Contact us   Feedback   Subscription   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2016 (4) TMI 456 - ITAT KOLKATA

2016 (4) TMI 456 - ITAT KOLKATA - TMI - Disallowance of claim of short term capital gain/loss on purchase and sale of shares by treating the same as sham transaction - Held that:- The purchase transaction in the case of the assessee is genuine. The assessee has produced complete evidence requires to substantiate the genuineness of the claim of the assessee in respect of purchase transaction. We find that the authorities below have erred in treating the purchase transaction as non-genuine or sham .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

t : Shri Ravi Tulsiyan, FCA For the Respondent : Shri Sujit Kr Das, JCIT, Sr DR ORDER Per Shri Mahavir Singh, JM This appeal by assessee is arising out of order of CIT(A)-XXXII, Kolkata in Appeal No. 46/XXXII/11-12/R&T/7(4)Kol dated 01.01.2013. Assessment was framed by ITO, Wd-7(4), Kolkata u/s. 143(3) of the Income-tax Act, 1961 (hereinafter referred to as "the Act") for AY 2005-06 vide its order dated 27.12.2007. 2. The only issue in this appeal of assessee is against the order o .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

imply on surmises and on the ground of surrounding circumstances by treating the transactions in shares as sham transactions." 3. Briefly stated facts are that assessee is a Private Ltd. Company, engaged in the business of financing and investment. The AO during the course of assessment proceedings noticed that the assessee claimed to have purchased 15700 shares of Kwality Builders & Developers Ltd. @ ₹ 108.20 for a sum of ₹ 17,00,310/- on 24.09.2004. The assessee sold these .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

f purchase was conducted had not executed any trade in the shares of Kwality Builders & Developers Ltd. on 24.09.2004. Accordingly, the AO disallowed the loss by treating the purchase of shares of Kwality Builders & Developers Ltd. as sham transaction. Aggrieved, assessee preferred appeal before CIT(A) who also confirmed the action of AO by observing as under: "Considering the above facts and the material available before me I found that the agreement about real transactions takes p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct of the appellant in making payment as well as other material on the record and the inference can reasonably be drawn that the date of purchase 24-09-2004 of above transaction is non-genuine and the entire transaction is a sham with predetermined result and ulterior motive to avoid payment of taxes. It is held that after considering the surrounding circumstances and applying the test of human probabilities it is rightly concluded that the appellant's claim about the date of purchase 24-09- .....

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 is upheld. This ground of appeal is dismissed." Aggrieved, now assessee is in second appeal before Tribunal. 4. We have heard rival submissions and gone through facts and circumstances of the case. The main argument of assessee before us was that the purchase of shares of Kwality Builders & Developers Ltd. as on 24.09.2004 of 15700 shares at a price of ₹ 108.30 per share was though off market transaction but routed through a registered brokers M/s. N. M. Lohia &am .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

claimed by the assessee as short term capital loss. The assessee claimed to have produced following documents before lower authorities in respect of purchase and sale of the scrip of Kwality Builders & Developers Pvt. Ltd. at the prevailing market rate prevalent with the CSE. "1. Copy of the contract note issued by N.M.Lohia & Co. for purchase of shares of Kwality Builders & Developers Ltd. enclosed at Page 1 of the Paper book. 2. Copy of the contract notes issued by Pradeep Ku .....

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 AO sought information relating to, both, the purchase and sale of shares from CSE u/s. 133(6) of the Act and CSE in conformity with the assessee's contention informed that the purchase transactions were not carried out on the floor of the Exchange but sale transactions were executed on the CSE floor. In this regard it was explained that vide letter dated 10.12.2007 submitted to the AO that the purchases through the broker N.M. Lohia & Co. and not through CSE and confirmation of the b .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tion of the assessee was that the payment was made after six months from the date of purchase but before the end of the financial year. He explained that this was treated as outstanding for the six months from the payment is made. The assessee explained the delivery of shares through Demat account to the assessee that has taken place on 22.03.2005 of 14700 shares, on 24.03.2005 of 600 shares and on 30.03.2005 of 400 shares just before the date of sale. Ld. Counsel for the assessee explained that .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed all the evidence of purchase of shares produced by the assessee and doubted the purchase transaction. The sale transaction was not doubted. He explained that the purchase transactions were off market transactions and obviously there can be no record regarding these transactions with the Stock Exchange. The broker has filed written explanation before the AO admitting and confirming the purchase made by assessee of these shares. 5. We have gone through the details in entirety and found that 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

ven though the purchase is through off market transaction. In such facts, Hon'ble Calcutta High Court in the case of CIT Vs. Carbo Industrial Holding Ltd. (2000) 244 ITR 422 (Cal) held as under: "The perusal of the details regarding the transaction of various shares reveals that the sale and purchase in fact was not on the same date, though on the date when the shares are received by the assessee. There are in fact four relevant dates-the date of contract, the date of receipt of the 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

sale and payment received by account payee cheque was on two different dates. If the share broker, even after issue of summons does not appear, for that reason, the claim of the assessee should not be denied, specially in the cases when the existence of broker is not in dispute, nor the payment is in dispute. Merely because some broker failed to appear, assessee should not be punished for the default of a broker and on mere suspicion the claim of assessee should not be denied. " Similarly, .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ank accounts and regular Books-of-A/cs. All the shares sold were transferred through Demat Account or handed over physically to concerned brokers. The price at which the shares have been sold is also published in the daily Quotation issued by the Calcutta Stock Exchange. The shares sold after 1st October'04 pertains to the assessment year 2005-06. Security Transaction tax has been deducted from the sale proceeds. 6.3 The decisions of the Hon'ble Calcutta High Court in the case of CIT-VsC .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

rchase and sale of shares were supported by proper Contract Notes, deliveries of shares were received through demat accounts maintained with various agencies, the shares ITA Nos. 714 to 718/Kol/2011-C-AM Smt. Sunita Khemka 6 were purchased and sold through recognised broker and the sale considerations were received by Account Payee Cheques, the transactions cannot be treated as bogus and the income so disclosed was assessable as LTCG. 6.4 In the assessment orders under consideration the AO has n .....

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