TMI Blog2017 (11) TMI 1283X X X X Extracts X X X X X X X X Extracts X X X X ..... related in any way to the assessee. The Purchaser have not been examined by the Assessing Officer to verify the genuineness of sale. The Assessing Officer has failed to appreciate that shares of private limited companies cannot be sold in the open market and hence the seller is at the mercy of the Purchaser. Merely because the assessee had sold the shares at face value in a distressed situation it cannot be presumed that the assessee had engineered the transaction is to manage its tax liability. The assessee states that the sale is genuine out of urgent financial needs and also on account of the fact that differences had arisen between the assessee and the majority shareholders. Assessee also produced even the date of payment for purchase of shares, which was made only at the time of purchase of shares. Also the assessee has transferred the shares back to the Ankola Paper Mills Private Limited and VRKP Steel Industries Private Limited and received the payment of ₹ 10,00,000/-. This ₹ 10,00,000/- was invested by the assessee in international export corporation of ₹ 32,00,000/-. It means that the assessee was in need of money and hence, for this purpose he sold t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of short term investment in unquoted equity shares at ₹ 1,45,50,000/-. Thereby the assessee has claimed to set off of this capital gain against the capital loss arising from sale of investment in unquoted equity shares. The AO required the assessee to file the details of purchase and sale of unquoted equity shares and he furnished information in the following chart: - Name of the company Date of purchase Qty. Rate Total Date of sale Qty. Rate Total sale amt. Net Capital gain/ loss VRKP Steel Ind. Pvt. Ltd. 19.03.08 25,000 100 2,50,000 10.09.09 25000 10.00 25,0000 -2250000 Do- 19.03.08 15,000 100 1,500,000 10.09.09 15,000 10.00 1,50,000 13,50,000 Do- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ged in a manner to defraud the Revenue of its legitimate taxes. Accordingly, by applying the decision of Hon ble Supreme Court in the case of CIT vs. Durga Prasad More [1971] 82 ITR 540 (SC), Sumati Dayal vs CIT [1995] 214 ITR 801 (SC) and Mc Dowell Co. Ltd. vs Commercial Tax Officer [1985] 154 ITR 148 (SC), disallowed the long term capital loss claimed on account of sale unquoted equity shares at ₹ 1,45,50,000/- Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) after considering the submissions of the assessee confirmed the action of the AO vide Para 2.3 as under: - I have perused facts of the case and the appellant's submissions carefully. I find that in the paper book, the appellant has submitted submissions made before AO vide letter dated 29.01.2013, whereby the appellant had referred to the companies in which she is director/ promoter. The statement of application of sale proceeds shows that against sale proceeds of two unlisted companies/three properties. payments made to such companies in which assessee is promoter/director includes payments made to Ceenik Exports (I) Ltd. at ₹. 8,00,000 0.000, Nitkin Properties Estates Pvt. Ltd. at ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nfirm the disallowance of deduction claimed on account of loss on sale of unquoted shares. Therefore, the grounds of appeal are dismissed. Aggrieved, now assessee is in second appeal before Tribunal. 5. We have heard the rival contentions and gone through the facts and circumstances of the case. We find from the facts of the case that the assessment has been completed at an income of ₹ 1,30,06,155/- rejecting the claim of long term capital loss on the sale of unquoted equity shares amounting to ₹ 1,45,50,000/-. The claim of the of the assessee for set off long term capital gain on the sale of property against the long term capital loss on sale of unquoted equity shares has been rejected on the ground that the same is not genuine. The reasons for rejection as per the assessing officer and confirmed by the CIT(Appeals) are as follows:- i) There was no basis for the assessee who have incurred such huge loss. ii) The transaction is arranged to defraud revenue. iii) There was no justification for selling the shares at face value since the companies are doing well. iv) The claim of the assessee that she was in need of money has not been establis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... efore us also produced even the date of payment for purchase of shares, which was made only at the time of purchase of shares and which is reflected in the following chart: - Name of the Co. Date of purchase/ payment No. of shares Amount Date of sale Sale amt Gain / loss VRKP Steel Industries P. Ltd. 18.09,2007 25,000 2500000 15.09.2009 2,50,000 22,50,000 17.10.2007 1500 15,00000 10.09.2009 1,50,000 13,50,000 18.03.2008 1500 1500000 10.09.2009 1,50,000 1350000/- (A) 55000 5500000 5,50000 49,50000 Ankola paper mills Ltd. 20.07.2007 10,000 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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