Kartikeya v. Sarabhai vs. CIT

228 ITR 163Supreme Court of India1997#4640 most cited

What is Kartikeya v. Sarabhai vs. CIT authority for?

Extinguishment of substantial rights of a shareholder in an investee company due to reduction of share capital is considered an "extinguishment" within the meaning of 'transfer' under Section 2(47) of the Income Tax Act, even if a third party is not involved.

25

judgments rely on this decision, according to BharatTax’s citation analysis of 366,339 Indian tax judgments — from 2015 to 2026.

Also referred to as

Kartikeya Sarabhai vs CIT · Section 2(47) · extinguishment of rights · reduction of share capital · transfer of capital asset · Section 45 · definition of transfer · merger · company law

Sections most often in play

Section 45Section 35DSection 40(a)(i)Section 80HHCSection 2(47)Section 35(2AB)Section 14ASection 28(iiid)
Read the full judgment

Issues it is cited on

extinguishment of rightssection 47section 2(47)compulsory acquisitionvaluation of sharesdomestic companysection 2(14)corporate guaranteetransfer of capital assetsection 45section 55right to receive

Judgments citing Kartikeya v. Sarabhai vs. CIT

Mahindra & Mahindra Ltd, Mumbai vs. ACIT Cir 2(2)2, Mumbai

In the result, all the appeals of the assessee are partly allowed for statistical purposes and appeal of the revenue is dismissed

ITA 1449/MUM/2016[2011-12]Status: DisposedITAT Mumbai19 Jun 2020AY 2011-12

Bench: Shri Mahavir Singh, Vp & Shri M.Balaganesh, Am & Sa No.462/Mum/2019 (Arising Out Of Ita No.1449/Mum/2016) (Assessment Year : 2011-12) Mahindra & Mahindra Vs. Dy. Commissioner Of Limited, Income-Tax Corporation Taxation, Circle-2(2)(2) P.K. Kurne Chowk, Aayakar Bhavan, Worli, Mumbai – 400020 M.K.Road, Mumbai-400020 Pan/Gir No.Aaacm3025E (Appellant) .. (Respondent) & Sa No.461/Mum/2019 (Arising Out Of Ita No.7382/Mum/2017) (Assessment Year : 2013-14) Mahindra & Mahindra Vs. Dy. Commissioner Of Limited, Income-Tax Corporation Taxation, Circle-2(2)(2) P.K. Kurne Chowk, Aayakar Bhavan, Worli, Mumbai – 400020 M.K.Road, Mumbai-400020 Pan/Gir No.Aaacm3025E (Appellant) .. (Respondent) Dy. Commissioner Of Vs. Mahindra & Mahindra Limited, Income-Tax Corporation Taxation, Circle-2(2)(2) P.K. Kurne Chowk, Aayakar Bhavan, Worli, Mumbai – 400020 M.K.Road, Mumbai- 400020 Pan/Gir No.Aaacm3025E (Appellant) .. (Respondent) Mahindra & Mahindra Vs. Asst. Commissioner Of Limited, Income-Tax Corporation Taxation, Circle-2(2)(2) P.K. Kurne Chowk, Aayakar Bhavan, Worli, Mumbai – 400020 M.K.Road, Mumbai-400020 Pan/Gir No.Aaacm3025E (Appellant) .. (Respondent)

Section 143(3)Section 144C(5)

…capital loss arising on account of share capital could be allowed to be carried forward in the hands of the assessee. We find that the Bangalore Tribunal had placed reliance on the Hon’ble Supreme Court in the case of Kartikeya vs. Sarabhai vs CIT reported in 228 ITR 163. On perusal of the facts before the Hon’ble Supreme Court in Kartikeya vs. Sarabhai case, we find that assessee had purchased 90 non-cumulative preference shares in Sarabhai Ltd., each of the face value of Rs.1000/- at a price of Rs.420 per share. In the year 1965, a sum of Rs.500 per share was paid off to the shareholder upon reduction of share…

Anik Industries Ltd, Mumbai vs. DCIT CC 40, Mumbai

The appeal stands allowed

ITA 7189/MUM/2014[2010-11]Status: DisposedITAT Mumbai19 Mar 2020AY 2010-11

Bench: Shri Saktijit Dey, Jm & Shri Manoj Kumar Aggarwal, Am आयकरअपील सं./ I.T.A. No.7189/Mum/2014 (िनधा"रण वष" / Assessment Year:2010-11) M/S. Anik Industries Ltd. Dcit-Central Circle -40 बनाम/ 610, Tulsiani Chambers Mumbai. Vs. Nariman Point, Mumbai. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaacm-2696-K (अपीलाथ"/Appellant) : (""थ" / Respondent) & आयकरअपील सं./ I.T.A. No.5234/Mum/2016 (िनधा"रण वष" / Assessment Year:2012-13) M/S. Anik Industries Ltd. Dcit-Central Circle -40 बनाम/ 610, Tulsiani Chambers Mumbai. Vs. Nariman Point, Mumbai. "थायीलेखासं./जीआइआरसं./Pan/Gir No. Aaacm-2696-K (अपीलाथ"/Appellant) : (""थ" / Respondent) अपीलाथ"कीओरसे/ Appellant By : Shri Bhupendra Shah-Ld. Ar ""थ"कीओरसे/Respondent By : Shri Manoj Kumar-Ld. Dr सुनवाईकीतारीख/ : 17/01/2020 Date Of Hearing घोषणाकीतारीख / : 19/03/2020 Date Of Pronouncement

