 1997 (9) TMI -2-(SC). THE ASSESSEE HAS MADE ELABORATE AR GUMENTS IN ITS WRITTEN SUBMISSION DATED 25/10/2017 CONTENDING THAT, THE SCHEME OF CAPITAL REDUCTION IN SHARES OF ANNPL (ASSESSEE'SSUBSIDIARY) FELL WITHIN THE PURVIEW OF D EFINITION OF TRANSFER ENVISAGED U/S 2(47) OF THE 1.T. ACT, AND A S LAID DOWN IN THE HON'BLE APEX COURT JUDGMENT IN KARTIKEYA V. SAR ABHAIL V. CIT (1998) 1 DTC 219 (SC) (1997). THE ASSESSEE HOLDS TH AT, AS A CONSEQUENCE OF THE SHARE-REDUCTION SCHEME, THE ASSE SSEE HAS REDUCED ITS INVESTMENT VALUE AND NUMBER OF SHARES, HELD, RESULTING IN A VALID CAPITAL LOSS. THE ASSESSEE HAS REITERATE D THAT, IN THE JUDGMENT (CITED SUPRA) THE HON'BLE APEX COURT LAID DOWN WITH REGARD TO THE MEANING OF TRANSFER AND SCOPE OF SECT ION 2(47) THAT, TRANSFER' IN RELATION TO A CAPITAL ASSET, WAS AN I NCLUSIVE-DEFINITION, WHICH INTER-ALIA PROVIDES THAT 'RELINQUISHMENT OF A N ASSET OR EXTINGUISHMENT OF ANY RIGHT THERE IN AMOUNTS TO A T RANSFER. ACCORDING TO THE APPELLANT, IT IS NOT THEREFORE NEC ESSARY FOR A CAPITAL GAIN, TO ARISE, THAT THERE MUST BE SALE OF A CAPITAL ASSET, AS SALE IS ONLY ONE SUCH MODE OF TRANSFER. THE ASSESSEE'S CONTENTIONS HAVE BEEN DULY CONSIDERE D. THE FACTS OF THE PRESENT CASE HAVE BEEN ELABORATED IN T HE PRECEDING PARAS. THE DISTINGUISHING FACTORS HAVE BE EN CLEARLY BROUGHT OUT, BY WAY OF A COMPARATIVE ANALYSIS OF TH E SHARE- HOLDING PATTERN AS EXTRACTED AS PARA-6.6 ABOVE. IN THE PECULIAR FACTS & CIRCUMSTANCES OF THE PRESENT CASE EVEN THOUGH THERE WAS A CERTAIN REDUCTION IN 'NUMBER OF SHARES' YET THERE WAS NO EFFECTIVE REDUCTION IN THE FACE VA LUE OF THE SHARES; AND MORE IMPORTANTLY THE OVERALL SHARE-HOLD ING PERCENTAGE OF THE ASSESSEE COMPANY IN M/S ANNPL REM AINED AT 99.88% BEING THE SAME FIGURE OF SHAREHOLDING, PR IOR TO THE IMPLEMENTATION OF THE IMPUGNED-SCHEME. IN THIS FACT UAL BACKGROUND THERE WAS NO EFFECTIVE TRANSFER OR EXTIN GUISHMENT OF RIGHTS, AS ENVISAGED IN THE JUDGMENT OF THE HON' BLE SUPREME COURT (CITED SUPRA). IN THESE FACTS & CIRCU MSTANCES, THE SAID RATIO DOES NOT SQUARELY APPLY TO THE CASE UNDER ADJUDICATION. 