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2020 (2) TMI 1370 - HC - Income TaxCapital loss disallowance - assessee could not establish the factum of sale of the shares made to her associate concern and the said transactions of sale were made without intervention of broker - As per tribunal assessee was not having either the possession or the ownership of the shares which were sold to GAFL - HELD THAT:- CIT (A) has gone on a tangent in arriving at a finding on presumption that once the purchases have been found to be genuinely made, either there should be corresponding sales or the shares should form part of the closing stock and because the shares are not part of the closing stock, the inference was drawn that corresponding sale is also genuine. As against that, the Tribunal has relied upon only the evidence which is debit note prepared by the assessee which was produced on record. On perusal of such debit note, it was found by the Tribunal that the same were self-prepared giving only the particulars of the credit amount, number of shares, rate of sale and name of the company, without there being any particulars of shares i.e. distinctive number or names of the persons in whose names those shares were standing, etc. Tribunal has also found as a matter of fact that there is no material on record to prove that the shares were actually delivered by the assessee to the GAFL even subsequently as there is total absence of any document to remotely indicate such fact. Tribunal has also found that there is no matching of the shares which were sold and purchased subsequently through some share brokers. It was also found that, even in the broker’s voucher, distinctive numbers of those shares were not given and the broker had also not stated that from whom he has purchased these shares for assessee and in whose names such shares were standing. The Tribunal therefore found that there is absence of proof on record to hold that the shares were actually delivered by the assessee to GAFL. Considering the provision of Sections 2(14) r/w. 2 (47) of the Act, 1961, if the estate or interest which it purported to assign had at the date of the deed did not exist, it is well settled that neither at law nor in equity can the assignment of such an interest operate according to its tenor. Similarly, in the facts of the case, when the shares were not in existence on the date of sale, then the same could not have been considered as capital asset, so as to fall within the definition of transfer under Section 2 (47) of the Act. It cannot be said that the Tribunal has committed any error in holding that the assess is not entitled to claim capital loss arising out of the transactions of sale of shares, which were not in actual possession of the assessee. Tribunal was right in holding that if the assessee could not establish the factum of sale of the shares made to her associate concern and the said transaction of sale is made without the intervention of the broker, the capital loss claimed by the assessee is not allowable - Decided against assessee.
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