TaxTMI 
TaxTMI 
2022 (12) TMI 1159
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..... CIT(A) has erred in law in allowing exemption of Rs. 2,32,13,084/- u/s. 54F against the claim of long term capital gain. 4. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 7,66,500/- on account of share transactions. 5. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in deleting the addition of Rs. 8,48,892/- made by the Assessing Officer on disallowance of interest expenditure u/s. 57(iii). 6. On the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in allowing the disallowance done by the Assessing Officer of long term capital loss of Rs. 80,23,177/- on account of sale of shares." 2. The assessee is an individual who filed return of income for the relevant AY 2015-16 on 31.03.2017 declaring a total income of Rs. 12,78,540/-. The case was subjected to scrutiny and statutory notices u/s. 143(2)/142(1) were issued from time to time, which the assessee complied with. Finally, the Ld. AO completed assessment vide order dated 29.12.2017 at a total income of Rs. 3,53,93,932/- after making certain additions. Aggrieved by order of assessment, the assesse....
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....ns between Mr. Bakshi & Ors. and the FMG, the FMG acquired the right of carrying out any business in the said premises as a tenant. 5.00 That, after purchasing the business of dealership and after acquiring the right of tenancy, the FMG carried out business of automobile dealership in the said premises. Initially the FMG was having dealership of Ashok Leyland and subsequently, from 1984, it got the dealership of Maruti Suzuki Ltd. 6.00 That meanwhile somewhere in the year 1980, the said premises was purchased by M/s. Khandelwal Chambers, 415, M.G. Road, Indore, through its beneficiaries Shri Tulsiram Khandelwal and 3 others from Mr. Baxi & Ors. under Sale Deed dated 01-11-1980. After purchasing the premises, M/s. Khandelwal Chambers became the sole Owner of the said premises. However, the tenancy rights of the FMG in the said premises continued and thenceforth, instead of paying rent to Mr. Baxi, the FMC started paying rent to Khandelwal Chambers. A copy of the letter conferring right of tenancy as well as change in the name of owners, addressed by Mr. M.Y. Baxi in favour of FMG is being submitted herewith for kind perusal and record, as Annexure C-1.00. 7.00 That, somewhere ....
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....d circumstances, Shri Dipesh Khandelwal approached to the FMG being the original tenant and as also to the assessee and other persons being the sub-tenancy right in the said property for certain monetary consideration to be mutually agreed upon amongst themselves. 14.00 That, accordingly, after prolonged negotiation and cross offers between the landlord and the FMG and as also between FMG and its sub-tenants inter se, finally, all the concerned parties reached to an understanding, which was subsequently recorded as a MOU on 02-05-2014. A draft copy of the said MOU was also found in the computer of the assessee during the course of' Search operations carried out in his residential and business premises on 28-02-2014. As per the said MOU landlords agreed to pay consideration aggregating to a sum of Rs. 5 Crores, to the assessee, the main tenant and other sub-tenants. As per the draft MOD and the subsequent negotiations amongst the tenant and sub-tenants, as the assessee was in possession/occupation of 65% of the said premises, he became entitled for a consideration of Rs. 3.25 crores. 15.00 That, a copy of the final MOU dated 02.05.2014 has already been furnished by the asses....
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....ls desired by your good self can very well be gathered." 19.00 Madam, the above explanation was duly accepted in the proceedings carried out under s. 153A of the Act and the MOU furnished by the father of the assessee before the then AO was the same as has been furnished before your good self. it shall further be worthwhile to note that, at an earlier occasion, in the case of assessment proceedings of the landlord namely Shri Dipesh Khandelwal, carried out under s. 153A of the Act, the veracity of the above said MOU and contents thereof have been accepted without any adverse inference. The genuineness of the MOU was thus well established earlier and it was duly accepted by the then AO, although in the case of a different assessee i.e. father of the assessee. In view of the above submission and various documentary evidences, we hope that we could be able to establish with the documentary evidences that the assessee was a co-tenant (sub-tenant) of the superstructure situated at the subject premises." 6. However, after considering aforesaid submission of assessee, Ld. AO held that the assessee was not having any kind of sub-tenancy right and the long-term capital gain declared in....
