GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (10) TMI 2304 - ITAT DELHI

2015 (10) TMI 2304 - ITAT DELHI - TMI - Disallowance of loss under the head "capital gain" treating the transaction doubtful - whether there is no scope of any fair market value or estimation and in case of sale of shares, the Assessing Officer has no power to replace the value of the consideration agreed between the parties? - Held that:- In the present case, the assessee had shown sale of 10 lacs shares of Pioneer Ltd. for a total consideration of ₹ 1 lac only i.e. @ ₹ 0.10 per sha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ssessing Officer was having no power to replace the value of the consideration agreed between the parties with any fair market value or estimation. Only because the Pioneer Ltd. had shown the book value of shares at the rate of ₹ 3.50 per share, the Assessing Officer was not justified to ignore the price agreed between the parties and to doubt the genuineness of the claimed loss, even ignoring the valuation report. We thus while setting aside orders of the authorities below direct the Asse .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

peals) is bad in law and on facts. 2) Under the facts and circumstances of the case and in law, the Learned CIT(Appeals), has erred in holding that loss computed by the assessee in respect of sale of share of M/s. Pioneer Ltd. is not allowable, ignoring that the valuation of shares arrived by Independent valuer for the purpose of amalgamation. 3) On the facts and in the circumstances of the case and in law and more particularly on the basis of documents available for the purpose of the appeal, t .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome-tax." 2. We have heard and considered the arguments advanced by the parties in view of orders of the authorities below, material available on record and the decisions relied upon. 3. The issue involved in the above grounds is as to whether the Learned CIT(Appeals) was justified in upholding the disallowance of ₹ 4,47,55,491 claimed in respect of loss under the head "capital gain" treating the transaction doubtful. 4. The relevant facts are that during the year, the ass .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

, the Pioneer Ltd., Ultima and Solaris Holding Ltd. These shares were sold by the assessee at par and the loss arisen was due to indexed cost. In case of sale of shares of the Pioneer Ltd., the assessee has shown sale of 10 lacs shares of the said company for a total consideration of ₹ 1 lac i.e. at just ₹ 1.10 per share, whereas the assessee showed the cost of such shares at ₹ 4,00,00,000 i.e. ₹ 40 per shares. The assessee was required to furnish copy of balance sheet of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

income-tax return or other document of the said company. The assessee had also not furnished any document to show that the actual consideration of such sale of shares was ₹ 1 lac only. The Assessing Officer noted further that the assessee neither furnished copy of shares transferred deed nor any confirmation from the buyer stating the said consideration. The Assessing Officer accordingly held that the loss claimed by the assessee on sale of unlisted shares of Pioneer Ltd. remained unsubst .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

es were allotted to the assessee in the assessment year 2007-08 for a consideration of ₹ 4 crores. The assessee had also sold the shares of two other unlisted companies, namely, Solaris Holdings and Ultima Hygiene Ltd. The shares of these two companies were sold at par and the loss accrued due to indexation was allowed by the Assessing Officer. In respect of shares of Pioneer Ltd., the Assessing Officer observed that the assessee had purchased these shares, having face value of ₹ 10 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

irectors of the Company, the Learned AR submitted that it is not correct as complete documents were filed by the assessee as it is evident from the submissions of the assessee before the Learned CIT(Appeals), a copy thereof has been made available at page No. 1 to 10 of the paper book. 7. Regarding the observation of the Assessing Officer that the book value of the shares as shown by Pioneer Ltd. is ₹ 3.50 per share, the Learned AR submitted that the Assessing Officer has failed to compute .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

in the name of other party and the consideration was received by cheque. In support, he referred page Nos. 67 and 68 of the paper book which are copies of shares certificate. 8. The Learned AR submitted further that long term capital gain or loss is to be computed in the manner laid down in section 48 of the Act as in the section the expression used is "full value of consideration received or accrued", meaning thereby that there is no scope of any fair market value or estimation. The .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

); 4. Morarji Textile Ltd. - ITA No. 1979/Bom/2009; 5. MGM Benefit Trust - ITA No. 316/Bum/2009 dt. 26.11.2009; 9. The Learned AR submitted further that the authorities below have overlooked the auditor s report of Pioneer Ltd. clearly showing the value of shares as on 31.3.2008 at ₹ 0.17 per share. In this regard, he referred page No. 25 of the paper book i.e. auditor s report. He submitted further that auditors had also observed that the accumulated losses of the company are more than 50 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

and assessee vis-à-vis computation of long term capital loss and after analyzing the working of the assessee and the Assessing Officer, it was observed that difference in sale consideration as per Assessing Officer and assessee is only ₹ 34 lacs. However, instead of making any separate addition of ₹ 34 lacs on account of alleged under valuation of shares, the Learned CIT(Appeals) has sustained the entire loss as computed by the Assessing Officer. 11. The Learned AR further su .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

valuer is an important piece of evidence and the same cannot be discarded without their being any cogent material on record showing that the report of valuer is not correct. In this regard, he placed reliance on the judgment of Hon'ble jurisdictional Delhi High Court in the case of S.K. Construction & Co. - 167 Taxman 171 (Delhi). 13. The Learned AR submitted further that the transaction among the group company is not prohibited under the law and an assessee can sell shares at lesser pr .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

otherwise and in the year under consideration, there was no long term gain available with the assessee. Therefore, there was no ulterior motive of the assessee behind the transaction as has been alleged by the Learned CIT(Appeals). The assessee has lost the opportunity of carrying forward this loss in upcoming years by virtue of amalgamation. Therefore, it can be said that the transaction entered by the assessee was a bona fide and genuine transaction without any colorable device. The Learned A .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

alance sheet of M/s. Solaris Holdings for assessment year 2009-10; balance sheet of Solaris Chemicals for assessment year 2009-10 and balance sheet of Janpath Investments for assessment year 2009-10. 15. The learned Senior DR on the other hand placed reliance on the orders of the authorities below, which we have already discussed hereinabove. 16. Considering the above submission, we find that during the year, the assessee has furnished following computation of capital gains/loss: Name of Co. Dat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the claimed loss on sale of shares of the Pioneer Ltd. The Assessing Officer doubted the genuineness of the claim on the basis that the assessee could not produce the complete balance sheet of Pioneer Ltd., the papers submitted were not signed by the auditors or by the directors of the company, the book value of the shares as shown by Pioneer Ltd. is ₹ 3.50 per share and hence the price claimed to have been received by the assessee is not acceptable. In its submissions before the Learned .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ve overlooked that the shares were duly transferred in the name of other party and the consideration was received by cheque. Besides the contention of the assessee also remained that the long term capital gain or loss is to be computed in the manner laid down in section 48 of the Act wherein expression used is "full value of consideration received or accrued". The main thrust behind this contention of the assessee was that there is no scope of any fair market value or estimation and in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fficer has no power to replace the value of the consideration agreed between the parties. In this regard, we find strength from the above cited decision of Hon'ble Delhi High Court in the case of Nilofar Singh (supra) holding that the expression "full value of consideration" used in section 48 of the Act does not have any reference to market value. Similar view has been expressed in other decision, cited hereinabove, by the Learned AR. We also agree with the contention of the learn .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version