- (1.) The subject matter of challenge in this appeal is a judgment and order dated April 21, 2003, passed by the learned Income-tax Appellate Tribunal setting aside the order of the Commissioner of Income-tax (Appeals) and restoring the order of the Assessing Officer. Briefly stated the facts and circumstances of this case are as follows: During the assessment year 1993-94, the assessee applied for 1,41,000 non-convertible debentures of Rs. 400 each issued by Gujarat Ambuja Cement Ltd. The application money was Rs. 12 each. The assessee in applying for 1,41,000 non-convertible debentures paid an application money of Rs. 16,92,000. However, only 82,863 non-convertible debentures were, in fact, issued to the assessee. Needless to mention, the excess amount paid by the assessee by way of application money was refunded to him. Therefore, the effective investment of the assessee in applying for 82,863 partly paid non-convertible debentures was Rs. 9,94,356, The aforesaid debentures were accompanied with detachable warrants which entitled the assessee to buy an equal number of shares at a rate to be fixed by the company. The assessee sold the partly paid-up non-convertible debentures at a loss of the application money. The buyer paid the balance amount Upon such payment, the detachable warrants became tradable. Out of 82,863 detachable warrants, the assessee sold 13,000 detachable warrants at the rate of Rs. 55 each and, thus, realised a sum of Rs. 7,15,000. The balance 69,863 detachable warrants were retained by the assessee. In the facts of the case, the assessee contended, as would appear from the order of the learned Tribunal, that as far as sale of partly paid up 82,863 units of "18.5 per cent, non-convertible debentures", is concerned, "since the assessee transferred these units only on the consideration of the said ISL agreeing to pay the remaining unpaid amount i.e., the call money, the entire application money, amounting to Rs. 12 per debenture and which worked out to aggregate of Rs. 9,94,356, constituted short-term capital loss. As far as the sale consideration of Rs. 7,15,000 received on sale of 13,000 "detachable warrants" is concerned, the assessee claimed that since the cost of acquisition of those detachable warrants is not ascertainable, the sale proceeds of these detachable warrants constitutes capital receipts not liable to tax".
(2.) Both the contentions of the assessee were rejected holding that the application money for non-convertible debentures at Rs. 12 each was payable for acquisition of each detachable warrant. Therefore, the claim of the assessee that he had suffered short-term capital loss of a sum of Rs. 9,94,356 was disallowed. The assessee had retained the detachable warrants worth (69863 x 12) Rs. 8,38,356 and recovered a sum of Rs. 7,15,000 by selling 13,000 detachable warrants. Thus, the total receipt was (8,38,356 + 7,15,000) Rs. 15,53,356. After deducting the application money (15,53,356-9,94,356), a sum of Rs. 5,59,000 was earned which was treated as his business income.
(3.) Aggrieved by the order of the Assessing Officer, the assessee preferred an appeal before the Commissioner of Income-tax (Appeals). He upheld the contentions of the assessee. The Revenue preferred an appeal before the learned Tribunal which reversed the order of the Commissioner of Income-tax (Appeals) and restored the order of the Assessing Officer.;