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2019 (4) TMI 1383 - AT - Income TaxSet off of short term capital loss - tax planning vs tax avoidance - purchase on exorbitant price and after getting ssle at minimal price - HELD THAT:- The perusal of Balance Sheet, financials of the said company, wherein the company had not entered into any major transactions of carrying on the business reflects that there was no merit in purchase of shares at face value with premium of ₹ 9,900/- per share after few days of incorporation of the said company. Further, this purchase was on 13.01.2010 and on 27.01.2010 bonus shares were issued and on 29.01.2010 the shares were sold at face value of ₹ 100/- plus premium of ₹ 760/- per share. The assessee has failed to justify first the cost of purchase i.e. with premium of ₹ 9,900/- per share and then the sale consideration i.e. premium of ₹ 760/- per share. In the absence of the same, the loss claimed by assessee is not justified and we uphold the orders of authorities below in denying the set off of short term capital loss of ₹ 15.08 crores on sale of shares of Vadhivare Specialty Chemicals Ltd. The grounds of appeal No.1 and 3 raised by assessee are thus, dismissed. Denial of set off of capital loss - sale of shares of Pentagon Manufacturing and Marketing Ltd. against long term capital gains arising on sale of shares of FEM - HELD THAT:- We thus, find no merit in the stand of AO that the transaction of booking loss by selling shares by the assessee to his daughter is colourable device, cannot be accepted. Once the transaction has been entered into within four corners of law and the transaction has not been doubted; where the shares which were held by assessee for long period were sold at a price which was more than NAV value of shares as on date of sale of shares, then it may be case of tax planning within four corners of law and the same cannot be brushed aside. Applying the ratio laid down by the Hon’ble High Court of Punjab & Haryana in Porrits & Spencer (Asia) Ltd. Vs. CIT [2010 (3) TMI 179 - PUNJAB & HARYANA HIGH COURT] wherein it has been held that once the transaction is genuine and merely it has been entered into with a motive to save tax, it would not become a colourable device and consequently, earn any disqualification. We direct the AO to allow the claim of assessee and set off of loss on sale of shares of Pentagon against gains arising on sale of shares of FEM. The grounds of appeal No.2 and 4 raised by assessee are thus, allowed. Loss claimed on sale of shares of Reliance Industries Ltd. - HELD THAT:- Facts of assessee are similar to the facts before the Hon’ble Bombay High Court in Pr. CIT Vs. Adar Cyrus Poonawalla [2018 (11) TMI 1339 - BOMBAY HIGH COURT] , we hold that the sale of shares of Reliance Industries Ltd. by the assessee after the announcement of bonus issue at the market price which is available on the stock market and where the transaction has not been doubted, there is no merit in not allowing set off of capital loss on the ground that it was colourable device to evade payment of taxes.
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