Reduction of equity share capital not subject to capital gains – ITAT Mumbai

Bennett Coleman & Co. Ltd Vs ACIT (ITAT Mumbai Special Bench)- Whether the CIT(A) was justified in declaring long term capital loss of Rs. 22,21,85,693/- on account of reduction in paid up equity share capital – the loss arising on account of reduction in share capital cannot be subjected to provisions of sec.45 r.w.s. 48 and, accordingly, such loss is not allowable as capital loss. At best such loss can be described as notional loss and it is settled principle that no notional loss or income can be subjected to the provisions of the Income Tax Act. Loss arising on account of reduct...