2022 (11) TMI 842 - AT - Income Tax
CIT(A) admitting the additional evidence during the first appellate stage under Rule 46A of the Income Tax Rules, 1962 - HELD THAT:- During the appellate stage of proceedings, the assessee pleaded before the ld. CIT(A) that the AO did not ask the assessee to furnish the required documents for the purpose of proving the transaction in question. CIT(A) accordingly accepted the documents on record relating to the transaction of sale of shares (the issue relating to which, we will discuss in later part of this order). Since the opposite documents were necessary for going through the transaction in question and to determine the genuineness of the claim of loss made by the assessee, therefore, in our view, the ld. CIT(A) did not commit any error in taking on record the aforesaid documents. Ground No.1 of the revenue’s appeal is, therefore, dismissed.
Disallowance of loss on sale of shares being stock in trade - AO had made the impugned addition for want of verification of the transactions in question - CIT(A) considering submissions of the assessee allowed the claim of the assessee holding that the expenditure/loss claimed by the assessee was an allowable expenditure u/s 36(1)(vii)/36(2) of the Act by way of a non-speaking order - HELD THAT:- The transactions in question, in our view is not bonafide transaction of sale of shares being stock in trade as alleged by the assessee. The facts speak itself that the underlying transactions is relating to the sale of immovable property i.e., land. Another fact on the file is that the assessee is neither in the business of purchase and sale of shares nor in the business of purchase and sale of immovable property, land etc. Therefore, the assessee, in our view, has treated the said shares as stock in trade for the purpose of evasion of due tax.
The transaction in question, since was not related to the business activity of the assessee, therefore, the said land/shares cannot be said to be a stock in trade. Even if for the sake of argument it is assumed that the transaction was of sale of shares, the said shares cannot be treated as stock in trade of the assessee. Even otherwise, the said transaction of shares would be hit by the provision of Section 73 of the Act and this loss claimed by the assessee being speculation loss could not be adjusted against the business income of the assessee.
So far as, the claim of the ld. A/R that if the transaction has to be treated as that of sale of capital asset then, the aforesaid loss may be treated as short-term capital loss, we, in this respect, are of the view that the entire transaction requires examination/verification at the end of the AO. We, therefore, restore this issue to the file of the Assessing Officer for the purpose of examining the entire transaction and to find out the real facts and intent pertaining to the transaction and also to find out the tax evasion method, if any, adopted by the assessee and to decide the limited issue by way of a speaking order as to whether the assessee is entitled to claim short-term capital loss in this case or not. Accordingly, these grounds of the revenue are allowed for statistical purposes.
Disallowance u/s 14A on account of expenditure incurred towards tax exempted income - CIT-A deleted the disallowance made by the Assessing Officer - HELD THAT:- As relying on various Hon’ble High Courts decisions as unanimous to hold that where the assessee has not derived any tax exempt income from investments, then no disallowance is attracted u/s 14A - Decided against revenue.