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2014 (1) TMI 498 - HC - Income TaxDisallowance of short term capital loss - assessee appellants purchased shares, on 8.11.2007, @ Rs. 100/- per share and sold the same on 31.3.2008 @ Rs. 10/- per share - book value was Rs. 56 - Held that:- The revenue cannot take or accept such make-believe transactions, as presented by the appellants - Truth or genuineness of such transactions must prevail over the smoke screen, created by way of pre-meditated series of steps taken by the appellants, with a view to imparting a colour of genuineness and character of commercial nature, to such share transactions - One has to look at the whole transactions and a series of steps taken to accomplish such share transactions, in an integrated manner, with a view to ascertaining the true nature and character of such purchase and sale of shares - The shares were purchased and sold in these cases, cannot be treated as regular business transactions - Following CIT v. Durga Prasad More [1971 (8) TMI 17 - SUPREME Court] - The revenue is entitled to look into the surrounding circumstances, to find out the reality of the recitals made in the documents. In the present case, there is an obvious and plain transaction of tax evasion which has been clothed with the smoke-screen of subterfuges, by the assessee appellants - The facts of the present case clearly reveal that such trading transactions of purchase and sale of shares, had not been effected, for commercial purpose but to create artificial loss, with a view to reducing tax liability – Such transactions are not genuine and natural transactions but preconceived transactions, demonstrating creation of such short term capital loss – The appellants restored to a preconceived scheme, to procure short term capital loss, for the purpose of neutralizing the short term capital gains by way of price differential, in the said share transactions not supported by market factors – The findings of the CIT(Appeals) are not based on relevant, cogent and credible material or evidence - Such share transactions were not quoted and consequently, were not traded through stock exchange - When all the facts and circumstances of the case are viewed, in totality, it is evident that the assessee appellants failed to discharge the onus, to prove the genuineness of the transactions of purchase and sales of such shares - Decided against assessee.
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