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2013 (10) TMI 541 - AT - Income TaxOff market transactions - huge loss - genuineness - colourable device to avoid tax - Held that:- he requirement of filling up the DIS for transfer cannot be an issue to decide the genuineness of the transactions carried out by the appellant. - Not a single instance has been given by the AO highlighting that any purchase or sale was effected by the assessee in respect of these "off market transactions" which is not at market rate - Even if, for the sake of argument, it is accepted that no such evidence was provided by the assessee regarding market rate on the date of transaction then also, market rate of a particular share on a particular date is easily verifiable independently from the website of Bombay Stock Exchange(BSE). The assessee has furnished the print-out of stock prices from such site of BSE before us in respect of various transactions and from the same, it is seen that the transactions carried out by the assessee in respect of these "off market transactions" is very much at market rate - Almost in all the cases, the sale price adopted by the assessee is near to the high price of the concerned script on this date - When the sale price adopted by the assessee is close to the high price of the concerned share on the relevant date, it cannot be said that the transactions effected by the assessee is not at market rate, particularly, when the AO has not given even a single instance where the assessee has effected the transaction of purchase at a price higher than the high price of the concerned share on the relevant date or effected the sale of a share at a price below the low price of the concerned share on the relevant date – Decided against the Revenue. Further, AO that in similar transactions, the assessee has earned profit also and even if the AO is making disallowance of the loss in "off market transactions", then he should disregard the profit also in similar transactions and hence, only net loss can at best be disallowed. But the AO has taxed the profit earned by the assessee in such transactions and disallowed the losses only. This goes to show that the AO has also accepted "off market transactions" as genuine and valid where the assessee has earned profit, but in similar transactions, where the assessee has incurred losses, the AO had disallowed such loss by holding that such transactions are only paper transactions or bogus transactions. This is not permissible. Disallowance u/s 14A of the Income Tax Act – Held that:- Relying upon the judgment of Hon'ble Karnataka High Court rendered in the case of CCI Ltd. [2012 (4) TMI 282 - KARNATAKA HIGH COURT], wherein it was held that if the assessee is a dealer of shares and securities then it cannot be said that such purchases of shares and holding of shares were for the purpose of earning of dividend income and hence, expenditure incurred in acquiring cannot be u/s. 14A of the Income-tax Act, 1961 – In the instant case assesses is a dealer in shares and securities and this fact is noted by Assessing Officer also in his assessment order and inspite of this contention raised by Ld. AR of the assessee before us, nothing has been brought on record by Ld. CIT-DR of the Revenue to show otherwise – Therefore following the judgment of Hon'ble Karnataka High Court rendered in the case of CCI Ltd, no disallowance u/s. 14A of the Act on account of interest expenditure on proportionate basis be sustained – Decided against the Revenue.
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