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M/s. Jayant Security & Finance Ltd. Versus I.T.O. Ward 1 (4) , Baroda

2015 (9) TMI 646 - ITAT AHMEDABAD

Genuity of loss on sale of shares - Held that:- No reasons to reject the loss on sale of shares by the assessee. The prices at which shares are sold cannot be subjected to our scrutiny and determination, but then rejecting the loss in entirety ends up holding that the assessee ought to have sold the shares at the prices at which the same were purchased. That is beyond the plea of tax authorities to decide, and it is for the businessman as to how he conducts his business – though within the frame .....

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hri D. V. Singh, Sr.D.R. ORDER PER PRAMOD KUMAR, A. M.: This appeal is directed against CIT(A) s order dated 13th February, 2012, for the assessment year 2007-08. 2. The short issue that we are required to adjudicate in this appeal is whether or not learned CIT(A) was justified in upholding the action of the Assessing Officer in treating the loss of ₹ 9,96,875/- on sale of shares, as not genuine. 3. Briefly stated, the relevant material facts are like this. During the course of assessment .....

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Assessing Officer was of the view that the assessee has failed to justify that which type of financial crises had compelled it to sell the shares at too low a rate and that merely on the ground of financial crises, one cannot sell unquoted shares without considering it s book value (BV) or present day market value (PDMV) or income generating capacity (IGC) . He further noted that the sales price of shares was fixed by mutual understanding and was not fixed as per market value . He then went on .....

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oration were purchased at ₹ 8.89/- and the said share sold at ₹ 5/- per share and incurred the loss of ₹ 3.89/- per share. Similarly, the shares of Subala Trading Company was purchased at ₹ 100/-per share and the said shares were sold at ₹ 10/- per share and incurred loss of ₹ 90 per share. Assessee failed to justify how it has booked losses in the sale transactions of shares of Swastika Coal Corporation & Subala Trading Company. Considering the above stat .....

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est income, substantial income was likely on which Income-tax was required to be paid by the assessee. During the course of assessment proceedings, the A.R. of the assessee company was also to submit the book value of shares of these companies. However, he failed to submit till date. The book value at the time of purchase of shares and the time shall of shares of there companies are not submitted till date. By doing manipulation in sale price of shares it has booked loss which has been adjusted .....

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ue of shares of Subala Trading Company is taken at ₹ 100/- per shares and claimed of loss of ₹ 4,50,000/-. 4. The Assessing Officer also held that the above loss is speculative loss in nature, as Explanation to Section 73 is invoked on the facts of this case. However, we need not really deal with that aspect of the matter as learned CIT(A) has deleted that issue in favour of the assessee, and the Assessing Officer is not in appeal against that decision. We leave it that. 5. Aggrieved .....

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a price much below purchase price and appellant did not furnish book value of the shares sold even on specifically asking for the same. AO had further observed that appellant could not substantiate its claim of financial crisis and no prudent person would sell shares at such huge loss without reference to intrinsic value of shares. Explanation below section 73 was invoked by the AO only as an alternate reason to make the addition/disallowance. Appellant has thus, not really challenged the subst .....

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actions was through account payee cheque or even if transactions were between unITA related parties, loss incurred cannot be accepted to be genuine. Disallowance of loss of ₹ 9,96,875/- is confirmed. 6. The assessee is not satisfied and is in further appeal before us. 7. We have heard the rival contentions, perused the material on record and duly considered facts of the case in the light of the applicable legal position. 8. We have noted that as held by Hon ble Karnataka High Court in the .....

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