COMMISSIONER OF INCOME TAX Vs. NALWA INVESTMENT LTD

JUDGEMENT

(1.) THIS is an appeal preferred by the revenue under Section 260A of the Income Tax Act, 1961 (hereinafter referred to as the 'Act') against the judgment dated 29 -7 -2005 passed by the Income Tax Appellate Tribunal (hereinafter referred to as the 'Tribunal') in ITA No. 1705/Delhi/2002 pertaining to assessment year 1995 -96. Vide the impugned judgment the Tribunal has also disposed of ITA No. 1704/ Delhi/2002 pertaining to assessment year 1994 -95 with which we are not concerned in the present appeal.

(2.) IN order to adjudicate upon the appeal the following facts require to be noted:

(3.) CONTINUING with the aforesaid narration, the rights issue of SRNCDs opened on 21 -11 -1994 with 19 -12 -1994 as the date of closure. In order to attract a large number of subscribers to the rights issue JISCO attached a fixed DW with each debenture with a face value of Rs. 10 and a premium of Rs. 190. JISCO being aware of the fact that in order to make the rights issue a success it had to ensure availability of finance to its investors. In order to achieve the said purpose JISCO entered into an arrangement with Unit Trust of India (hereinafter referred to as 'UTT) whereby UTI agreed to pay the balance sum of Rs. 389 per SRNCD on behalf of the allottees to JISCO. The assessee being an existing stakeholder applied to the rights issue made by JISCO. In accordance with the conditions of the issue, the assessee paid an application money of Rs. 111 per debenture. As arranged UTI paid the balance sum of Rs. 389 to JISCO whereupon JISCO issued a DW in favour of the assessee as well as other investees including Abhinandan Investment Ltd. (i.e., appellant in ITA No. 480/07).