Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Forum Articles Highlights TMI Notes SMS News What's New Calendar Imp. Links Database More...
Extracts
Home List
← Previous Next →

Income-Tax Officer Versus Shri Hasmukh U. Gadhecha

Short Term Capital Loss on sale of unquoted shares - genuity of expenditure - FIFO method of accounting adopted by AO - Held that:- The undisputed facts are that the assessee was already a share holder in said Inter Active Technologies, and after selling about 1/3 share holding remained owner of about 2/3 rd shares in next year, doubts have been raised by ld. Assessing Officer only in respect of this year’s sale of shares tow2ards the end of the year. It emerges from the record that assessee 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

the taxes of ₹ 95/- lakhs for the A.Y. 2010-11 after set off of earlier years losses (profit ₹ 614/- lakhs for the A.Y. 2010-11) and also paid advance-tax of ₹ 15/- lakhs for the A.Y. 2011-12.

Thus in consideration of all these undisputed facts, ld. CIT(A) rightly observed that the purchase of these shares by the appellant cannot be considered as non-genuine or paper transactions. Assessee produced necessary evidence that Inter Active i.e. company furnished necessary .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

nter Active’s net worth was reduced from ₹ 800 lakhs to ₹ 400 lakhs. The book value of share of the company slided down to ₹ 38.21 as on 27/03/2008. This was a conscious business decision of the assessee. Besides, the payments for purchase of shares were made by account payee cheques, similarly the consideration for sale of share was also received by account payee cheques. Assessing Officer was not justified in applying FIFO method instead of adopting specific distinctive numbe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

de the nexus of utilization of borrowing for earning offered interest income - Held that:- It has been accepted by the Assessing Officer that interest expenditure has been expended to earn interest income. Sec. 56 does not postulate any condition about the rate of charging interest. The appellant explained the reasons and circumstances as to how the lesser interest was charged on old loans. No discernible case for diversion of borrowed funds for non-business purposes has been made out by ld. 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

ng of lesser rate of interest on old loans and advances and advances given for shorter period. This contention of the appellant was not controverted by the Assessing Officer either during the course of assessment proceedings nor during remand proceedings. Considering all these facts and circumstances ld. CIT(A) deleted the disallowance. In our considered view there is no inconsistency in the order of ld. CIT(A) on this issue, which is upheld.- Decided in favour of assessee - ITA No. 3031/Ahd/201 .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

evenue s appeal:- 1. The Ld. CIT(A) has erred in law and on facts in directing to allow the Short Term Capital Loss on sale of unquoted share of ₹ 1,82,10,800/-. 2. The ld. CIT(A) has erred in law and on facts in deleting the disallowance of interest payment of ₹ 9,87,264/- being excess of interest received. 3. On the facts & circumstances of the case, the ld. CIT(A) ought to have upheld the order of the Assessing Officer. 3. Following grounds are raised in assessee s cross-objec .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

s and not properly appreciating various facts and law in its proper perspective and further erred in passing orders in gross violation of the principles of natural justice. 3. Learned CIT(A) has erred in law and on facts of the case in confirming the action of AO in charging interest u/s 234 A/B/C/D of the Act. 4. Learned CIT(A) has erred in law and on facts in not adjudicating upon the ground challenging the action of AO in initiating penalty under section 271(1)(c) of the Act without recording .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

- on sale of land and loss of ₹ 1,82,10,800/- on account of sale of shares of Inter Active Technologies Pvt. Ltd.. AO called for details of loss in share and held that the claim in this behalf was not genuine. In appeal ld. CIT(A) held that the impugned transaction of sale of shares was genuine and allowed the loss. Aggrieved revenue is before us on this ground. 6. Ld. Departmental Representative relied on the order of the Assessing Officer. 7. Ld. Counsel for the assessee contends that th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ding, i.e., 3,43,600 shares in Inter Active Technologies @ ₹ 47/- per share so as to restrict his losses. The sale in these market conditions resulted in loss at ₹ 1,82,10,800/-. AO was suspicious mainly on the loss figure being incidentally nearer to STCG on land sale amounting to ₹ 1,81,50,000/-, which was set off. In this connection, the assessee vide letter dated 18/12/2010 submitted a detailed reply explaining that the genuineness of loss and its allowability. However, 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

during the course of assessment proceedings, the assessee filed submission dated 18.12.2010 before the Assessing Officer and explained that, the shares Interactive Technologies were purchased in earlier year also beside purchase and sale in current year about 2/3rd share holding continued in subsequent years. The earlier and subsequent share holding in Interactive Technologies have been accepted by the department; therefore, there is no gainsaying that the impugned transaction was paper transac .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ears losses (profit ₹ 614/- lakhs for the A.Y. 2010-11) and also paid advance-tax of ₹ 15/- lakhs for the A.Y. 2011-12. 7.2 Beside assessee furnished all the relevant documents to demonstrate the authenticity of purchase and sale of shares by filing - copy of allotment letter, resolution passed by the Company allotting shares to the assessee, bank statement showing payment for acquisition of such shares, returns filed with the ROC reporting allotment of shares, Balance Sheet of the C .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

