Indian Kanoon - Search engine for Indian Law

2. The present appeal was admitted on 10th May, 2006 and the following questions of law were framed:-

"1. Whether the I.T.A.T. was right in holding that the sale consideration received by the assessee by transfer of shares and sale of rights entitlement of partly convertible of partly convertible Debentures (PCDs) is income from capital gains and not income from business?

2. Whether the I.T.A.T. was right in holding that the Assessee had incurred loss on sale of its entitlement to acquire partly convertible debentures & the assessee is entitled to set off the alleged loss from the capital gains/income earned by the assessee?"

25,37,330/- and claimed a carry forward of short term capital loss of Rs. 1,41,73,760/- to be set off against future capital gains. 3.2 The Assessee claimed that it has suffered short term loss on the sale of rights entitlement of Partly Convertible Debentures (hereafter 'PCDs') of M/s Jindal Strips Ltd. (hereafter 'JSL') and M/s Jindal Iron & Steel Co. Ltd. (hereafter 'JISCO'). At the material time, the assessee was a shareholder of JSL and JISCO. During the year JSL announced a Rights Issue in terms of which every shareholder was entitled to subscribe to 7 (seven) PCDs for every 10 (ten) equity shares. JISCO also floated a rights issue in terms of which every shareholder was entitled to subscribe to 5 (five) PCDs for 4 (four) equity shares.