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....ed to contact the new land-lord and execute a regular rent note. However, no rent agreement was executed between the new land lord i.e. Khandelwal Chambers and M/s. Fair-deal Mar-war Garages Pvt. Ltd., no rent agreement was signed with the assessee and landlord . * It is evident that company was the tenant through its director/s at the said premises and was carrying out the business. There was no agreement between the landlord and directors of company to individually execute any rental contract. * Thus, it is undisputed fact that M/s. Fairdeal Marnar Garages Pvt. Ltd. was the original tenant in the captioned property, therefore the company is lawfully entitled for receiving consideration of relinquishment tenant right if any. At the most the director of the company may be entitled for tenancy right but not the assessee by any stretch of immigration. * In the year 1986 first legal dispute between the landlord of M/s. Khandelwal Chambers and M/s. Fairdeal Marwar Garages Pvt. Ltd. arose. At that time the assessee was minor and only 05 years old having no right in the said tenancy occupied by company. * From the year 1986 to year 2014, the said property was in dispute before th....
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....and occupation of the said premises as tenant/sub-tenant alongwith other tenant/sub-tenants. However, it is not acceptable as the assessee was never having right of sub-tenancy in the said property as discussed in para above. Physical possession never create legal right of tenancy. It is fact that there was no sub-tenancy right in the name of the assessee since inception of rent agreement by the company with landlord. * The claim of assessee that sub-tenancy right was acquired in the year 2003, as per a "Kirayanama" executed on a simple paper. However, it is fact that the said documents is nothing but a letter head of Gaurav Tekriwal, and signed by Shri Gaurav Tekriwal (as a sub-tenant) and Shri Rajendra Telaiwal (on behalf of the company M/s. Fairdeal Manvar Garages Pvt. Ltd. as a tenant of the property) without consent of the landlord, without any witness/s, even the documents was not executed on stamp paper. Therefore, the so-called "Kirayanama" is not having any legal authenticity and does not create any sub-tenancy right in favour of the assessee. * There was no tenancy right, therefore, there is no question of relinquishment of the rights and capital gain as per section 4....
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....m of long-term capital gain by observing as under: "4.3 I have duly considered tire facts of the case, the AO's order and the appellant's written submission find that in support of his contentions, the appellant has furnished various documentary evidences, from page Nos. 78 to 158 of the paper book. I find that at page No. 68 to 77, appellant has filed a copy of his written submission dated 20/12/2017 which was filed by him before the AO for establishing the nature of the receipt of the amount of Rs. 3,25,00,000/-. Further, at page No. 78 to 80, the appellant has furnished one copy of Memorandum of Understanding [MOU] duly made on 02/05/2014 by and between M/s. Khandelwal Chambers through Shri Dipesh Khandelwal and the appellant and other co-tenants, a copy of sale deed duly executed by the original owner of the property situated at 2, A.B. Road, Indore to M/s. Khandelwal Chambers on 31/07/1980, a copy of letter dated 01/11/1980 given by the original landlord to the Fairdeal Marwar Garages Pvt. Ltd. (in short 'FMG'), the main tenant intimating the change in the ownership of the property, copies of various court orders from page No. 98 to 155, copy of kirayanama wr....
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....om 1985 to 2014, the said property was in dispute before various courts viz. Civil Courts, High Court and Supreme Court. The furnishing of copies of the orders of such courts as have also been acknowledged by the AO in the body of the assessment order, have also been filed before me. Thus, in such a situation, the contention of the appellant regarding the landlords' agreeing to compensate the then tenants of the subject property for eviction thereof in lieu of some consideration, is found to be correct. 4.3.3 I find that although on the date when the FMG obtained the tenancy right in the said property from the then landlord in the year 1974, the appellant was a minor as rightly pointed out by the AC in assessment order but, subsequently, when the appellant derived sub-tenancy right in the said property by way of kirayanama duly written by him in favor of FMG on 01/06/2003, I find that the appellant having the date of birth as 14/06/1981, had attained the majority and therefore, he was competent to enter into sub-tenancy agreement. I find that at no point of time, the appellant claimed that he was the main tenant of the subject property but, his claim all through had been that....
