2014 (3) TMI 642

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....ppeal by the Assessee is directed against the order of the Ld. Commissioner of Income Tax (Appeals-XXXI), New Delhi dated 10.2.2012 pertaining to assessment year 2004-05. 2. One issue raised is that Ld. CIT(A) erred in sustaining the disallowance of capital loss of Rs. 9,97,500/- stating that this transaction is a sham perhaps to book an artificial loss. 3. In this case assessment was framed....

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....Eco Friendly Ventures the father of the assessee is director and the shares have been sold to her sister in law. Thus it is a related party transaction in which the shares have been merely transferred between the family members and the assessee has booked an artificial loss. Thus the total loss of Rs. 9,97,500/- was being disallowed and added back to the income of the assessee. 4. Upon assessee....

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....he AO's action without any basis. Nothing has been brought on record to show the share transaction was the sham. We find that just because the transaction is between the relatives, it cannot be said to be a sham. In this regard, we also note the contention by the Ld. Counsel of the assessee that in similar case in the case of Ashwani Khurana vs. ACIT in ITA No. 1942/Del/2012 vide order dated 2....

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....alue of the share is even less than the book value of the shares at which the assessee has sold the shares. The Ld. CIT(A) has upheld the action of the AO on the ground that the transaction of sale of shares is a sham transaction. However, we do not find any evidence or basis for holding the sale of shares to assessee's wife as sham transaction. Merely because the transaction is between the re....