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Case Law Details

Case Name : Deepak Nitrite Ltd. Vs DCIT (Gujarat High Court)
Appeal Number : R/Tax Appeal No. 1653 of 2007
Date of Judgement/Order : 12/01/2023
Related Assessment Year : 1993-94
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Deepak Nitrite Ltd. Vs DCIT (Gujarat High Court)

Gujarat High Court held that detachable warrants have conceivable cost of acquisition and the same is deductible from sale consideration for calculation of capital gain.

Facts-

Appellant, Deepak Nitrite Limited was holding the shares of M/s Deepak Fertilisers and Petrochemicals Ltd. Initially Deepak Fertilisers issued partly convertible debentures of Rs.100/- on the right basis to its shareholders. Each debenture of Rs.100/-was consisting of 3 parts, with a detachable warrant.

It is the case of the appellant that the holder of the warrant shall have the right to apply for and be allotted one equity share of Rs.10 at a price not exceeding Rs.50/- as may be decided by the Controller of Capital Issue (CCI) and these rights shall be exercised during a period of 3 months or such longer period as may be determined by Board of Directors of DEPCL between the expiry of 4 years and the expiry of 6 years from the date of allotment.

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