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....e-tax view of the change in the provisions of s. 48 r.w.s. 55(2)(a) of the Act. if the contention of the AO is accepted, then in every case, wherever any compensation is received by a tenant from the landlord for vacating the property, the same would escape the tax that since, the tenancy was not legalized and therefore, the provisions of s. 55(2)(a) would not apply and consequently, applying the ratio of Hon'ble Apex Court in the case of CIT vs. B.C. Srinivasa Setty, reported in (1981) 128 ITR 294 SC wherein it has been held that transfer of any capital asset which has no cost of acquisition cannot be brought to tax under s. 45. In my considered view, once the tenancy or sub-tenancy is established, any amount received towards the relinquishment thereof cannot get escaped to tax in view of the provisions of s. 55(2)(a) of the Act introduced in the statute after the decision of the Hon'ble Apex Court in the case of B.C. Srinivasa Setty (supra), merely on technical grounds. 4.3.5 I find that in the wake of the decades long legal disputes of tenancy, Shri Deepesh Khandelwal entered into a Memorandum of Understanding [MOU] duly executed on a stamp paper worth of Rs. 1000/-, o....
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....53A were carried out and during the course of such proceedings, a notice u/s. 142(1) for A.Y. 2008-09 to A.Y. 2013-14 was duly issued by the then ACIT (Central)-2, Indore on 29/10/2015, a copy whereof is placed at page No. 159 to 164 of the paper book, and in such notice issued to Shri R.K. Tekriwal, there is a clear mention of the draft MoU entered into between Shri Deepesh Khandelwal and the various entities of the group. In such circumstances, the genuineness of the MOU subsequently entered into between the landlord and the appellant and others, cannot be doubted or disputed. I find that at para (5.8) of the order, the AO has averted that Shri Deepesh Khandelwal was issued a notice u/s. 133(6) and in response, Shri Deepesh Khandelwal filed detailed reply with documentary evidences. The AO then simply reached to the conclusion that the appellant had never been the tenant in the said property without specifying or bringing on record her basis for reaching to such conclusion. I find that it is not the case of the AO that Shri Deepesh Khandelwal had denied to have made any payment to the appellant. In my view, Shri Khandelwal could have only stated that the appellant was not his dir....
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....dships that consideration received for surrender of tenancy rights would be assessable under item E of s. 14 and it cannot be treated as a casual and non-recurring receipt under s. 10(3) and be subjected to tax under s. 56. It was also held that although section 45 could not be applied for the assessment year in question as it fell in the pre-amendment period, but if the income cannot be taxed under s. 45, then it cannot be taxed at all. Further, the Hon'ble ITAT Mumbai in the case of Kewal Silk Mills vs. ACIT (2013) 21 ITR 121 (Mum Trib) has held that when the assessee was enjoying possession of Property and for peaceful vacation thereof it had received the impugned amount which was described by both the parties as the amount so revived would be chargeable to capital gains and cannot be assessed as 'income from other sources'. Furthermore, in the similar circumstances with that of the appellant, the Hon'ble ITAT Mumbai Bench, in the case of P.N. Amersey-HUF vs. ITO (2012) 31 CCH 252 (MumTrib), decided the case in favour of revenue, has held that the amount received by the assessee on surrender of tenancy rights is liable to capital gains tax if assessee was having ....