7.2 THE ASSESSEE HAS FURTHER DRAWN ATTENTION TO THE DECISIONS OF GUJARAT HIGH COURT IN THE CASES OF CIT V JAYAKRISHN A HARIVALLABHA DAS (1998) 231 ITR 108 (GUJ); AND MUMB AI HIGH ITA NO.445/BANG/2018 PAGE 15 OF 19 COURT IN THE CASE OF CIT V SURAT COTTON SPINNING & WEAVING MILLS PVT. LTD; WHEREIN IT WAS OBSERVED THAT IN A SCHEME OF SIMILAR TRANSFER FULL VALUE OF CONSIDERATION COULD BE NIL. CONTENDING THAT THE ASSESSEE'S CASE INVOLVED REAL TRANSFER U/S 2(47) OF THE I.T. ACT. THE ASSESSEE HAS ALSO REFERRED TO THE JUDGMENTS OF VANIA SILK MILLS P LTD V CIT 191 ITR 647AND THAT OF DCIT V BPL SANYO FINANCE LTD 312 ITR 63 (KAR). THE ASSESSEE'S CORE CONTENTION RAISED IN THIS REGAR D IS THAT IRRESPECTIVE OF THE AMOUNT OF CONSIDERATION INVOLVE D (EVEN IF NIL) OR THE ACCRUAL OF EITHER POSITIVE OR NEGATIVE INCOME, THE CAPITAL GAINS / LOSS PROVISION WOULD BE ATTRACTED, AS CERTAIN ELEMENT OF TRANSFER EXTINGUISHMENT OF ASSETS / RIGH TS HAS OCCURRED IN THE PROCESS OF SUCH TRANSFER. IT IS THE ASSESSEE'S CASE THEREFORE, THAT AS A RESULT OF THE ARRANGEMENT UNDER THE SHARE-REDUCTION SCHEME UNDER CONSIDERATION; THE RES ULTANT CAPITAL LOSS HAS TO BE ALLOWED, AS THE EXTINGUISHME NT OF RIGHTS BY VIRTUE OF SHARE REDUCTION. AMOUNTS TO TRANSFER A S DESCRIBED AND INCORPORATED IN THE ABOVE STATED JUDGMENTS. THE RATIO OF JUDGMENTS INVOKED BY THE APPELLANT NO DOUBT RELATES TO THE ISSUE OF CAPITAL GAINS 1 LOSS AND THE WIDE-MEANING OF TRANSFER ASCRIBED TO THE SECTION 2(47). THERE IS NO SPECIFIC DISPUTE WITH THE FINDINGS AND OBSERVATIONS OF THE HON'BLE C OURT ON THIS ASPECT OF THE MATTER. HOWEVER, THE CLEAR DISTI NGUISHING FACTORS IN THE PRESENT CASE ARE WHETHER THE SAME WO ULD SQUARELY APPLY TO WHAT IS ESSENTIALLY, IN THE PRESE NT CASE. AN INTRA-GROUP ARRANGEMENT OF REDUCTION OF SHARES BETW EEN THE APPELLANT AND ITS OWN SUBSIDIARY. IT IS ABUNDANTLY CLEAR FROM THE PRECEDING DISCUSSION, THAT, THE FINAL SHARE HOL DING RATIO REMAINED UNCHANGED AFTER THE IMPLEMENTATION OF THE SHARE OF REDUCTION SCHEME. THE NUMBER OF SHARES WAS REDUCED BUT, WITHOUT TANGIBLE REDUCTION IN FACE VALUE OR THE TOT AL- PERCENTAGE OF SHAREHOLDING HELD EVEN AFTER SUCH RED UCTION IN NUMBERS. THESE CRUCIAL QUESTIONS THEREFORE REMAIN UNADDRESSED IN THE PRESENT SITUATION AND DO NOT COR RESPOND TO THE FACTS & CIRCUMSTANCES IN WHICH THE ABOVE CIT ED JUDGMENTS WERE PASSED. IT IS THEREFORE HELD THAT, T HE SAID JUDICIAL PRONOUNCEMENTS DO NOT SQUARELY APPLY TO THE CASE PR ESENTLY, UNDER CONSIDERATION. 