Loading judgment…
Facts
A search operation was conducted on the assessee's premises, revealing that the assessee held shares in two companies, Shrey Properties Pvt.Ltd. and Snerea Properties Pvt.Ltd., which jointly owned a property valued at ₹150 crores. Subsequently, these companies issued fresh shares to AEZ Infratech Pvt.Ltd., reducing the assessee's percentage shareholding from 2.25% to 0.562%, and AEZ Infratech further transferred some shares to Om Shivay Real Estate Pvt.Ltd. The Assessing Officer treated this reduction in proportionate ownership of the underlying property as a de-facto transfer and added ₹2,53,20,000/- as capital gain to the assessee's income, which the CIT(A) deleted.
Held
The Tribunal upheld the CIT(A)'s decision, confirming that there was no actual transfer of shares or immovable property by the assessee, but merely a reduction in shareholding percentage due to a fresh issuance of shares by the companies. Following the Delhi High Court's ruling, it was held that such a reduction does not constitute relinquishment of a right by the existing shareholder if no offer of rights was made, thus no capital gain could be attributed to the assessee. Any income arising from such transactions would be taxable in the hands of the actual transferors of shares.
Key Issues
Whether a reduction in an assessee's shareholding percentage due to fresh issuance of shares by a company amounts to 'transfer' or 'relinquishment' of a capital asset under Section 2(47) of the Income Tax Act, 1961, leading to capital gains for the assessee, and if a notional reduction in proportionate ownership of an underlying property can trigger capital gains.
Sections Cited
147, 143(3), 153A, 132, 2(47), 68, 148, 142A, 144, 144A
AI-generated summary — verify with the full judgment below
IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH 'G': NEW DELHI
BEFORE SHRI MAHAVIR SINGH, VICE PRESIDENT AND SHRI KRINWANT SAHAY, ACCOUNTANT MEMBER
ITA No.2386/Del/2023 Assessment Year: 2011-12
Income Tax Officer, Delhi. Vs. Ms. Sunita Sanjeev Aeren,
Aerens Bimaldeep Complex, Mall Road, Behind Pocket D-3, Kishan Garh, Vasant Kunj, New Delhi – 110 070.
PAN : AAHPG0477C.
(Appellant)
(Respondent)
Cross Objection No.55/Del/2025 (In ITA No.2386/Del/2023) Assessment Year: 2011-12
Income Tax Officer, Delhi. Vs. Ms. Sunita Sanjeev Aeren, Aerens Bimaldeep Complex, Mall Road, Behind Pocket D-3, Kishan Garh, Vasant Kunj, New Delhi – 110 070. PAN: AAHPG0477C.
(Appellant)
(Respondent)
Assessee by : Shri Rajeshwar Painuly, CA. Revenue by : Shri Mahesh Kumar, CIT-DR.
Date of hearing : 11.11.2025 Date of pronouncement : 14.11.2025
ORDER
PER MAHAVIR SINGH, VP
This appeal by the Revenue is arising out of the order of learned CIT(A)-27, New Delhi in appeal No.CIT(A), Delhi-31/10207/2019-20 dated 22<sup>nd</sup> May, 2023.
transacting parties, i.e., the then existing shareholders of the assessee and the transferees to whom the shares have been allegedly sold at an undervalue. Learned Counsel stated that in the present case, there is no transfer of any shares or their properties by the assessee and hence, there is no question of any long term capital gain arising in the transaction. Learned Counsel for the assessee relied on the findings of the learned CIT(A) as noted in Paragraph No.5.2 and 5.3 as under:-
"5.2 Findings:
- i. This is a matter of fact and even admitted by the ld. AO in his assessment order that appellant has not sold any share of M/s Shrey Properties Pvt.ltd. and M/s Snerea Properties Pvt.Ltd. during the year. - ii. However, there is reduction of % shareholding of appellant in these two companies on account of fresh issue of shares to M/s ADTV Communications Pvt.Ltd. - iii. It is not in the hands of minority shareholders to control the company in issuing of shares to the existing shareholder or to some new investor. - iv. This is the decision of the Board to whom to allot fresh equity shares in what quantity and at what price. - v. Whenever there is fresh issue of equity shares by any company in the form of ESOP (to employees), right issue, public issue, or preferential issue of shares to some strategic investors, the percentage shareholding of the existing shareholders always undergo change. This can never be construed as relinquishment of right as no such right was offered to them. - vi. As far as, Section 2(47) of the Income Tax Act, which defines "transfer" in relation to a capital asset, is concerned, the relinquishment of the right in the capital asset is also considered as one of the modes of the transfer of property/capital asset. However, before invoking this provision, the Id. has failed to appreciate that - A. Firstly, a person must have the right in the relinquished capital asset, - B. Secondly, he must relinquish his right in favour of some specific person/entity; and
Note: it only a graphical Presentation.
Abbreviation used above is explained as under.
- (1)\ Owner of Prithviraj Road Property Means:- owner of property located on 15/1 Prithviraj Road New Delhi value perused. (2)\ Shrey Mean:- Shrey Properties Pvt Ltd. - (3)\* Sherea Means:- Sherea Properties Pvt Ltd - (12)\* Sanjeev Means:- Sanjeev J. Aeren - (13)\* Shrey Means:- Shrey S Aeren - (15)\* Sunita Means:- Sunita S Aerens - (16)\* Sanya Means:- Sanya S Aeren - (14)\* AEZ Means:- AEZ Infraction Pvt Ltd. Now known as ADTV Communication Pvt Ltd.
to whom the shares have been allegedly sold at an undervalue.
- 18. The question whether the Prithviraj Road Property is held by the Assessees as stock-in-trade or any other asset is not relevant in considering whether any addition could be made to the income of the Assessees under Section 68 of the Act on account of the sale/purchase of the shares of the Assessee company by its shareholders or by otherwise acquisition of shares. The Assessees continue to hold the title and interest in the Prithviraj Road Property and had not alienated their interest or title in favour of any other person." - 7. Respectfully following the aforesaid decision of Hon'ble Delhi High Court in the case of Snerea Properties (P.) Ltd. (supra), we confirm the order of learned CIT(A) and dismiss this appeal of the Revenue. - 8. As we have already dismissed the appeal of the Revenue, the cross-objection of the assessee has become infructuous, and is also dismissed. - 8. In the result, the appeal of the Revenue and cross-objection of the assessee are dismissed.
Decision pronounced in the open Court on 14<sup>th</sup> November, 2025.
Sd/-
Sd/-
(KRINWANT SAHAY) ACCOUNTANT MEMBER
(MAHAVIR SINGH) VICE PRESIDENT
VK.
Copy forwarded to: -
- 1. Appellant - 2. Respondent - 3. CIT - 4. CIT(A) - 5. DR, ITAT
Assistant Registrar