Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (6) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (6) TMI 555 - AT - Income TaxShort Term Capital Loss on sale of unquoted shares - genuity of expenditure - FIFO method of accounting adopted by AO - Held that:- The undisputed facts are that the assessee was already a share holder in said Inter Active Technologies, and after selling about 1/3 share holding remained owner of about 2/3 rd shares in next year, doubts have been raised by ld. Assessing Officer only in respect of this year’s sale of shares tow2ards the end of the year. It emerges from the record that assessee in order to protect his earlier share holding purchased the new shares at higher rate to save Inter Active from liquidation and to re-strengthen the company's capital and reserves, which is claimed to be a prudent business decision. Assessee’s efforts are proved from the record that the book value of the company went upto ₹ 170/- per share as on 18.12.2010 which was for Rs. (-) 40.23 per share as on 29.12.2007 i.e. before the infusion of funds by the appellant. The aforesaid company had paid the taxes of ₹ 95/- lakhs for the A.Y. 2010-11 after set off of earlier years losses (profit ₹ 614/- lakhs for the A.Y. 2010-11) and also paid advance-tax of ₹ 15/- lakhs for the A.Y. 2011-12. Thus in consideration of all these undisputed facts, ld. CIT(A) rightly observed that the purchase of these shares by the appellant cannot be considered as non-genuine or paper transactions. Assessee produced necessary evidence that Inter Active i.e. company furnished necessary information and no any infirmity was indicated by the ROC qua the impugned purchase and sale of shares and in maintenance of other records relating to share transactions. Thus the adverse inference drawn by ld. Assessing Officer that there were alleged interpolation in the registers of the company are not tenable. The shares were sold by assessee due to crash of the share market adversely resulting in the cascading effect on other investments. In order to minimise the losses as the Inter Active’s net worth was reduced from ₹ 800 lakhs to ₹ 400 lakhs. The book value of share of the company slided down to ₹ 38.21 as on 27/03/2008. This was a conscious business decision of the assessee. Besides, the payments for purchase of shares were made by account payee cheques, similarly the consideration for sale of share was also received by account payee cheques. Assessing Officer was not justified in applying FIFO method instead of adopting specific distinctive numbers of shares for the purchase and sale of shares while computing the impugned STCG. Thus we see no infirmity in the order of ld. CIT(A) allowing the impugned STCG loss. We uphold his order on this issue, this ground of the revenue is dismissed. see Union of India And Another Versus Azadi Bachao Andolan And Another [2003 (10) TMI 5 - SUPREME Court] - Decided in favour of assessee Disallowance of interest expenditure - AO disallowed expenditure as the assessee failed to provide the nexus of utilization of borrowing for earning offered interest income - Held that:- It has been accepted by the Assessing Officer that interest expenditure has been expended to earn interest income. Sec. 56 does not postulate any condition about the rate of charging interest. The appellant explained the reasons and circumstances as to how the lesser interest was charged on old loans. No discernible case for diversion of borrowed funds for non-business purposes has been made out by ld. Assessing Officer. We have carefully considered the submission of the Ld. Counsel as well as the finding of the Assessing Officer recorded in the assessment order. A remand report was also called from the Assessing Officer, which did not impinge on the assessee in effective terms, as the possibility of use of funds in capital investment was not established. Ld. Assessing Officer accepted that the interest expenditure was actually incurred for earning the interest income and loss arose due to charging of lesser rate of interest on old loans and advances and advances given for shorter period. This contention of the appellant was not controverted by the Assessing Officer either during the course of assessment proceedings nor during remand proceedings. Considering all these facts and circumstances ld. CIT(A) deleted the disallowance. In our considered view there is no inconsistency in the order of ld. CIT(A) on this issue, which is upheld.- Decided in favour of assessee
|