COMMISSIONER OF INCOME TAX Vs. VINIT ESTATE (P) LTD.
LAWS(DLH)-2007-8-249
HIGH COURT OF DELHI
Decided on August 02,2007

COMMISSIONER OF INCOME TAX Appellant
VERSUS
Vinit Estate (P) Ltd. Respondents

JUDGEMENT

- (1.) ADMIT , After hearing learned counsel for the parties, the following substantial question of law is framed for our consideration : "Whether the Tribunal was correct in law in allowing the assessee to include interest of Rs. 10,57,192 to the cost of acquisition of the shares for the purposes of computing capital gain -
(2.) 700/Del/2005 relevant for the asst. yr. 2001 -02.
(3.) THE assessee had entered into an agreement with M/s Pace Industries (P) Ltd. (Vendor) for purchase of 25,000 equity shares of the value of Rs. 10 each of NIIT Ltd. The purchase value of the shares was shown as Rs. 3,06,25,000. Long with interest @ 18 per cent per annum till the day of payment. Clause 5 of the agreement is of considerable importance and this reads as follows : "5. It is hereby further agreed and declared as follows : (a) As from the date of this agreement, the vendor shall hold the shares and all dividends and interest accrued or to accrue upon the same or any of them upon trust for the purchaser and agrees to pay and deal with respect of the same in such manner as the purchaser shall from time to time direct. (b) The vendor will at the request of the purchaser attend all the meetings of shareholders or otherwise which he shall be entitled to attend by the virtue of being the registered owner of the shares or any of them and will vote at every such meeting in such manner as the purchaser shall have previously directed in writing." According to the assessee, payment of the consideration amount was made to the vendor aLong with interest of Rs. 10,57,192. The assessee sought to include this amount towards the cost of acquisition of the shares. The AO was of the view that the agreement was an afterthought and, therefore, denied the deduction under s. 48 of the IT Act, 1961. ;


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