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2014 (12) TMI 760 - AT - Income TaxDisallowance on Short term capital loss – AO observed that shared purchased by assessee on an extraneous consideration – Violation of section 40A(2a)(b) – Held that:- In the case of Dy. CIT vs. Shri. Sanjay Gupta (2014 (12) TMI 793 - ITAT LUCKNOW), the Tribunal has taken cognizance of all these facts and has held that if the entire shareholdings of the assessee in SSAIL were sold to some other company at a lesser rate, in the original shareholdings the assessee may incur long term capital loss, but the assessee cannot incur short term capital loss by purchasing fresh shares at an inflated rate and to sell it out at a nominal rate. The Tribunal has also observed in that order that whatever value of the shares are declined, it was declined upto September, 2007 and thereafter there was no decline in the value of shares, as it was purchased and sold within a period of three months. In that case, the Tribunal has only allowed long term capital loss to the assessee and not short term capital loss. Following the decision in case of Dy. CIT. -4, Kanpur Versus Shri Sanjay Gupta and others [2014 (12) TMI 793 - ITAT LUCKNOW] the assessee has not claimed any long term capital loss. Only short term capital loss was claimed on purchase made between 11.9.2007 to 12.12.2007 and the sales made on 15.12.2007. The purchase and sales were made within a short period, therefore, there cannot be change in the market value of shares. Therefore, there is no question of short term capital loss to be suffered by the assessee. - Decided in favour of revenue.
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