shares have been complied with. Similarly the details about of the subsequent sale, the buyer of the shares, receipt of the sale consideration through account payee cheques, transfer of the sold shares from assessee's account to the account of the buyer etc have been demonstrated by relevant documentary evidence. Under the circumstances, the impugned transaction of sale of shares is established by the assessee and has not been proved to be false or nongenuine. Assessee complied with all 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

or inadequacy of the price nor to the market value of the capital asset. Reliance is placed on following authorities:- • CIT vs. Gillanders Arbuthnot & Co. [1973] 87 ITR 407; • CIT vs. George Henderson & Co. Ltd. 66 ITR 622 (SC) 7.4 During the course of appellate proceedings, a remand report was called for by the ld. CIT(A). After considering the material available on record, AO s remand report and submissions of the assessee ld. CIT(A) held that the impugned transaction of pu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

mpany from liquidation and to re-strengthen the company's capital and reserves and the appellant was successful in saving the aforesaid company from adverse consequences. It is evident from the record that the book value of the company had gone upto ₹ 170/- per share as on 18.12.2010 which was for Rs. (-) 40.23 per share as on 29.12.2007 i.e. before the infusion of funds by the appellant. The aforesaid company had paid the taxes of ₹ 95/- lakhs for the A.Y. 2010-11 after set off .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

to ₹ 170/- per share from Rs. (-) 40.23 per share as on 29.12.2007. Thus, the purchase of shares by the appellant at ₹ 100 per share (at a premium of ₹ 90 per share) cannot be any how considered as non-genuine or bogus or paper transactions. The company had furnished necessary information to the Registrar of Companies and no any infirmity was noticed by the ROC in purchase and sale of shares and in maintenance of other records for share transactions. There is thus no substance .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

attempt to reduce its incidence of tax by adopting a colorable or questionable device, by observing as under:- 2.18 It is evident from the aforesaid submission furnished before the Assessing Officer that the share market was booming at the time of investment in shares. However, all of a sudden, just after the couple of days of investment, the share market was substantially crashed in only one day and then after it continued to show downwards. After the crash in the market, the company's netw .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ares to the close relative it was submitted before the Assessing Officer by the appellant that as per the Companies Act, 1956, the closely held company cannot invite or transfer the equity share of the company to the general public and therefore, the shares were transferred to the HUF of assessee's father. However, by merely transferring the shares to a relative cannot be considered as a non-genuine transaction where the shares with distinctive numbers were actually delivered and the amount .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tta High Court judgment in the case of CIT vs. Oberoi Hotels P. Ltd, 334 ITR 293 (Cal.), ld. CIT(A) held that the transactions of the purchase and sale of shares of the assessee were genuine and he accordingly allowed the impugned Short Term Capital Loss of ₹ 1,82,10,800/- attributable to sale of part of the shares of M/s. Inter Active Technologies Pvt Ltd., by observing as under:- ……The shares were actually purchased by the assessee and payments were made by account payee ch .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

colourable one and considered as having been entered into with the intention of offsetting the short-term capital gain earned from the sale of land. 2.24 There is no substance in the finding of the Assessing Officer without prejudice recorded in para-4.19 of the assessment order. The appellant had acquired shares in the form of physical certificates with distinctive numbers and it was never dematerialized with a depository and therefore, while computing the capital gain, purchase and sale of sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

he considered opinion that the Assessing Officer was not justified in applying FIFO method instead of adopting specific distinctive numbers of shares for the purchase and sale of shares while computing capital loss for ₹ 99,10,980/-. However, the Assessing Officer himself had not computed the income by adopting the loss of short-term capital loss of ₹ 99,10,980/-, the aforesaid finding of the Assessing Officer remained academic and the same is hereby rejected. 2.25 Considering the fa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

pital loss of ₹ 1,82,10,800/-incurred on account of sale of part of the shares of M/s Inter Active Technologies Pvt. Ltd. The Assessing Officer is directed to allow the aforesaid loss of ₹ 1,82,10,800/-. The first ground of appeal is accordingly allowed. 7.7 Ld. Counsel thus contends that assessee s earlier year share holding in Inter Active Technologies has been held to be genuine by Assessing Officer, similarly after the impugned sale 2/3 share holding continue, which also has not .....

