TMI Blog2018 (8) TMI 1487X X X X Extracts X X X X X X X X Extracts X X X X ..... be set off against the capital gain. Thus, the surrounding circumstances and human probabilities are to be taken into account while considering the evidences emanating from the records. Considering the sequence of events discussed the share transaction is nothing but a sham transaction, a colourable device to avoid capital gains tax liability and, therefore, has to be ignored. The first appellate authority has accepted the transaction without considering the fact that what is ‘apparent’ is not ‘real’ on the facts of the case in hand. We, therefore, set aside the findings of the CIT(A) and restore that of the AO. The assessment order is upheld. The sole ground raised by the Revenue is allowed. - ITA No. 2989/DEL/2016 - - - Dated:- 23-8- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... roceeding further, let us examine the principles laid down by the Hon'ble Supreme Court in the case of Durga Prasad More 82 ITR 540 [SC]. The relevant findings of the Hon'ble Supreme Court read as under: It is true that an apparent must be considered real until it is shown that there are reasons to believe that the apparent is not the real. In a case of the present kind a party who relies on a recital in a deed has to establish the truth of those recitals otherwise it will be very easy to make self-serving statements in documents either executed or taken by a party and rely on those recitals. If all that an assessee who wants to evade tax is to have some recitals made in a document either executed by him or executed in his fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... see had taken part consideration as mentioned hereinabove. 10. It is not understood that once the property was agreed to be sold to QIPL and part consideration was received, then why the same property was entered into a collaboration agreement with CRPL, which is a group company? 11. Pursuant to the collaboration agreement, the assessee received ₹ 10 crores as refundable security deposit/earnest money from CRPL. ₹ 9 crores was received during the F.Y. 2010-11 as under: Date Cheque No. Amount paid 03.03.2011 44206 1,50,00,000/- 07.03.2011 44209 3,00,00,000/- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss of sale of shares was generated. 16. At this stage, it is pertinent to note that the assessee paid a premium of ₹ 190/- on the shares of a company which was incorporated on 03.01.2011 and its first F.Y. ended on 31.03.2011 and the date of purchase of shares is 15.03.2011. Though the premium is justified by a valuation report, but the same appears to be a selfserving document because a company which is incorporated in January 2011 cannot fetch a hefty premium of ₹ 190/- in a span of three months. 17. On 31.03.2011, the book value of shares of VBPL is mentioned at ₹ 82/- 18. No prudent person with some commercial prudence would pay a hefty premium of ₹ 190/- on a book value of ₹ 82/-, hold it for on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of an assessee trying to take advantage of the said provision would not arise. Therefore, in each case, the question is, the way the assessee has avoided to pay tax relying on the statutory provisions is legitimate or not is to be considered by the Court. The Court has to bear in mind that it is wrong to encourage or entertain the belief that it is honorable to avoid the payment of tax by resorting to dubious methods. An obligation is cast on every citizen to pay the taxes without resorting to subterfuges. When the statute provides certain rights, which if properly applied would reduce the tax burden on the assessee or exempts him from the payment of the assessee is entitled to the said benefit. However, if he is invoking the said provisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion. But the cumulative effect of all these instances unequivocally points out the real intention behind this transaction and leads to a irresistible conclusion that this tax planning is done with the intention to avoid payment of tax on capital gains and it is not a case of legitimate tax planning but a devise to avoid payment of tax. 23. Considering the sequence of events discussed hereinabove, in the light of the principles laid down by the Hon'ble Supreme Court and also by the Hon'ble Karnataka High Court, we have no hesitation to hold that the share transaction is nothing but a sham transaction, a colourable device to avoid capital gains tax liability and, therefore, has to be ignored. The first appellate authority has a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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