TMI Blog2012 (7) TMI 72X X X X Extracts X X X X X X X X Extracts X X X X ..... UTI, paid by PML through adjustment against dues of assessee firm - incentive for the turnover given to the assessee firm by PML to make good the loss resulting from the share transaction, which was withdrawn after the share transactions were completed. Held that:- Premier Mills Limited merely used the assessee firm as a special vehicle for the purpose of achieving, what it would not be possible for it to achieve in a legal way. It was found that as PML could not purchase its own shares and in order to circumvent Section 77 of the Companies Act, it decided to repurchase the shares through the assessee herein, which subsequently sold the same to the sister concern, wherein the spouse of Managing Director of Premier Mills Limited was a Man ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e assessee went on appeal before the Commissioner of Income Tax (Appeals), who found the modus operandi adopted to purchase the shares of the Premier Mills Limited and subsequent sale of the same to a sister concern of the Premier Mills Limited, were all colourable device, as such, the claim of capital loss was rejected. Aggrieved by the same, the assessee went on appeal before the Income Tax Appellate Tribunal, which remanded the matter back to the officer for a fresh consideration based on the records. As far as the assessment year 1988-89 is concerned, the facts are one and the same. It is seen from the order of the Assessing Authority that after remand order by the Tribunal, the assessee was called upon to produce the records regarding ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is nominees. Thus, in terms of the agreement, the assessee stated to have purchased shares at the value of Rs. 30/- when the price of the share was between Rs. 8.25 and Rs. 8.50 per share and not Rs. 30/- or Rs. 39.50 at which they were purchased from Unit Trust of India. On analysis of the materials placed before the Assessing Officer, it was found that except the letters exchanged between Premier Mills Limited and Unit Trust of India, there was absolutely no correspondence exchanged between the assessee and the Unit Trust of India/ Premier Mills Limited/ Jagadish Chandran. On the other hand, the letter exchanged between the Premier Mills and the Unit Trust of India would indicate that it was the Premier Mills who were under compulsion to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ck-in-trade in the ordinary course of share dealings. The Officer however pointed out that the assessee firm is a one of the nominees through its newly appointed partner M/s. Capricon General Finance Private Limited, which was admitted as a partner by the assessee firm for supervising the smooth functioning of the purchase and sale of the shares. It was further pointed out that the said Capricon General Finance Private Limited did not figure in any of the financial statement filed on behalf of the assessee firm, which clearly pointed out that the said company had withdrawn itself as a partner from the assessee firm subsequently after acting for the limited purpose. The Officer however pointed out that during the period, Premier Mills Limite ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Premier Mills Limited had an agreement in his individual capacity with the Unit Trust of India to repurchase the shares of Premier Mills Limited, by using the name of the assessee's firm. Jagdish Chandran purchased the shares at highest price than the market price. Then the shares were subsequently sold to Belathur Investments Private Limited, a group concern of M/s.Premier Mills Limited, wherein, Savita Chandran, who is the wife of Jagdish Chandran, Managing Director of Premier Mills Limited, is the Managing Director. Going by the above said facts, the Tribunal pointed out that it cannot be said that the assessee's firm repurchased the shares as per the agreement. Secondly, the Tribunal pointed out that there was no agreement between ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ne and straight transaction, we do not find any justifiable ground to accept the said contention. On going through the orders of the authorities below, we have no hesitation in confirming the finding rendered by the Tribunal which is based on records. 7 . As already pointed out in the preceding paragraph, the course of transaction that had gone in, clearly pointed out that the Premier Mills Limited merely used the assessee firm as a special vehicle for the purpose of achieving, what it would not be possible for it to achieve in a legal way. It was found that as Premier Mills Limited could not purchase its own shares and in order to circumvent Section 77 of the Companies Act, it decided to repurchase the shares through the assessee herein ..... X X X X Extracts X X X X X X X X Extracts X X X X
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