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2012 (9) TMI 755 - HC - Income TaxWhether loss arising from purchase and sale of units is not allowable as the transaction is a colourable device to avoid tax despite the fact that the actual purchase and sale has taken place and the assessee has actually incurred the loss - Assessee had purchased units of the UTI from Bank of America – Sold back the same units to Bank of America on very next day – Assessee receive dividend and incurred a STCL, set off with LTCG and carried forward the balance STCL – AO point was that the units sold by them on 31.5.1991 were in the name of the assessee - Bank had purchased these units from the assessee earlier in two lots in 1990’s remained in the name the assessee – UTI confirmed that the transfers were registered in the name of the assessee from 31.5.1990 till 14.5.1994 and assessee received dividends till 1994 - Held that:- As the revenue does not dispute that the transactions in fact had taken place between the assessee and the Bank of America. Revenue’s only point is that there was no registration of the units in the actual holder's name. If the Revenue had questioned the transaction as not legal, and not based on the amendment to Section 94, which came into existence only with effect from 1.4.2002, then Section 94 would not have come into play in considering the merits of the claim. Thus, on principle, when the Revenue had accepted the transfer, the sole ground on which the transaction was held to be a colourable one could not be sustained. Appeal decides in favour of assessee
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