TMI Blog1993 (7) TMI 121X X X X Extracts X X X X X X X X Extracts X X X X ..... way. During the year, the assessee sold a flat in Bombay and there was a capital gain of Rs. 35,70,661. On 24-12-1985 the assessee sold two lakh equity shares of M/s. Grahmas Trading Co. (I) Ltd. and 10,500 equity shares of M/s. Shalimar Works Ltd. The cost price of these shares (Rs. 10 face value) was Rs. 24,05,332 and Rs. 13,40,514. These shares were held as investments in the assessee's balance-sheet. These shares have been held by the assessee for quite some time. They were sold for Rs. 1 lakh in respect of the shares in M/s. Grahmas Trading Co. (I) Ltd. and for Rs. 2,625 in respect of the shares in M/s. Shalimar Works Ltd. The long-term capital loss came to Rs. 36,43,221. The loss was set off against the capital gains in the return. T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to uphold the contention. Firstly there is nothing on record to show that the sale of shares to the share broker was sham. The CIT(A) has recorded a categorical finding that there is nothing on record to suggest any collusion between the assessee and the share broker. Even the ITO does not appear to take a view that the sale of shares to the share broker is sham or a make-belief transaction in spite of having summoned the broker and having examined him and his books of account. In the absence of any such conclusion, the view of the ITO that the assessee is not entitled to claim set off of the loss in the share transaction against the long-term capital gain is not justified. Secondly, even assuming that the assessee had deliberately cho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case a partial partition effected by the assessee was not recognised on the ground that under section 171(9) of the Act, any partial partition effected after 31-12-1978 cannot be recognised by the ITO. The provisions of section 171(9) were challenged as being violative of Article 14 of the Constitution of India. One of the defences of the revenue before the High Court was that the derecognition of partial partition was enacted as a measure to prevent tax evasion and should, therefore, be upheld having regard to the decision in McDowell's case. It was while repelling the above defence that the Madras High Court presided over by his Lordship, the Learned Chief Justice M.N. Chandurkar, held that a real and genuine transaction which is not a du ..... X X X X Extracts X X X X X X X X Extracts X X X X
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