Long term capital loss on sale of shares sustained where independent valuation remained undisputed and revenue failed to rebut

Long term capital loss claimed on sale of shares was contested on grounds of genuineness and valuation; the assessing officer rejected the claim without specifying deficiencies in the assessee's independent valuation or producing an alternative valuation, and the revenue failed to counter the valuation during appellate and remand proceedings. The absence of any material disputing the share sale prices or demonstrating a different net asset value led to acceptance of the assessee's position and rejection of the assessing officer's summary disallowance, with appellate conclusions favouring the assessee's claimed loss.

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Issues: Whether the claim of long term capital loss of Rs. 183,00,38,564/- on sale of shares is allowable where the assessee furnished valuation report and documentary evidence before the first appellate authority and the Assessing Officer in remand reports did not present an independent valuation or concrete contrary material to rebut the assessee's valuation.

Analysis: The issue centres on sufficiency and veracity of evidence substantiating LTCL on sale of shares to an unrelated foreign purchaser. The factual matrix shows sale to an unrelated Singapore entity and production before the appellate forum of documentary evidence including demat statements, agreements and an independent valuation report (dated 22.02.2021). The first appellate authority forwarded these materials to the A.O. for remand verification and multiple remand reports and opportunities were exchanged. The A.O.'s initial objections related to non-submission of certain documents and funding being routed through related entities; however, the assessee demonstrated that earlier name changes and provided demat/purchase records before the appellate authority. In the second remand report the A.O. did not identify any specific deficiency in the independent valuer's determination of value nor did the department produce its own valuation or evidence quantifying market value on the date of sale. Rule 11UA (NAV considerations) and procedural notice under Section 250 were part of the appellate record; the assessee's chart showed sale prices were not below NAV and the department failed to controvert the valuation with affirmative proof. Where the transaction is between unrelated parties and the assessee produces an independent valuation and corroborative documents, the onus rests on the revenue to rebut with concrete contrary material; a mere assertion or failure to produce an alternative valuation is inadequate to summarily reject the assessee's claim.

Conclusion: The claim of long term capital loss of Rs. 183,00,38,564/- is allowable; the Revenue's grounds are dismissed and the first appellate authority's decision upholding the LTCL is affirmed in favour of the assessee.

Final Conclusion: The appellate tribunal affirms the appellate authority's allowance of the LTCL, holding that in absence of independent contrary evidence from the revenue the valuation and documentary evidence produced by the assessee suffice to establish the genuineness and quantum of the loss.

Ratio Decidendi: Where an assessee produces an independent valuation and supporting documentary evidence for share sale to an unrelated party, and the revenue fails to produce a contrary valuation or concrete rebuttal during remand/appellate proceedings, the assessing officer cannot summarily reject the assessee's valuation and disallow the long term capital loss.

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