7.3. THE AO IN THE IMPUGNED-ORDER HAS PLACED RELIAN CE ON THE RATIO OF JUDGMENTS IN THE CASE OF BENNETT COLEMAN & CO. LTD V ACIT (TS-580-ITAT-2011) (MUM) AND CIT VS. RASIKLALM ANEKLAL (HUF) 1989 (3) TMI 3- (SC). THE ASSESSEE IN ITS WRITTEN SUBMISSION DATED 25/10/ 2017 HAS ATTEMPTED TO DISTINGUISH THE AFORESAID CASE OF BENN ET COLEMAN & CO. LTD., BY RELYING ON THE OBSERVATIONS OF THE DISSENTING MEMBER OF THE 3-MEMBER BENCH. HAVING PER USED THE RATIO OF THE JUDGMENT, I AM AGREEABLE TO THE CO NTENTION OF THE AO THAT, THE APPELLANT'S CASE UNDER ADJUDICATIO N IS FAIRLY- ITA NO.445/BANG/2018 PAGE 16 OF 19 COVERED TO A LARGE EXTENT, IN VIEW OF THE SIMILARIT Y OF THE FACTS & CIRCUMSTANCES UNDER CONSIDERATION IN THE PRESENT CASE. THE CORE ARGUMENTS OF THE REVENUE IN THIS CASE (BENNET COLEMAN & CO. LTD.) WAS THAT THE SCHEME APPROVED BY THE HON 'BLE HIGH COURT IN THAT CASE WAS ON ACCOUNT OF REDUCTION OF FACE VALUE OF SHARES FOR RS. 10 TO RS. 5 AND LATER CONSO LIDATING 2 OF THE RESULTANT SHARES INTO 1 EQUITY SHARE AND TO ISSUE A FRESH SHARE OF RS. 10 EACH. THE REVENUE HAD RAISED A SIMI LAR GROUND THAT NO SHARES WERE PARTED-AWAY TO ANYONE EL SE AND THAT EVEN POST-CONVERSION, THE COST OF ACQUISITION OF SHARES HAD TO BE CONSIDERED WITH REFERENCE TO THE COST OF ORIGINAL SHARES. THIS IS QUITE AKIN TO THE PRESENT CASE, WHE RE EVEN AFTER THE SHARE-REDUCTION, (BETWEEN THE GROUP ENTIT IES), THE EFFECTIVE SHAREHOLDING PERCENTAGE REMAINED THE SAME . THE ASSESSEE'S PRIMARY ARGUMENT OR DISTINGUISHMENT FROM THE PRESENT CASE, IS THAT A CERTAIN CONSIDERATION WAS P ASSED ON TO M/S ANNPL, AS AGAINST THE CASE OF BENNETT COLEMAN & CO. LTD. THIS ARGUMENT HOWEVER, DOES NOT HOLD GROUND IN VIEW OF THE FACT THAT THE QUESTIONS OF SHARE-VALUATION AND ADEQUACY OF CONSIDERATION HAVE NOT BEEN EXAMINED BY THE AO, EVE N- THOUGH, THE SCHEME WAS ESSENTIALLY AN INTRA-GROUP ARRANGEMENT BETWEEN THE SUBSIDIARY AND A HOLDING CO MPANY. IN THIS VIEW OF THE MATTER, THE AO'S RELIANCE ON TH E JUDGMENT OF BENNETT COLEMAN & CO. LTD. (CITED SUPRA) IS FOUN D TO BE APPROPRIATE AND TENABLE, IN THE GIVEN FACTS & CIRCU MSTANCES. IN THE CASE OF BENNET COLEMAN & CO. LTD. (CITED SUP RA) THE HON'BLE COURT AGREED WITH THE REVENUE'S CONTENTION THAT THERE WAS NO REAL-TRANSFER (IN TERMS OF SECTION 2(47)) AN D THAT ONE SET OF SHARES WERE SIMPLY EXCHANGED BY ANOTHER SET OF SHARES, WHILE THE TOTAL SHAREHOLDING PERCENTAGE PRIOR / SUB SEQUENT TO THE SCHEME OF REDUCTION REMAINED THE SAME. THE AO HAS ALSO POINTED TOWARDS THE