TaxTMI 
TaxTMI 
2018 (6) TMI 91
X X X X Extracts X X X X
X X X X Extracts X X X X
....ee was under scrutiny and statutory notices were duly served on the assessee. During the assessment proceedings, the AO was not carrying on any business. During the year, assessee received compensation on surrendering of tenancy rights to the tune of Rs. 75 lakhs from Bombay Amusement Park Pvt Ltd under High Court order. Assessee also booked a loss of Rs. 75,10,750/- on sale of shares of unquoted shares of some group companies to another group company M/S Vishal Amusement Pvt Ltd at agreed price calculated on the basis of balance sheets of the respective company. All the said companies were loss making over the years. The said loss was set off against the compensation received from surrender of tenancy rights. The total long term loss after indexation was computed at Rs. 78,55,468/-. After claiming the set off against the tenancy rights ,the unabsorbed loss of Rs. 3,55,468/- was carried forward for future set off. The AO observed that the assessee has sold share holdings in five private companies on 21/03/2005 to Vishal Amusement Pvt. Ltd. Which were group companies to another company as per details hereunder:- Sr No. Scrip No. of shares Rate of sale of shares Date of purc....
X X X X Extracts X X X X
X X X X Extracts X X X X
....relied on various decisions to support his contention as has been referred to in the appellate order. 6. Learned AR submitted before us that the assessee has genuinely entered into the transactions on sale of shares which the assessee was holding of other five group companies to M/S Vishal Amusement Park Pvt. Ltd which was also a group company. Learned AR stated that assessee entered into sale of shares on 21/03/2005 and the said sales considerations were received simultaneously by account payee cheques and was duly shown as cheques in hand at the year end and were realised in the month of April on or before 15/04/2005. Learned AR submitted that the transactions were executed after following due procedures as laid down in the respective laws. The learned AR brought to the attention of the Bench, the copies of resolution of the Board of Directors which is filed at page No.15 of the paper book evidencing that the decision to sell the said shares was taken in a meeting of the Board of Directors held on 18/03/2005 and the share transfer forms were duly executed after affixing the requisite stamp fee the copies whereof are filed at page No.17 to 28. Learned AR also took us through the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pon any valuation report and submitted that decision as relied by the ld AR in the case of CIT(A) vs. Special Paints Ltd.,(supra) was distinguishable on facts. In the case of CIT vs. Gillette Diversified Operations (P) Ltd., (supra), ld DR submitted that in that case there is no loss to the revenue whereas in the present case, there is loss of the revenue and therefore this decision was distinguishable on facts and not applicable to the case of the assessee. 10. In the rebuttal, learned AR submitted that the transactions entered into by the assessee were very much as per law and there was nothing wrong in entering into selling of shares at a price determined on the basis of balance sheet of the respective companies and also by following the procedure laid down in the respective legislation. Finally learned AR prayed before the Bench that since assessee has entered into genuine transactions of sale of shares, the appeal of assessee deserved to be allowed by setting aside the order of the CIT(A). 11. We have heard rival submissions and perused the material on record. The undisputed facts are that assessee has received compensation of Rs. 75 lakhs for surrender of tenancy rights fro....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... of payments for transfer of such shares and were duly shown in the books of accounts of the assessee. The sole issue raised by the revenue is that the price at which these were transferred was not based upon valuation report and thus the AO rejected the setting off the said loss against the long term capital gain. It seems to be a case of tax planning by the assessee, though the transactions having been carried out between the group companies. In the case of CIT(A) vs. B. Arunkumar & Co., the identical issue came up before the Jurisdictional High Court in which the Hon'ble High Court has held that the assessee has shown the full consideration received for the sale of shares which has been disclosed in the return of income and the same can not be substituted. We find that both Commissioner of Income Tax (Appeals) as well as the Tribunal have rendered a finding of fact that the consideration of Rs. 750/- and Rs. 936/- per share received on the sale of the shares by the respondent assessee was in fact the full consideration which have been disclosed to the revenue. It is not the case of the revenue that the amount disclosed by the respondent assessee was less than what has been recei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e transaction of purchase as well as sale of the shares of Rail Track India and Evergrowing Iron & Finvest were both done on the basis of networth of the shares as would be evident from the workings given by the assessee before the Assessing Officer as also before the Tribunal. The said shares were not quoted shares & that the valuation of the shares both at the time of purchases well as at the time of sale of the said shares was on the networth basis which have not been challenged by Assessing Officer or the Commissioner (Appeals). It is only that both these authorities have only raised certain doubts as to why such a loss was incurred. However, they have not been able to produce any evidence to dispel the credibility of the prices as indicated by the respondent assessee when there is no evidence to upset the purchase & sale prices of said shares. The prices arrived at on the basis of networth of the said companies as provided by the assessee, would have to be accepted. If that were to be done then the addition could not be made as the transactions would be in order. There is also no finding that '.he transactions were not legitimate or that the transactions were sham." 15. ....