1)         SC in NAVIN JINDAL vs ACIT: 11/01/2010: CAP GAINS : RIGHTS RENUNCIATION : LONG TERM/SHORT TERM 

We find merit in this batch of civil appeals filed by the assessee(s). The right to subscribe for additional offer of shares/debentures on Rights basis, on the strength of existing shareholding in the Company, comes into existence when the Company decides to come out with the Rights Offer. Prior to that, such right, though embedded in the original shareholding, remains inchoate. The same crystallizes only when the Rights Offer is announced by the Company. Therefore, in order to determine the nature of the gains/loss on renunciation of right to subscribe for additional shares/debentures, the crucial date is the date on which such right to subscribe for additional shares/debentures comes into existence and the date of transfer [renunciation] of such right. The said right to subscribe for additional shares/debentures is a distinct, independent and separate right, capable of being transferred independently of the existing shareholding, on the strength of which such Rights are offered. For the purposes of Section 48 of the Act, one must keep in mind an important principle, namely, that chargeability and computation has to go hand in hand. In other words, computation is an integral part of chargeability under the Act. It is for this reason that we have opined that the right to subscribe for additional offer of shares/debentures comes into existence only when the Company decides to come out with the Rights Offer. It is only when that event takes place, that diminution in the value of the original shares held by the assessee takes place. One has to give weightage to the diminution in the value of the original shares which takes place when the Company decides to come out with the Rights Offer. For determining whether the gains/loss of renunciation of right to subscribe is a short-term or long-term gains/loss, the crucial date is the date on which such right to subscribe for additional shares/debentures comes into existence and the date of renunciation [transfer] of such right. Our view is based on the judgement of this Court in the case of Miss Dhun Dadabhoy Kapadia vs. Commissioner of Income-Tax, Bombay, reported in [1967] 63 I.T.R. 651], which has taken the view that, for computing capital gains on renunciation of right to subscribe for additional shares, diminution in the value of original shares would be regarded as the cost of acquisition for such right [See pages 654-655 of the said judgement].

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2)         SC on revenue's SLP in CIT vs M/s Dharam Pal Prem Chand Ltd.: Excise Refund: Interim Order

The special leave petition shall stand over for four weeks in order to enable the assessee herein to file an additional affidavit indicating therein the accounting treatment which has been given by the assessee to the expenses incurred towards payment of excise duty.    

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