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....er that head only and no other head. The Hon'ble High Court of Calcutta in the case of CIT vs. General Industrial Society Ltd. (2003) 262 ITR I (Cal.) also held that if a particular income is chargeable under one head, it cannot be computed and charged under a different head or as income from other sources. 4.3.10 Accordingly, in my considered view, the appellant was correct in showing the entire receipts as his capital receipts under the head 'Income from capital Gain' and consequently, I find absolutely no justification in the AO's action in holding the same as Income from Other Sources. Accordingly the Ground Nos. 3(i) to 3 (iii) of the appellant are Allowed." 8. Before us, Ld. DR vehemently supported the order of Ld. AO and emphasized following contentions: (i) The property in which the assessee is claiming to have sub-tenancy right, was originally taken on rent by M/s. Fairdeal Motors. Subsequently, the business of M/s. Fairdeal Motors was taken over by M/s. Fairdeal Marwar Garages Pvt. Ltd. (in short "FMG"). Shri Prahlad Rai Tekriwal (grandfather of assessee) and Shri R.K. Tekriwal (father of assessee) were directors in FMG but the assessee, Shri Gaurav T....
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.... the reason is very simple and apparent. It is on record from various documents placed before lower authorities and copies also filed in the Paper-Book that a serious legal battle was going between the original owners and FMG. Therefore, it was not at all possible to make the original owners as party to the "Kirayanama". (iii) In terms of "Kirayanama", the assessee has paid rent @ 3,000/- per month to FMG. This fact is not disputed or doubted by Ld. AO. (iv) That the assessee has received the sum of Rs. 3,25,00,000/- on the basis of MOU dated 02/05/2014. Carrying our attention to a copy of the MOU, placed at Page No. 78 of the Paper-Book, Ld. AR submitted that the MOU is executed by and between six persons, viz. (i) Shri Dipesh Khandelwal owner of property on First Part, and (ii) five tenants/sub-tenants in the property on Second Part. Ld. AR submitted that the assessee is one of the five tenants/sub-tenants on the Second Part. Ld. AR submitted that the MOU is executed on a stamp-paper of Rs. 1,000/- and duly witnessed. Ld. AR submitted that the MOU contains full details of the impugned property, its owners, all tenants/sub-tenants (including assessee), the disputes which arose....
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....delwal, in response to which the said owner filed a reply. However, Ld. AO has neither supplied a copy of the reply to the assessee nor narrated the contents of reply in the assessment-order. Ld. AR submitted that the assessee has come to know about the alleged reply of the owner, only after reading the assessment-order. Therefore, no credence can be given to this observation of Ld. AO. (vii) Ld. AR submitted that FMG is a company incorporated under the provisions of Companies Act and the same is still existing. But the Ld. AO has not made any enquiry from FMG. (viii) Ld. AR submitted that the revenue has allowed deduction of Rs. 5,00,00,000/- in the assessment of owner, Shri Dipesh Khandelwal. As a necessary corollary, it is automatically proved that the revenue-authorities have accepted the factum of receipt by assessee from the said owner. (ix) Ld. AR submitted that the revenue authorities have doubted the receipt of Rs. 3,25,00,000/- in the case of this assessee only. But they have not taken any adverse view in the assessments of other co-tenants who have received remaining consideration of Rs. 1,75,00,000/- [Rs. 5,00,00,000 (-) Rs. 3,25,00,000]. How can authorities appro....
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.... assessee received the impugned sum of Rs. 3,25,00,000/-. We observe that MOU is executed on a stamp-paper of Rs. 1,000/-, it is duly witnessed and the original owner, Shri Dipesh Khandelwal, is also a party. Therefore, the doubts raised by the revenue authorities with regard to "Kirayanama" dated 01.06.2003 are dispelled by MOU dated 02.05.2014. We may also look into one more factor which is very relevant. From the documents submitted before lower authorities and also placed in the Paper-Book, it is on record that there was a serious legal battle between the owners and FMG. When it is so, how can we expect that the owners would help FMG/assessee in making a MOU for creating a frivolous long-term capital gain in the hands of assessee who is necessarily a party on the side of FMG. Taking into account all these factors, we do not find any valid reason for the Ld. AO to raise doubt on the authenticity of "Kirayanama" or "MOU". Other contention of revenue is that Clause 5 of the MOU dated 02.05.2014 states that the assessee had "physical possession" over the property but mere "physical possession" does not establish any kind of sub-tenancy right. But this contention is due to a half-re....
