Case Law Details
Director Of Income-Tax International Taxation Vs Intel Capital (Cayman) Corporation (Karnataka High Court)
HC: Capital gain on conversion of FCCBs into shares would be determined by adopting conversion price prevailing at BSE or NSE on date of conversion
Conclusion: AO was not justified in computing capital gains by adopting the cost of acquisition at Rs. 873.83 and 858.08 per share as bonds issued to assessee were issued under the Foreign Currency Exchangeable Bond Scheme, 2008 (FCCB scheme) and the conversion price Rs. 200/- determined by assessee on the basis of price of shares at Bombay Stock Exchange or National Stock Exchange on the date of conversion of FCBBs into shares.
Held: Assessee had acquired foreign currency convertible bonds and after conversion of the same into shares, sold the same during the relevant previous year and disclosed short term capital gains from the transaction and paid tax thereon at the prescribed rate. The cost of acquisition of equity shares on conversion of foreign currency convertible bonds was shown to be at 873.83 and 858.08 per share whereas in fact assessee converted the bonds into shares at `200/- per share. AO concluded that cost of acquisition of share had to be assessed at 200 per share and not at 873.83 and 858.08 per share as claimed by assessee and completed the assessment. In the instant case, bonds issued to assessee were issued under the Foreign Currency Exchangeable Bond Scheme, 2008 (FCCB scheme) and the conversion price determined on the basis of price of shares at Bombay Stock Exchange or National Stock Exchange on the date of conversion of FCBBs into shares. It was also pertinent to mention that there was no conflict between the provisions of the scheme and the Acts / Rules. Therefore, the issue was decided in favour of assessee.
FULL TEXT OF THE HIGH COURT ORDER /JUDGEMENT
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