TMI Blog2014 (9) TMI 1031X X X X Extracts X X X X X X X X Extracts X X X X ..... following substantial question of law is proposed for consideration in the present tax appeal preferred by the revenue under section 260A of the Income Tax Act, 1961 (to be referred to hereafter as the Act ) being aggrieved by the impugned order dated 29.11.2013 made by the Income Tax Appellate Tribunal, Ahmedabad (to be referred to as the Tribunal ). Whether the Appellate Tribunal is right in law and on facts, in reversing the decision of the CIT (A) upholding the disallowance of the loss of ₹ 2,16,59,338/- in commodity future trading claimed to have been incurred by the assessee in the course of its business by ignoring the facts as brought on record by the Assessing Officer which were based on close analysis of the seized material suggesting that there was a collusion by the assessee with connected / interested parties so as to create an artificial loss? 2. This appeal arises out of the following factual background. A search under section 132 of the Act was carried out in the group cases of Himanshu J. Shah on 22.09.2005. Certain documents were found related to share trading activity carried out by the assessee and therefore, the proceedings under section 153A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... share trading activity. Pursuant to a search in a group cases of Himanshu J. Shah on 22.09.2005, on the basis of certain documents related to the present assessee, the proceedings under section 153C of the Act were initiated. In the return filed by the assessee, he claimed such loss under the head of Commodity Future Trading Account . 5(a) It can be gathered that on getting the details from MCX, it was noticed that all the transactions were between 03.03.2005 to 30.03.2005 through its broker M/s Krone Commodity. These transactions were essentially with one M/s Tirupati Enterprises / one Ms. Neena Maradia, who were also the clients of M/s Krone Commodity. The sales of commodity were made at a lower rate and purchases were made at a higher rate as concluded by both the Assessing Officer and the Commissioner (Appeals) which, according to them, was suggestive of being in collusion to contrive loss artificially. The explanation of the assessee was also called for. The Assessing Officer had found some mutual connection between Himanshu J. Shah, the group concern and the concern of the assessee. On having noted that M/s MPFL and M/s VUSPL had created a family for enabling the broke ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a fact-finding body, concluded that the loss suffered by the assessee in the said transactions was genuine. As regards the question whether such transaction was a speculative transaction or a business loss and was to be adjusted against any income of the assessee, the Assessing Officer had been directed to first determine this aspect and after so doing, to compute the correct income of the assessee. 8. These conclusions of the Tribunal are aptly supported by the decision of this Court on the very issue rendered in the case of Commissioner of Income Tax v. Special Prints Ltd., (2013) 356 ITR 404, where the assessee sold its plant and machinery to a group company for a particular consideration against the written down value of the said plant and machinery and earned short-term capital gains. It also entered into another transaction with another group company to whom the assessee had sold cumulative convertible preference shares. In the process of this transaction of sale of cumulative convertible preference shares, the assessee had incurred long-term capital loss and such loss was set off against the capital gain earned on account of sale of plant and machinery. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ock-in-trade; the shares were sold on different dates and the assessee had claimed differential amount as a business loss. The Assessing Officer held that the conversion of capital asset into stock-intrade was not genuine on the ground that the assessee had confidential information regarding the suit filed against the company in the US and Germany, and that as a result, there was likelihood of a fall in the value of the shares. This was challenged by the assessee and the Tribunal held that the conversion of shares was genuine on various grounds. 9(a) When the matter was challenged before the Bombay High Court, it held in favour of the assessee and against the revenue, by holding that even if the shares were sold to a close relative of the assessee, the genuineness of the transaction could not be doubted. It also held that the decision of the Tribunal was based on findings of fact, relying on the decision of the Apex Court in the case of CIT v. Karam Chand Thapar and Bros. P. Ltd. (supra). 10. At this stage, reference would be needed to the decision of the Apex Court rendered in the case of Commissioner of Income Tax, Calcutta v. Karam Chand Thapar and Bros. P. Ltd. (supra), w ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