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....enue has allowed deduction of Rs. 5,00,00,000/- in the assessment of owner, Shri Dipesh Khandelwal, which proves, without saying anything more, that the revenue authorities have accepted the factum of receipt by assessee from the said owner. Lastly, we also find merit in the contention of Ld. AR that revenue authorities have doubted the receipt of Rs. 3,25,00,000/- in the case of this assessee only. But they have not taken any adverse view in the assessments of other co-tenants who have received remaining consideration of Rs. 1,75,00,000/-, out of total payment of Rs. 5,00,00,000 to all co-tenants. We agree to Ld. AR's submission that the authorities cannot reject transaction in the hands of assessee while accepting it in the hands of other co-tenants. 11. In view of foregoing discussion, we are persuaded to hold that the assessee had a sub-tenancy right in the property and upon surrender thereof, the assessee received a sum of Rs. 3,25,00,000/- which was rightly offered as long-term capital gain in terms of section 45(1), 48, 55(2) and 2(29B) of the Income-tax Act, 1961. Therefore, the Ld. AO was wrong in rejecting the claim of long-term capital gain and assessing the same as....
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....s from one Shri Deepesh Khandelwal as compensation towards relinquishment of the appellant's right in a property situated at 2, A.B. Road, Indore. I find that such rights were undisputedly being held by the appellant since the year 2003, under a kirayanama dated 01/06/2003. It is therefore, can be said that the appellant was holding capital assets in the form of subtenancy rights for more than 3 years with no cost of acquisition. I find that the AO has also accepted the receipt of such sum by the appellant but, the AO has recharacterized such receipts from income, from capital gain as shown by the appellant to income from other sources. I find that while adjudicating the Ground Nos. 3(i) to 3(iii) of the present appeal, I have already held that the amount received by the appellant at Rs. 3,25,00,000/- was a capital receipt and assessable to tax under the head income from capital gain. 7.3.1 I further find that during the course of the appellate proceeding before me, the appellant has made a detailed written submission which has been extracted hereinabove. I also find that along with such written submission the appellant has submitted various documentary evidences such as copy....
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.... 01/04/2015 to 31/07/2015 i.e. uptil the due date of furnishing the return of income in the appellant's case under s. 139(1) of the Act' I find that the appellant neither during the course of the assessment proceedings, nor during the course of the appellate proceedings before me has furnished any detail or documentary evidences. Thus in my considered opinion, the appellant is eligible for claim of deduction to the extent of Rs. 2,32,13,484/- only. 7.3.2 I find that the AO has denied the claim of the appellant firstly by stating that the nature of receipt of Rs. 3,25,00,000/- was not falling under the head Long Term capital Gain, which I have already overruled. Secondly, I find that the AO has disregarded the transaction of purchase of incomplete structure by the appellant from BPEL, in which he was one of the directors. I find that during the course of the assessment as well as appellate proceedings, the appellant had duly furnished a copy of agreement duly executed between the BPEL and appellant on 15/05/2014 and-under such agreement, the BPEL had clearly agreed to sale its residential structure under construction on leasehold land bearing survey No. 106 admeasuring 0.3....
