ITAT Delhi upholds Revenue's appeal, emphasizing lack of genuineness in share sale transactions. The ITAT Delhi allowed the Revenue's appeal in both issues, emphasizing the lack of genuineness in the transactions involving the sale of shares of M/s ...
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ITAT Delhi upholds Revenue's appeal, emphasizing lack of genuineness in share sale transactions.
The ITAT Delhi allowed the Revenue's appeal in both issues, emphasizing the lack of genuineness in the transactions involving the sale of shares of M/s Pioneer Ltd. and M/s Solaris Holdings Ltd. The judgment highlighted the need to consider surrounding circumstances and human probabilities to determine the reality of transactions, ultimately upholding the AO's disallowance of losses claimed by the assessee.
Issues Involved: 1. Deletion of disallowance of loss claimed on sale of shares of M/s Pioneer Ltd. 2. Deletion of disallowance of loss claimed on sale of shares of M/s Solaris Holdings Ltd.
Analysis:
Issue 1: Deletion of disallowance of loss claimed on sale of shares of M/s Pioneer Ltd. The appeal by the Revenue contested the deletion of disallowance of a loss claimed by the assessee on the sale of shares of M/s Pioneer Ltd. The AO disallowed the long-term capital loss of Rs.3.35 crore, as he found no reasonable basis to justify the sale of shares at a significantly lower price to a related party. The CIT(A) deleted the addition, but the ITAT Delhi disagreed. The ITAT noted that the shares were transacted between related entities at a substantial loss, indicating a lack of genuineness in the transaction. The ITAT referred to the Sumati Dayal case to emphasize the need to consider surrounding circumstances to determine the reality of transactions. The ITAT concluded that the transaction was aimed at defrauding the Revenue and overturned the CIT(A)'s decision.
Issue 2: Deletion of disallowance of loss claimed on sale of shares of M/s Solaris Holdings Ltd. The second ground of appeal concerned the deletion of disallowance of a loss claimed on the sale of shares of M/s Solaris Holdings Ltd. The AO disallowed the loss of Rs.97.35 lac, as the payment for the purchase of shares was claimed to have been made only after the sale. The CIT(A) reversed the AO's decision, but the ITAT Delhi disagreed. The ITAT found the transaction to be non-genuine, as the payment was received after a significant delay and the parties involved were related entities. The ITAT concluded that the transaction was aimed at evading legitimate tax dues, similar to the first issue. Therefore, the ITAT allowed the Revenue's appeal and restored the AO's decision.
In conclusion, the ITAT Delhi allowed the Revenue's appeal in both issues, emphasizing the lack of genuineness in the transactions involving the sale of shares of M/s Pioneer Ltd. and M/s Solaris Holdings Ltd. The judgment highlighted the need to consider surrounding circumstances and human probabilities to determine the reality of transactions, ultimately upholding the AO's disallowance of losses claimed by the assessee.
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