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2017 (12) TMI 357 - AT - Income TaxShort term capital gain on sale of shares - non materialization of transaction - hypothetical income - Held that:- The facts as emerged before us are that the proposed transaction of sale of shares did not materialize at all. No agreement or MOU or any sale bill etc. with respect to sale of these shares has been brought on record. It is contended that no such document was entered into and therefore there was no question of bringing on record any such document. Further, even sale consideration of the impugned share has not been determined. Only an advance of ₹ 25 Lakhs is stated to have been received which has been deducted by the assessee from the cost of Investment in the Balance Sheet. No further amount is reported to have been received by the assessee. Thus, under these circumstances it is not justified at all to presume that sale of shares has taken place. No income has accrued in the favor of assessee. Apparently, the proposed transaction of sale fell through and did not materialize. Under these circumstances, it cannot be held at all that any capital gain was earned by the assessee on sale of impugned shares. Thus, addition made by the AO is illegal and factually incorrect and the same is here by directed to be deleted. Addition for deviation u/s 145A - assessee did not include amount of Excise duty and VAT while making valuation of the closing stock - Held that:- Hon’ble Delhi High Court in case of CIT vs. Mahavir Aluminium Ltd.,[2007 (11) TMI 41 - HIGH COURT OF DELHI] it was held that if there is change in closing stock to give effect to Section 145A, there must necessarily be a corresponding adjustment in the opening stock of the year. Similar view has been expressed by the ICAI in the Guidance Note explaining the provisions of Section 145A. Further, on the basis of sense of justice and equity also same inference can be drawn that if Trading and P & L Account is to be converted from ‘Exclusive’ method to ‘Inclusive’ method, then corresponding adjustment will be required to be made in all relevant heads of Income and Expenditure including the opening stock. The adjustment on account of Payment of Excise duty and VAT out of Cash/Bank but not debited in P & L Account would also be required to be given. It is noted that assessee has submitted detailed submissions and evidences to demonstrate the fact of payment of Excise duty as well as amount of Excise duty and VAT embedded in the value of opening stock. No dispute on facts has been raised by the Ld. DR before us. Further, assessee has also submitted before the lower authorities both sets of Trading and P & L Account prepared on both ‘inclusive’ and ‘exclusive’ method showing that amount of net loss in both the situation remains the same at ₹ 48,716,531/- . Thus, viewed from any angle no case is made out by the revenue before us for sustaining the addition. Under these circumstances, we find that the CIT (A) has rightly deleted the addition
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