For Appellant: Shri Bhupendra Shah-Ld. ARFor Respondent: Shri Manoj Kumar-Ld. DR
Section 143(3)

…e law laid down by the Apex Court in the case of McDowell Co. Ltd.'s case (supra) has no application to the facts of this case. 18. The learned Counsel for the revenue relied on the judgment of the Apex Court in the case of Kartikeya V. Sarsbhai v. CIT [1997] 228 ITR 163 / 94 Taxman 164 where it was held as follows: "Section 2(47) of the Income-tax Act, 1961, defines "transfer" in relation to a capital asset. It is an inclusive definition which, inter alia, provides that relinquishment of an asset or extinguishment of any right therein amounts to a transfer of a capital asset. It is not necessary for a capital ga…

Carestream Health Inc, Mumbai vs. DCIT (It) 2(1)(1), Mumbai

In the result, the appeal of assessee is allowed

ITA 826/MUM/2016[2011-12]Status: DisposedITAT Mumbai06 Feb 2020AY 2011-12

Bench: Shri M.Balaganesh, Am & Shri Amarjit Singh, Jm M/S. Carestream Health Inc Vs. Dy. Commissioner Of C/O. Carestream Health Income Tax, Range-2(1)(1) India Private Limited Scindia House, M.M.Road Sunteck Centre Ballard Pier 1St Floor, Subhash Road Mumbai – 400 028 Vile Parle (E) Mumbai – 400 057 Pan/Gir No. Aaecc6050H (Appellant) .. (Respondent)

Section 10(34)Section 115Section 144C(13)Section 144C(5)Section 2(22)(d)Section 2(47)Section 45Section 48

…l reduction is a „transfer‟. e) The assessee also placed reliance on the following judgements to support its proposition that reduction of capital amounts to „transfer‟ chargeable to tax as capital gains :- (i) Kartikeya V Sarabhai and Anr vs CIT reported in 228 ITR 163 (SC) (ii) CIT vs G Narasimhan reported in 236 ITR 327 (SC) (iii) CIT vs Mrs Grace Collis reported in 248 ITR 323 (SC) f) The assessee also placed reliance on the decision of Hon‟ble Jurisdictional High Court in the case of Sadanand S Varde and Ors vs State of Maharashtra and Ors reported in 247 ITR 609 (Bom) wherein the Hon‟ble Bombay High Court…

M/S Jupiter Capital Pvt Ltd, Bangalore vs. Deputy Commissioner of Income Tax Circle-11(5), Bangalore

In the result, the appeal filed by the assessee is allowed

ITA 445/BANG/2018[2014-15]Status: DisposedITAT Bangalore29 Nov 2018AY 2014-15

Bench: Shri Sunil Kumar Yadav & Shri Arun Kumar Garodiaassessment Year : 2014-15

For Appellant: Shri S. Parthasarathi, AdvocateFor Respondent: Shri D. Sudhakara Rao, CIT (DR)
Section 2(47)

…book and out of that, the relevant portion is available on pages 64 to 69 of paper book. He further submitted that reliance has been placed by assessee on the judgment of Hon’ble Apex Court rendered in the case of Kartikeya V. Sarabhai Vs. CIT as reported in 228 ITR 163. But this judgment was not followed by CIT(A) on some invalid reasons given by him. He submitted that the issue in the present case is squarely covered in favour of the assessee by this judgment of Hon’ble Apex Court. The ld. DR of revenue supported the orders of authorities below. 4. We have considered the rival submissions. We find that on this…

M/S Digital Radio (Delhi) Broadcasting Ltd., New Delhi vs. ACIT, New Delhi

In the result appeal of the assessee in ITA No 1316 &1317/Del/2011 and ITA

ITA 1316/DEL/2011[2006-07]Status: DisposedITAT Delhi24 Nov 2015AY 2006-07

Bench: Sh. I.C.Sudhir, Jm Andsh. Prashant Maharishi, Am A.Y. 2006-07 Digital Radio (Delhi) Broadcasting Ltd. V Acit C/O. O.P. Sapra & Associates, S Circle-10(1) C-763, New Friends Colony New Delhi New Delhi (Appellant) (Respondent) Pan No. Aabcr7864B A.Y. 2006-07 Acit V Digital Radio (Delhi) Circle-10(1) S Broadcasting Ltd. New Delhi 401, Dakha House, 18/17, Wea Karol Bagh New Delhi (Appellant) (Respondent) Pan No. Aabcr7864B A.Y. 2006-07 Digital Radio (Kolkata) V Acit Broadcasting Ltd. S Circle-10(1) C/O. O.P. Sapra & New Delhi Associates, C-763, New Friends Colony New Delhi (Appellant) (Respondent) Pan No. Aabcr7863G

For Appellant: Sh. Sanjiv Sapra, CA, Sh. O.P. SapraFor Respondent: Sh. A.K.Saroha, CIT., DR
Section 35A

…us courts as under :- a. CIT V Narang dairy products 219 ITR 478 (SC) b. Smt Anand bala Bhushan V CIT ( All) 214 ITR 144 c. CIT V AR Damodar Murlidhar & co 119 ITR 583 (Mad) d. Mangalore electric supply Co ltd V CIT 113 ITR 655 (SC) e. Kartikey Sarabhai V CIT 228 ITR 163 (SC) We have perused all those decision and we are of the view that none of them applies to the facts of the case of the assessee. In all the above cases there was transfer of assets from one person to another and there is a receipt of consideration for such transfer. In none of the cases it was the facts that the assets was non-transferrable as…