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2018 (6) TMI 91 - AT - Income TaxDisallowance of long term capital loss on sale of shares - sham transactions or genuine transactions - Held that:- Assessee has genuinely entered into the sale of shares which are supported with the transfer deeds, Board resolution and the confirmation of payments for transfer of such shares and were duly shown in the books of accounts of the assessee. Sole issue raised by the revenue is that the price at which these were transferred was not based upon valuation report and thus the AO rejected the setting off the said loss against the long term capital gain. It seems to be a case of tax planning by the assessee, though the transactions having been carried out between the group companies. Both Commissioner of Income Tax (Appeals) as well as the Tribunal have rendered a finding of fact that the consideration of ₹ 750/- and ₹ 936/- per share received on the sale of the shares by the respondent assessee was in fact the full consideration which have been disclosed to the revenue. The revenue has not in any manner shown that the consideration disclosed by the respondent assessee to the revenue is not the correct consideration received by them and that the same should be replaced. Long term loss on sale of shares cannot be allowed to be non-genuine and therefore, we direct the AO to allow the set off such loss against the long term capital gain on compensation received by the assessee upon surrender of tenancy rights by setting aside the order of CIT(A) on this issue.- Decided in favour of assessee. Penalty u/s 271(1)(c) - Held that:- Since, we have allowed the long term capital loss on sale of shares to be genuine and allowable to be set off against the compensation received from surrender of tenancy rights and thus allowed the appeal of the assessee in quantum appeal. Consequently, the penalty as levied u/s.271(1)(c) does not survive.
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