2017 (11) TMI 1283

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....3 under section 143(3) of the Income Tax Act, 1961(hereinafter 'the Act'). 2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of the claim of long term capital loss on account of sale of shares of VRKP Steel Ind. Pvt. Ltd. and Ankola Papers Mills Pvt. Ltd. For this assessee has raised following three grounds: - "On the facts and in the circumstances of the case and in law the Learned Commissioner of Income-tax (Appeals) erred in confirming the addition of Rs. 122,88,426/- as Long Term Capital Gain in the hands of the appellant. On the facts and in the circumstances of the case and in law the Learned Commissioner of Income-tax (Appeals) erred in confirming the rejectio....

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.... 13,50,000 Do- 19.03.08 15,000 100 1,500,000 10.09.09 15,000 10.00 1,50,000 - 13,50,000   Total 55000   5,500,000   55000   550000 -4950000 Ankola papers mills pvt. Ltd 19.02.08 40,000 250 10,000,000 15.12.09 40,000 10.00 400000 -9600000   Total               - 14550000 4. From the above, AO noted that the assessee claimed to have sold 40,000 shares of Ankola Papers Mills Pvt. Ltd. by a sum of Rs. 10 per share, which was purchased for a sum of Rs. 250 per share. Similarly, 55,000 shares of VRKP Steel Ind. Pvt. Ltd. were sold at Rs. 10 per share against the p....

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....), disallowed the long term capital loss claimed on account of sale unquoted equity shares at Rs. 1,45,50,000/- Aggrieved, assessee preferred the appeal before CIT(A). The CIT(A) after considering the submissions of the assessee confirmed the action of the AO vide Para 2.3 as under: - "I have perused facts of the case and the appellant's submissions carefully. I find that in the paper book, the appellant has submitted submissions made before AO vide letter dated 29.01.2013, whereby the appellant had referred to the companies in which she is director/ promoter. The statement of application of sale proceeds shows that against sale proceeds of two unlisted companies/three properties. payments made to such companies in which assess....

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....nd sale date so that the valuation of said companies tumbled drastically. No prudent investor would sell its investment of as high as Rs. 1,55.00,000/- for just Rs. 9.50,000/- even in case of utter distress, which gives just above ... % of total investment without any fundamental change in valuation of said companies. Moreover. in present case, the appellant is not even able to substantiate that she was in dire need of funds, and that she had actually applied such funds to meet any urgent obligations. The booking of huge losses oil of unlisted shares without substantiating the sharp fall in their valuation. coupled with almost equivalent gain on sale of three residential properties only point to a situation where the appellant has engineere....

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....of the sale proceeds by the assessee does not justify the distress sale as claimed. vi) No prudent investor would sell his investment at such a huge loss even in case of distress. The claim of the assessee is as follows." 6. From the above, we find that the assessee is an investor in many new companies not only in the past but also the future. Some of these companies are start-up companies wherein investment are made at high rates and at premium. At times these companies do not succeed as expected. The assessee had explained the reason for liquidating immovable properties and investments in some companies on account of financial requirement. The assessee is a co-borrower and guarantor for some companies and hence distress sale w....

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....risen between the assessee and the majority shareholders. 7. As far as the facts are concerned, now the assessee before us also produced even the date of payment for purchase of shares, which was made only at the time of purchase of shares and which is reflected in the following chart: - Name of the Co. Date of purchase/ payment No. of shares Amount Date of sale Sale amt Gain / loss VRKP Steel Industries P. Ltd. 18.09,2007 25,000 2500000 15.09.2009 2,50,000 22,50,000   17.10.2007 1500 15,00000 10.09.2009 1,50,000 13,50,000   18.03.2008 1500 1500000 ....