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.... under s. 54F of the Act. Furthermore, the Hon'ble ITAT Chennai in the case of ACIT vs. Dr. S. Balasundaram (2013) 36 CCH 1A7 (Chen.) has held that if both the parties proceeded to carry the execution of the sale as per the agreement whether it is registered or not, there is no effect so far as transfer is concerned. In the similar circumstances, the Hon'ble Karnataka High Court in the case of PCIT & Anr. vs. Mrs. Vanaja Matthen 2019 (1) TMI 154 (Kar. HC) has held that if the assessee had invested the amount received on sale of capital asset either in purchasing a residential house or in construction of a residential house, even though the transactions are not complete in all respects, the assessee would be entitled to the benefit under s. 54F of the Act. Further, the Hon'ble High court of Bombay in the case of CIT vs. Mrs. Hilla J.B. wadia (1995) 216 ITR 0376 (Bom.) has held that the assessee was entitled to relief under s. 54 where she entered into an agreement with co-operative housing society for purchase of residential flats and paid almost entire consideration within two years of conveyance of her residential property. I find that the Hon'ble High Court of And....
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....section, it has to be seen that whether or not, the amount has duly been utilized and whether or not, the assessee could be said to have purchased the new asset. In my considered view, by making the full payment and taking over the physical possession, the appellant had purchased the residential property from BEPL and therefore, the above ratio in the Maini's case would have no application in the case in hand. 7.3.5 In, view of the facts and circumstances of the case, documentary-evidences placed on record and as also in the light of the various judicial pronouncements, as referred to herein above, I hereby 'hold that by way of making investment towards purchase of incomplete residential structure at Rs. 1,79,00,000/- and further by incurring construction expenses on such house to the extent of Rs. 53,13,484/-, the appellant was eligible for claim of deduction u/s. 54F of the Act on an aggregate sum of Rs. 2,32,13,084/- in respect of such investment, as against the deduction claimed by him at Rs. 2,41,02,339/-, with the result that while computing the total income of the appellant, the addition for the remaining amount of Rs. 8,88,855/- would be required to be made by the....
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....mption. Ld. AR submitted that in numerous decisions, the Hon'ble Courts have held this proposition. Ld. AR relied upon the decision of Hon'ble Jurisdictional High Court of Madhya Pradesh in case of CIT Vs. Ajit Singh Khajanchi (2008) 297 ITR 0095 dated 25.04.2007. With these submissions, Ld. AR submitted that the assessee has rightly claimed the exemption and the Ld. AO has wrongly denied the same. According to Ld. AR, the Ld. CIT(A) has correctly considered the evidences, facts and legal position and thereafter allowed relief to the assessee, which must be upheld. 15. We have considered rival submissions made by both sides, the relevant material held on record and the judicial precedents cited before us. We observe that the first reason assigned by Ld. AO for disallowing exemption that the assessee has not earned long-term capital gain, does not hold good because we have already accepted the claim of long-term capital gain of assessee. Regarding second reason assigned by revenue, we observe that the assessee has given adequate evidences of the investment of Rs. 1,79,00,000/- (+) Rs. 53,13,484/-, aggregating to Rs. 2,32,13,484/- to the Ld. AO as well Ld. CIT(A). The inves....
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....nsel for respondent has relied on the decision of this Court in Smt. Shashi Varma v. CFT (1999) 152 CTR (MP) 227 : (1997) 224 TTR 106 (MP). In the said judgment, it was averred that the assessee sold her property at Jabalpur and realized capital of Rs. 31,980 out of which she invested a sum of Rs. 71,256 and purchased a house at Delhi. The exemption was claimed from the charge of tax on capital gain under Section 54F of the Act. It was, rejected by the ITO as also by the Tribunal. This Court observed that substantial investment was made in construction of the house. In view of the requirement of Section 54F of the Act, the Tribunal, in the facts and circumstances of the case, was not justified. We are fortified in the above view by the decision of the Delhi High Court in Balmj v. CIT to the effect that for the purpose of attracting the provision, it was not necessary that the assessee should have become the owner of the property. Section 54F spoke of purchase and registration was not imperative. In this view of the matter, the question No. 2 is answered against the Revenue and in favour of the assessee." 17. In view of above discussion, we do not fine any strength in the findings ....