CASE OF DT VS. RASIKLALMANEKLAL (HUF) 1989 (3) TMI 3- (SC). IN TH E SAID CASE OF HON'BLE APEX COURT HELD THAT, IN THE EVENT OF EXCHANGE OF ONE PROPERTY AGAINST ANOTHER (BETWEEN TWO ENTITI ES). THE PROPERTY IN QUESTION CONTINUED TO REMAIN IN EXISTEN CE. IN BACKGROUND OF THE ABOVE DETAILED DISCUSSION AND FACTS & CIRCUMSTANCES OF THE PRESENT CASE AND IN LIGHT OF T HE JUDICIAL POSITION ON THE ISSUE AT HAND. I AM IN AGREEMENT WI TH THE AO'S ACTION. THE DISALLOWANCE OF RS. 1,64,48.55.840/- AN D CONSEQUENT LONG TERM CAPITAL LOSS IS ACCORDINGLY UPHELD. THE A SSESSEE'S GROUNDS OF APPEAL IN THIS REGARD ARE THEREFORE DISA LLOWED. 5. WE FIND THAT IN PARA 7.2 OF THE ORDER OF CIT(A), IT IS NOTED BY CIT(A) THAT DISTINGUISHING FACTORS FOR WHICH THE JUDGMENT OF HO NBLE APEX COURT RENDERED IN THE CASE OF KARTIKEYA V. SARABHAI VS. C IT (SUPRA) IS NOT APPLICABLE ARE NOTED IN PARA 6.6 OF HIS ORDER. IN PARA 6.6 OF THE ORDER OF CIT(A), IT IS NOTED BY CIT(A) THAT AS PER SCHEME OF REDUCTION OF SHARE CAPITAL ITA NO.445/BANG/2018 PAGE 17 OF 19 APPROVED BY HONBLE BOMBAY HIGH COURT, ALTHOUGH TOT AL NUMBER OF SHARES HELD BY THE ASSESSEE IN M/S. ASIANET NEW NETWORK P LTD. (ANNPL) HAS BEEN REDUCED FROM 153340900 NUMBER OF SHARES TO 998 8 NUMBER OF SHARES BUT THE PERCENTAGE OF HOLDING REMAINS UNCHANGED WHI CH WAS NOTED TO BE 99.88% PRIOR TO REDUCTION AS WELL AS AFTER REDUCTIO N. BECAUSE OF THIS, LD. CIT (A) CAME TO THE CONCLUSION THAT THOUGH THERE WAS A CERTAIN REDUCTION IN NUMBER OF SHARES YET THERE WAS NO EFFECTIVE REDUCTI ON IN THE FACE VALUE OF THE SHARES AND MORE IMPORTANTLY, RATIO OF SHARE HOL DING OF THE ASSESSEE COMPANY IN ANNPL REMAINS 99.88% AT THE SAME FIGURE OF SHARE HOLDING PRIOR TO THE IMPLEMENTATION OF THE SHARE-REDUCTION SCHEME APPROVED BY HONBLE BOMBAY HIGH COURT. HE HAS HELD THAT IN THI S FACTUAL BACKGROUND, THERE WAS NO EFFECTIVE TRANSFER OR EXTINGUISHMENT O F RIGHTS AS ENVISAGED IN THE JUDGMENT OF HONBLE APEX COURT. ON THIS BASIS, HE HELD THAT THIS JUDGMENT IS NOT APPLICABLE IN THE PRESENT CASE. NO W WE REPRODUCE THE RELEVANT PARA I.E. PARA NO. 5 FROM THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF KARTIKEYA V. SARABHAI VS. C IT (SUPRA). THE SAME IS AS UNDER. 