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2015 (3) TMI 925 - AT - Income TaxTreatment to loss - business loss v/s speculation loss - Held that:- Ld. Counsel for the assessee has demonstrated that one of the objects of the assessee-company is financing and major portion of the capital is deployed for the purpose of advancing loan. Even in the balance-sheet, the interest income is shown as ₹ 64,98,590/-. Therefore, we do not find any good reason to interfere into the order of the ld. CIT(A) directing the Assessing Officer to treat the loss of ₹ 68,49,965/- as business loss instead of treating the same as speculation loss. - Decided against revenue. Sham transaction - CIT(A) confirming the transaction entered with related parties as sham transaction in respect of loss incurred in share & securities - Held that:- The assessee sold the shares prior to purchases. The assessee sold shares at lower rates and within a day or two days purchased at higher rates and claimed losses on such transactions. The assessee could not offer explanation as to why such transactions were required to be executed between the family members leading into artificial losses.All transactions were off market transactions and were not executed through stock exchange.Shares were not actually delivered between the assessee and the concerned persons. All the transactions were only paper transactions, i.e. no delivery was effected for sales/purchases of shares.Bank pass book reveals that the assessee company had paid the difference (loss amount) on such transactions to these persons. No amount was received or paid by the assessee company on sales and purchases of such shares. The assessee has entered into speculation activities to avail the artificial loss created by such alleged transactions which were set off against the interest income. The gain arisen on such transactions have been shown by all these persons as income from other sources in their returns of income. Where purchase and sale of shares were done through cheques, which were not encashed, so that there was no movement of funds, the transactions being as between these persons and the assessee company itself without any explanation as to the need for the circumstances of transactions, such transactions could only be considered suspicious and are to be treated as sham transactions.Without prejudice to above, if at any stage it is held that the sham transactions are genuine, then also, the share transactions are in the nature of speculative transactions as per section 43(5) of the IT, Act, as no delivery was effected in this case on such transactions. These observations of the Assessing Officer have not been controverted by the assessee by bringing any contrary material on record. - Decided against assessee.
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