SC Allows Capital Loss Resulting From Capital Reduction As The Same Is Covered Under 'Transfer' As Per Section 2(47)

Facts of the case: –

• Assessee, engaged in the activities of investing in shares, leasing, financing, and money lending, invested in Asianet News Network Pvt. Ltd. (ANNPL), an Indian company by acquiring 14,95,44,130 shares with a face value of ₹10/- each. Subsequently, the assessee purchased additional 38,06,758 shares from other parties, increasing its total shareholding to 15,33,40,900 shares, representing 99.88% of the total share capital of the company, which stood at 15,35,05,750 shares.

• ANNPL incurred losses and later filed a petition before Bombay High Court seeking a reduction in its share capital. High Court approved the reduction, decreasing the company's share capital from 15,35,05,750 shares to 10,000 shares. Consequently, the assessee's shareholding was proportionately reduced from 15,33,40,900 shares to 9,988 shares, though the face value of the shares remained unchanged at ₹10/- per share. The High Court also directed the company to pay