5. SEC. 2(47) WHICH IS AN INCLUSIVE DEFINITION, INT ER ALIA, PROVIDES THAT RELINQUISHMENT OF AN ASSET OR EXTINGUISHMENT OF ANY RIGHT THERE IN AMOUNTS TO A TRANSFER OF A CAPITAL ASSET. WHILE, IT IS NO DOUBT TRUE THAT THE APPELLANT CONTINUES TO REMAIN A SHAREHOLDER OF THE COMPANY EVEN WITH THE REDUCTION OF A SHARE CAPITAL BUT IT IS NOT POSSIBLE TO ACCEPT THE CONTENTION THAT THERE HAS BEEN NO EXTINGUISHMENT OF ANY PART OF HIS RIGHT AS A SHAREHOLDER QUA THE COMPANY. IT IS NOT N ECESSARY THAT FOR A CAPITAL GAIN TO ARISE THAT THERE MUST BE A SALE OF A CAPITAL ASSET. SALE IS ONLY ONE OF THE MODES OF TRANSFER ENVISAGED BY S. 2 (47) OF THE ACT. RELINQUISHMENT OF THE ASSET OR THE EXTINGUISHMENT O F ANY RIGHT IN IT, WHICH MAY NOT AMOUNT TO SALE, CAN ALSO BE CONSIDERE D AS A TRANSFER AND ANY PROFIT OR GAIN WHICH ARISES FROM THE TRANSF ER OF A CAPITAL ASSET IS LIABLE TO BE TAXED UNDER S. 45 OF THE ACT. WHEN, AS A RESULT OF THE REDUCING OF THE FACE VALUE OF THE SHARE, THE SHARE CAPITAL IS REDUCED, THE RIGHT OF THE PREFEREN CE SHAREHOLDER TO THE DIVIDEND OR HIS SHARE CAPITAL AND THE RIGHT TO SHAR E IN THE DISTRIBUTION OF THE NET ASSETS UPON LIQUIDATION IS EXTINGUISHED PROPORTIONATELY TO THE EXTENT OF REDUCTION IN THE CAPITAL. WHEREAS THE APPELLANT HAD A RIGHT TO DIVIDEND ON A CAPITAL OF RS. 500 PER SHARE THAT STOOD REDUCED TO HIS RECEIVING DIVIDEND ON RS. 50 PER SHARE. SIMI LARLY, IF THE LIQUIDATION WAS TO TAKE PLACE WHEREAS HE ORIGINALLY HAD A RIGHT TO RS. 500 PER SHARE, NOW HIS RIGHT STOOD REDUCED TO RECEI VING RS. 50 PER SHARE ONLY. EVEN THOUGH THE APPELLANT CONTINUES TO REMAIN A SHAREHOLDER HIS RIGHT AS A HOLDER OF THOSE SHARES C LEARLY STANDS ITA NO.445/BANG/2018 PAGE 18 OF 19 REDUCED WITH THE REDUCTION IN THE SHARE CAPITAL. 6. FROM THIS PARA OF THIS JUDGMENT OF HONBLE APEX COURT, IT IS SEEN THAT IT IS HELD BY HONBLE APEX COURT IN THIS CASE THAT SECTIO N 2(47) IS CONTAINING AN INCLUSIVE DEFINITION AND INTER ALIA, IT PROVIDES TH AT RELINQUISHMENT OF AN ASSET OR EXTINGUISHMENT OF ANY RIGHT THERE IN AMOUNTS TO A TRANSFER OF A CAPITAL ASSET. THE HONBLE APEX COURT HAS ALSO NOTED THAT IT IS NO DOUBT TRUE THAT THE ASSESSEE CONTINUES TO REMAIN A SHAREHOLDER OF T HE COMPANY EVEN AFTER THE REDUCTION OF A SHARE CAPITAL BUT IT IS NOT POSS IBLE TO ACCEPT THE CONTENTION THAT THERE HAS BEEN NO EXTINGUISHMENT OF ANY PART O F HIS RIGHT AS A SHAREHOLDER QUA THE COMPANY. IN THAT CASE, THE ASS ESSEE HAS PURCHASED 90 NON-CUMULATIVE PREFERENCE SHARES, EACH OF THE FA CE VALUE OF RS. 1,000 AT A