SANJEEV NARULA,J. - (1.) The present appeals under Section 260A of the Income Tax Act, 1961 ('the Act') filed by the Revenue are directed against the common order dated 17th February, 2005, ('impugned order') passed by the Income Tax Appellate Tribunal ('ITAT') in ITA No.(s) 1739,1740,1742 & 1743/Del/ 2001 Assessment Year 1997-98 ('AY'), allowing the appeals preferred by the Respondent-assessees against the order of the CIT(A). Resultantly, additions made by the Assessing Officer ('AO') in the orders of assessment, as confirmed by CIT(A) have been set-aside.
(2.) The ITAT has decided all the appeals by way of a common order and furthermore since the question of law arising therefrom is identical in all the appeals, the same were heard together and are being disposed of by way of this common judgment. However, for the sake of convenience and to precisely delineate the controversy in the present appeals, factual background in ITA No. 822/2005 is being noted and discussed in detail. Facts in brief:
(3.) The Respondent-assessee (Nalwa Investment Limited) belongs to Jindal Group of Companies and is its promoter company. It was holding shares of Jindal Ferro Alloy Ltd. ("JFAL"). Vide amalgamation scheme sanctioned under Section 391-394 of the Companies Act, 1956, JFAL got amalgamated with Jindal Strips Ltd. ("JSL"). Consequently, the Respondent-assessee company transferred its shareholding in JFAL in lieu of receipt of shares of JSL and claimed that the transaction was exempt from capital gain tax under Section 47(vii) of the Act. The AO adopting the value of shares of JSL at the rate of Rs. 218 per share, calculated the profit on receipts of shares of JSL under the scheme of amalgamation at Rs. 5,31,28,579/-, and taxed the same as 'business income'. Revenue contended that since the Respondent-assessee was holding JFAL shares as stock-in-trade and not as capital asset, it was not entitled to exemption under Section 47(vii) of the Act. The statutory first Appellate Authority ['CIT(A)'] upheld the action of AO. In further appeal before ITAT at the instance of the Respondent herein, the Tribunal without recording a categorical finding as to whether the shares qualified as 'capital asset' or 'stock- in- trade', allowed the appeals in favour of the Respondents, holding that no profit accrues when shares of the amalgamated company are received in lieu of shares of amalgamating company. The relevant portion of the impugned order reads as under: "7. In view of the above decision, it cannot be said that the appellants were holding the shares of JFAL either by way of investment or stock in trade. However, we need not adjudicate upon this issue since the decision on this issue is not of much relevance in deciding the large issue before us. The major question for our consideration is whether any profit accrued to the appellants when they got the shares of amalgamated company in lieu of shares of amalgamating company held by them. In our opinion, no profit accrues unless the shares held by an assessee are either sold or transferred otherwise for consideration irrespective of the nature of holding." ;