The Loss Arising to Assessee for Cancellation of Its Shares Pursuant to Reduction of Capital Should be Allowed as Long Term Capital Loss: ITAT Mumbai

The Loss Arising to Assessee for Cancellation of Its Shares Pursuant to Reduction of Capital Should be Allowed as Long Term Capital Loss: ITAT Mumbai

In the case of Carestream Health Inc vs DCIT, ITAT Mumbai has held that:

The ld DR vehemently argued that the percentage of shareholding remains the same because reduction of shares had happened for all shareholders. We find that the ld DR relied on para 24 of the judgement of Special Bench of Mumbai Tribunal in 133 ITD 1 supra to support his proposition. In this regard, we hold that the percentage of shareholding has got no bearing for chargeability of capital gains under the Act. We further find that the provisions of section 55(2)(v) of the Act were applied in the Mumbai Special Bench decision also in para 28 thereon. We find that in the case before us, the provisions of section 55(2)(v) of the Act will have no application at all and if the assessee is not given the benefit, it will never get it and none of the clauses of section 55(2)(v) of the Act would be applicable to the assessee in the instant case. Hence reliance placed on para 28 of the judgement of Special Bench of Mumbai Tribunal does not advance the case of the revenue.

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Dhanraj Sharma

Dhanraj Sharma is CEO of Tax Concept. He is on a Mission to Educate and Empower 10,000+ Professionals across the Country.

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