TMI Blog2010 (4) TMI 1143X X X X Extracts X X X X X X X X Extracts X X X X ..... se of assessment. 3. Brief facts of the case are that, the Karta of the assessee is a share broker and was a member of the CSE/National Stock Exchange during the relevant year. The assessee earned income from house property, capital gain and income from other sources. The assessee filed its return of income declaring total income of ₹ 22,47,450/-. The AO completed the assessment at total income of ₹ 37,68,500/- by making disallowance of ₹ 15,29,049/- being the short term capital loss. At the time of assessment the AO found that, during the relevant previous year, the assessee has incurred capital loss to the tune of ₹ 15,29,049/- on sale of 12 scrips listed both on CSE BSE/NSE. And, out of the short term capit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... completed the transactions. It was also submitted before the AO that the assessee has purchased shares which were credited in the Demat account and the payments were made through account payee cheques. Similarly the shares were delivered on sale through Demat account and the consideration was received by cheque. However, the AO was not convinced with the submission of the assessee and after making several observation he disallowed the capital loss to the extent of ₹ 15,29,049/- by observing as under : (i) In the case of scrip of Nageshwar Investment, the transaction was not carried out on the on-line system of the Exchange. The share of Easum Capital was purchased in cross deal and the shares of Mandya Finance were purchased ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... confronting the assesse s argument has disallowed capital loss of ₹ 15,29,049/- . The Ld. CIT(A) on the other hand, without proper appreciation of the argument put forward by the AO during passing the order u/s. 143(3) has held that the loss incurred by the assessee on sale of shares listed on CSE was a genuine trading loss and directed to delete the additions. He lastly urged before the bench to set aside the order of the Ld. CIT(A) and restore that of AO. 5. On the other hand, the Ld. Counsel for the assessee relied on the order of the Ld. CIT(A) and urged before the bench to confirm the same. 6. We have heard the rival submissions, perused the material available on record and the orders of the lower authorities. We find th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... issued the contract note which have already been submitted. The consideration for the purchase and sale of these shares has been paid/received through the banking channels. The copies of bank statements have also been submitted. Further, on purchase of these shares, the delivery was taken in Demat account and similarly when share was sold the delivery to the respective brokers has also been given through the Demat account The copy of Demat account was also submitted during assessment proceedings. However, the submission of the appellant was not acceptable to the AO and after making several observations in the assessment order, he has disallowed the capital loss on sale of these shares amounting to ₹ 15,29,049/- According to the AO, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares to the broker on their sale. The AO has not brought anything on record to prove that there was any connivance between the appellant and share brokers. The AO has further observed that the companies in which the appellant has invested were not worth investing as those companies had small profit/loss and small capital base. The appellant in place of buying these shares, could have purchased shares of better companies at the prices at which he had purchased shares of small companies. In this regard, I intend to agree with the appellant that the AO cannot dictate his terms or impose his thoughts on the appellant that what he should have done and what not. From the assessment order it is apparent that the AO has disallowed the capita ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ns in these scrips were not carried out by the brokers who have issued the contract notes to the appellant. In view of the above, I am of the opinion that the AO was not justified in disallowing the capital loss of ₹ 15,29,049/-. Subsequently, the Ld. CIT(A) discussed the following case laws : i) ITO Vs- Raj Kumar Agarwal, ITA No. 1130/Kol/2007 (Kol), ii) Mukesh R. Marolia Vs- ACIT (2006) 6 SOT 247 (Mum), iii) ACIT Vs- Swapan Kumar Biswas, ITA No.121/Kol/2008 iv) DCIT Vs- Shri Bhagwati Prasad Agarwal, ITA No.1230/Kol/2008. v) Shri Jaywant Himani Vs- ITO, ITA No.340/Kol/2007, vi) Shri Acchyalal Shaw Vs- ITO, ITA No.1977/Kol/2008, vii) Anup Kumar Jayaswal , ITA N ..... X X X X Extracts X X X X X X X X Extracts X X X X
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