TaxTMI 
TaxTMI 
2014 (9) TMI 1031
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....rested parties so as to create an artificial loss?" 2. This appeal arises out of the following factual background. A search under section 132 of the Act was carried out in the group cases of Himanshu J. Shah on 22.09.2005. Certain documents were found related to share trading activity carried out by the assessee and therefore, the proceedings under section 153A read with section 153C of the Act were initiated. In response to the notice, the assessee filed return of income on 11.12.2007 declaring total income of Rs. 91,09,790/-, wherein he had claimed loss under the head loss in "commodity future trading" amounting to Rs. 2,16,59,338/-. Scrutiny was made with regard to such transactions of loss by the Assessing Officer with Multi Commodity Exchange, Ahmedabad (MCX). He also further went into details of trade time and person from whom purchases and sales were executed through such exchange. On the basis of collecting data from 3rd March, 2005 to 30th March, 2005, the Assessing Officer concluded that this is a contrived loss and the same was disallowed. 2(a) This was challenged by the assessee before the Commissioner (Appeals) which concurred with the findings of the Assessing O....
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....cording to them, was suggestive of being in collusion to contrive loss artificially. The explanation of the assessee was also called for. The Assessing Officer had found some mutual connection between Himanshu J. Shah, the group concern and the concern of the assessee. On having noted that M/s MPFL and M/s VUSPL had created a "family" for enabling the broker and a group of clients to act in concert, in the software "Trade Plus", employed by them and further relying on the statement of Shri Himanshu Shah and the Directors of the assessee Company, these were held to be manipulated transactions by both the revenue authorities. 6. The Tribunal extensively dealt with the facts which were presented before all the authorities. It is true that both the Assessing Officer and the Commissioner (Appeals) were of the opinion that such claim of the assessee under the loss of commodity trading, assessed to the tune of Rs. 2.16 lacs (rounded off) was a contrived loss. We notice that the issue essentially revolves around realm of facts. In the findings of the Tribunal, no perversity can be found, inasmuch as, the Tribunal noted that all the transactions ventured into by the assessee were in comm....
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....tion with another group company to whom the assessee had sold cumulative convertible preference shares. In the process of this transaction of sale of cumulative convertible preference shares, the assessee had incurred long-term capital loss and such loss was set off against the capital gain earned on account of sale of plant and machinery. The assessee had contended that the reason for sale of the shares, as also the basis of the valuation. It was pointed out that the price was adopted as per the valuation report. The Assessing Officer, however, found that the assessee had entered into a colourable device for tax avoidance and disallowed the entire loss towards such sale of cumulative convertible preference shares. The Commissioner (Appeals) held that the transactions would fall within legitimate tax planning and did not term it as a colourable device for tax avoidance and that the assessee had sufficient justification for sale of these shares. 8(a) The Tribunal held that the valuation report was on the basis of consideration of relevant factors and did not suffer from any infirmity. 8(b) When challenged before this Court, the Court held thus: "We are of the opinion ....
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....e decision of the Tribunal was based on findings of fact, relying on the decision of the Apex Court in the case of CIT v. Karam Chand Thapar and Bros. P. Ltd. (supra). 10. At this stage, reference would be needed to the decision of the Apex Court rendered in the case of Commissioner of Income Tax, Calcutta v. Karam Chand Thapar and Bros. P. Ltd. (supra), where the reference was in respect as to whether the loss was genuine or bogus and whether the loss incurred is a trading loss or capital loss. The Court held the same to be a question of fact and that the finding of the Tribunal that the loss in sale of shares was trading loss, no question of law would arise. The Apex Court held that, "The Tribunal is a fact-finding body. The questions whether a particular loss is a trading loss or a capital loss and whether the loss is genuine or bogus are primarily questions to be determined on the appreciation of facts. The findings of the Tribunal on these questions are not liable to be interfered with unless the Tribunal has taken into consideration any irrelevant material or has failed to take into consideration any relevant material or the conclusion arrived at by the Tribunal is pervers....