PRICE OF RS. 420 PER SHARE AND SUBSEQUENTLY, THE COMPANY PAID RS. 500 PER SHARE UPON A REDUCTION OF THE SHARE CAPITAL OF THE COMPANY BY WAY OF REDUCING THE FACE VALUE OF EACH SHARE FROM RS. 1,00 0 TO RS. 500. UNDER THESE FACTS, IT WAS HELD THAT THIS AMOUNTS TO TRANS FER IN VIEW OF THE PROVISIONS OF SECTION 2(47) OF IT ACT. IN THE PRESENT CASE, T HE FACE VALUE PER SHARE REMAINS SAME I.E. RS. 10 PER SHARE BEFORE REDUCTION OF SHARE CAPITAL AND AFTER REDUCTION OF SHARE CAPITAL BUT THE TOTAL NUMB ER OF SHARES HAS BEEN REDUCED FROM 153505750 TO 10000 AND OUT OF THIS, TH E PRESENT ASSESSEE WAS HOLDING PRIOR TO REDUCTION 153340900 SHARES AND AFTER REDUCTION 9988 SHARES. IN ADDITION TO THIS REDUCTION IN NUMBER OF SHARES HELD BY THE ASSESSEE COMPANY IN ANNPL, THE ASSESSEE RECEIVED AN AMOUNT OF RS. 3,17,83,474/- FROM ANNPL. HENCE IT IS SEEN THAT IN THE FACTS OF PRESENT CASE, ON ACCOUNT OF REDUCTION IN NUMBER OF SHARES H ELD BY THE ASSESSEE COMPANY IN ANNPL, THE ASSESSEE HAS EXTINGUISHED ITS RIGHT OF 153340900 SHARES AND IN LIEU THEREOF, THE ASSESSEE RECEIVED 9 988 SHARES AT RS. 10/- EACH ALONG WITH AN AMOUNT OF RS. 3,17,83,474/-. AS PER THIS JUDGMENT OF HONBLE APEX COURT RENDERED IN THE CASE OF KARTIKEY A V. SARABHAI VS. CIT (SUPRA), THERE IS NO REFERENCE TO THE PERCENTAGE OF SHARE HOLDING PRIOR TO REDUCTION OF SHARE CAPITAL AND AFTER REDUCTION OF S HARE CAPITAL AND HENCE, IN OUR CONSIDERED OPINION, THE BASIS ADOPTED BY THE CI T(A) TO HOLD THAT THIS JUDGMENT OF HONBLE APEX COURT IS NOT APPLICABLE IN THE PRESENT CASE IS NOT PROPER AND IN OUR CONSIDERED OPINION, THIS IS NOT P ROPER. IN OUR CONSIDERED ITA NO.445/BANG/2018 PAGE 19 OF 19 OPINION, IN THE FACTS OF PRESENT CASE, THIS JUDGMEN T OF HONBLE APEX COURT IS SQUARELY APPLICABLE AND BY RESPECTFULLY FOLLOWING T HIS JUDGMENT OF HONBLE APEX COURT, WE HOLD THAT THE ASSESSEES CLAIM FOR C APITAL LOSS ON ACCOUNT OF REDUCTION IN SHARE CAPITAL IN ANNPL IS ALLOWABLE. WE HOLD ACCORDINGLY. 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE DATE MENT IONED ON THE CAPTION PAGE. SD/- SD/- (SUNIL KUMAR YADAV) (ARUN KUMAR GARODI A) JUDICIAL MEMBER ACCOUNTANT MEMBER BANGALORE, DATED, THE 29 TH NOVEMBER, 2018. /MS/ COPY TO: 1. APPELLANT 4. CIT(A) 2. RESPONDENT 5. DR, ITAT, BANGALORE 3. CIT 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR, INCOME TAX APPELLATE TRIBUNAL, BANGALORE.