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 2/3 rd shares in next year, doubts have been raised by ld. Assessing Officer only in respect of this year s sale of shares tow2ards the end of the year. It emerges from the record that assessee in order to protect his earlier share holding purchased the new shares at higher rate to save Inter Active from liquidation and to re-strengthen the company's capital and reserves, which is claimed to be a prudent business decision. Assessee s efforts are proved from the record that the book value 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

rightly observed that the purchase of these shares by the appellant cannot be considered as non-genuine or paper transactions. Assessee produced necessary evidence that Inter Active i.e. company furnished necessary information and no any infirmity was indicated by the ROC qua the impugned purchase and sale of shares and in maintenance of other records relating to share transactions. Thus the adverse inference drawn by ld. Assessing Officer that there were alleged interpolation in the registers .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ee cheques, similarly the consideration for sale of share was also received by account payee cheques. Assessee s reference to the CBDT Circular No.704, dated 28 April, 1995 [213 ITR St. 7] providing that FIFO method is only required to be applied where the dates of purchase and sale could not be correlated with specific numbers of the scripts. Ld. Assessing Officer was not justified in applying FIFO method instead of adopting specific distinctive numbers of shares for the purchase and sale of sh .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

deletion of disallowance of interest expenditure of ₹ 9,87,264/-. The Assessing Officer disallowed the above interest expenditure of ₹ 9,87,264/- alleging that the assessee failed to provide the nexus of utilization of borrowing for earning offered interest income. In first appeal Ld. CIT(A) deleted the disallowance of interest by following observations: 4. is much substance in the contention of the Ld. Counsel that when it has been accepted by the Assessing Officer that interest ex .....

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 the Assessing Officer recorded in the assessment order. I have also considered the remand report of the Assessing Officer. The Assessing Officer had relied upon the discussion made in para-6 of the assessment order. The Ld. Counsel vide para-12 of the comments on the remand report of the Assessing Officer had raised the alternative contention which has also been considered. There is no substance in the alternative contention so raised. The Ld. Counsel could not justify as to how the disallowed .....

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 regular business of the assessee as has been projected. If that was the position then the Assessing Officer had to allow the same by increasing the cost of the land by the amount of interest treated as capital in nature. Since the contention of the Assessing Officer was without any basis, the alternative contention of the appellant has been rejected. The interest expenditure was actually incurred for earning the interest income and due to charging of lesser rate of interest on old loans and .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ing the facts of the case and the above discussion, I am of the view that the Assessing Officer was not justified in disallowing the excess interest expenditure over the interest income. The disallowance so made for ₹ 9,87,264/- is hereby deleted. 9.1 Ld. DR relied on the order of ld. Assessing Officer. 9.2 Ld. Counsel contends that ld. Assessing Officer observed that the assessee has earned interest income of ₹ 19,03,827/-, whereas interest expenditure of ₹ 28,97,976/- was sho .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

prudent measure and in these peculiar circumstances charged lower interest @ 6% on old loan & advance. Ld. Assessing Officer though accepted the contention of the assessee that interest expenditure has been incurred to earn interest income, however, without assigning any tenable reason, disallowed the excess interest expenditure over interest income. It is contended once it has been principally accepted by the Assessing Officer that interest expenditure has been expended to earn interest inc .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

  ↓     Latest Happening     ↓  

Forum: 3B mistake

Forum: Input credit of gst paid on urd

Article: Credit of unsold stock [Section 140(3)] - Actual Credit as well as Notional Credit - Part-I - GST Transitional provisions

Circular: Certain Clarifications sought on Construction Services provided in the Real Estate Sector – reg.

Forum: transfer of shares

Forum: Input tax credit

News: Anti-dumping duty on import of bus/truck tyres from China

News: Fast-track GST refund, else ₹ 65K cr may be stuck: Exporters

Highlight: It is open to the Settlement Commission to use best judgment in arrival of the figure. Nonetheless it has to explain the manner in which the best judgment figure has been arrived at by the Settlement Commission - HC

Highlight: Deemed dividend u/s 2(22)(e) - advances given to societies - in the absence of legal right of the assessee in the said society the amount advanced cannot be treated as deemed income.

Highlight: When electrical installations are treated as plant and machinery the depreciation has to be allowed @ 25% as per provisions contained u/s 32

Forum: GST return filing software online | Easy GST compliance management

Forum: Excise duty credit on finished stock at additional place of business.

TMI Note: Capital Gain - transfer of right in the land or transfer of land itself - addition u/s 50C - Harassment to the honest tax payers

Highlight: Option to avail composition scheme under GST by electronically filing an intimation in FORM GST CMP-02 and FORM GST ITC-03 upto 30-9-2017 - See Rule 3(3A)

TMI Note: Does ICDS apply for the purposes of computing exemption u/s 11 to 13.

Highlight: Voluntary Reporting of Estimated Current Income and Advance Tax Liability - CBDT issues draft notification

TMI Note: Certain ICDS provisions are inconsistent with judicial precedents. Whether these judicial precedents would prevail over ICDS.

Highlight: Provisions of ICDS shall prevail w.e.f. AY 2017-18 to the transactional issues dealt therein over earlier judicial pronouncements.

Notification: Levy of anti dumping duty on New/unused pneumatic radial tyres with or without tubes and/or flap of rubber (including tubeless tyres) having normal rim dia code above 16 originating in, or exported from China PR

News: Voluntary Reporting of Estimated Current Income and Advance Tax Liability

TMI Note: In case of conflict between ICDS and other specific provisions of the Income-tax rules, 1962 governing taxation of income like rules 9A, 9B etc. of the Rules, which provisions shall prevail.

TMI Note: Does ICDS apply to computation of Minimum Alternate Tax (MAT) u/s 115JB of the Act or Alternate Minimum Tax (AMT) u/s 115JC of the Act.

TMI Note: Where a term has not been defined under ICDS, nor under the Act, but has different interpretations given to it by the courts in tax cases, and in ICAI Accounting Standards, which interpretation would prevail while interpreting ICDS.

TMI Note: Whether the provisions of ICDS apply to a non-resident who claims the benefit of a double taxation avoidance agreement (DTAA).

TMI Note: In case any of the ICDS provisions is contrary to a circular or press release issued by the CBDT, which would prevail over the other.

TMI Note: ICDS-I requires disclosure of significant accounting policies and other ICDS requires specific disclosures. Where is the taxpayer required to make such disclosures specified in ICDS.

Notification: Income Computation and Disclosure Standards (ICDS) - New ICDS to be effective from AY 2017-18

News: RBI Reference Rate for US $

Highlight: GST - Detention of goods under transport - discrepancy in documents - the statutory provisions provide a mechanism for adjudication following detention of goods including for the provisional release thereof pending adjudication - HC

Highlight: Reassessment - first few paragraphs of the assessment order dealt with objections and disposed of accordingly - Unfortunately, the manner in which the AO has decided the issue is wholly unsustainable in law - HC

Highlight: Business expenditure u/s 37 - liquidated damage - breach of contract terms - Expenditure was not incurred for any purpose which is an offence or which is prohibited by law - cannot be disallowed - HC

Highlight: Valuation - inclusion of reimbursement of expenses - managing participation of clients in certain mela, fairs, promotional activities etc. - They are liable to service tax on the gross amount received - They cannot restrict their tax liability to only agency commission

Highlight: TDS liability - ITAT confirmed the liability - We do not see how it is possible for us to uphold the order of the Tribunal and when it purports to decide two Appeals of the Revenue by single paragraph conclusion - HC

Highlight: Reopening of assessment - sufficiency of material available with the AO to form a belief that income chargeable to tax had escaped assessment - bogus purchases - seller refused to respond - notice would not be interfered with - HC

Highlight: Exemption u/s 11 - education activities - transport and hostel facilities surplus cannot be considered as business income of the assessee society

News: Draft Notification for insertion of new rule 39A in the Income-tax Rules, 1962 – comments and suggestions-reg.

Highlight: Genuineness of labour wages expenses, embroidery charges, fabrication expenses etc. - getting work done through small workmen who do not have any permanent place of residence - disallowance of ad hoc expenditure deleted.

Highlight: Project import - Since the goods were never used for the purpose for which it was imported, the actual user condition has been violated - Redemption fine and penalty imposed.

Highlight: Penalty u/s 112 (a) - CHA - Lack of due diligence and failure to take more precautions can not, by itself, bring in penal consequences

Highlight: Import of services - GST - The fact that those services were received outside India will not change the fact that the services have been paid for by the beneficiary appellant, who is located in India. - Demand confirmed.

Notification: SEZ for IT/ITES at Madhurwada Village, Visakhapatnam District in the State of Andhra Pradesh - denotified.

Highlight: Merely because payment is received in Indian rupee, it cannot be said that payment against export has not been received in convertible foreign exchange.

Highlight: Merely vehicle numbers was not mentioned on the invoices cannot be the reason to deny Cenvat Credit

Highlight: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017 - Circular

Circular: Extension of time limit for submitting the declaration in FORM GST TRAN-1 under rule 120A of the Central Goods and Service Tax Rules, 2017

News: Auction for Sale (Re-issue) of Government Stocks

Article: TDS APPLICABILITY ON GOVERNMENT CONTRACTS UNDER GST (Under Section 51 of the CGST Act, 2017)

News: Manmohan takes potshots at note ban, 'hasty' rollout of GST

News: GST on petrol, diesel requires wider discussion: Nitish



|| 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