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....h Broker and in such statement, during the financial year 2014-15 relevant to A.Y. 2015-16, no transaction by the above named broking company with the appellant has been shown. I further find that in the D.P. Account of the appellant with the above named broking firm, no single transaction during the year under consideration in the name of the appellant is getting discernible. I find that despite appellant's denial, the AO has not carried out any independent inquiry and merely on the basis of some information found in ITS made the impugned addition. In my considered view, since from the documentary evidences furnished by the appellant during the course of the assessment proceedings, the alleged transactions of shares are not getting reflected and further since, the AO has not brought on record any material to rebut the denial of the appellant, the addition so made by the AO at Rs. 7,66,500/- merely on the basis of unverifiable information of the ITS, cannot be upheld. Accordingly, the addition of Rs. 7,66,500/- so made by the AO is hereby deleted. Accordingly, the Ground No. 5 of the appellant is allowed." 21. The issue involved is very simple and neat. The Ld. AO has made add....
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....g income. Thus, in essence, Ld. AO has disallowed deduction for the reason that assessee could not satisfy that the borrowed funds were in fact used for making or earning income. Ld. CIT(A) has, however, observed "I find that the funds procured by the appellant by way of interest-bearing loans were deployed by the appellant in his family company and on such loans given, the appellant has received an interest income of Rs. 9,74,814/-." The assessee has also filed evidences in the form of (i) Ledger A/c of Interest Expenditure which shows date-wise party-wise interest-payments; (ii) Ledger A/c of BEPL which shows the loans given to BEPL from time to time on which interest has been received; and also (iii) a detailed Statement showing a co-relation of the amounts borrowed from different persons and investment made in BEPL at Page No. 191 to 201 of the Paper-Book. By means of these clinching evidences on record, the assessee has sufficiently proved that the interest expenditure of Rs. 8,48,892/- has been incurred to earn interest-receipt of Rs. 9,78,814/- disclosed in the return. On test-check of these evidences, we are satisfied with the explanation given by the assessee. Therefore, t....
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....on to evade the tax. Even though the assessee has tried to show the transaction as genuine, however, the truth is that the loss was not earned from sale of shares as shown or primarily apparent, but the loss has been artificially created to claim set off of the same against the LTCG. Thus, it is proved that the transaction is a sham transaction and the loss is required to be disallowed." 27. During appellate proceeding, Ld. CIT(A) allowed claim of assessee by holding as under: "8.2 I find that the AO has dealt with the subject issue at Para (8) to Para (8.5) of the Order. The AO noted that the securities transfer form was a simple paper and not any legal document and further, on a perusal of share certificates, it was noted by the AO that they were issued in lieu of old shares. The AO further noted that the company PPPL was a family concern of the appellant which was incurring losses since 17 years and further, the shares have been sold to Smt. Suchita Agrawal who is sister of the appellant and thus, shares remained in the family and loss was artificially created in the hands of the appellant. Further, the AO averted that the consideration was received after two years and it was....
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....d the subject shares to the buyer, by way of the prescribed securities transfer form SH-4, which has been duly filled and signed by both the appellant as well as the buyer and which is bearing stamps for a value of Rs. 14,100/- [being 0.25% of the sale value of Rs. 56,12,895/-]. 8.5.1 As regard the finding of the AO that the share certificates have been issued in lieu of old shares, I find that the buyer Smt. Suchita Agrawal, after executing the share transfer deed, had applied to the share transfer agent namely M/s. Purva Sharegistry (India) Pvt. Ltd., vide her letter dated 19/06/2015, for issuing her the consolidated share certificates in lieu of the shares received by her. Accordingly, the aforesaid share transfer agent has issued the fresh copies of consolidated certificates in the name of the buyer namely Smt. Suchita Agrawal. In the said Share Certificates, there IS a mention that such consolidated certificates were issued in lieu of old share certificates. Thus, I find that merely for the reason that the share transfer agent has issued a consolidated share certificate to the buyer in exchange of the old certificates, no adverse inference can be drawn and cannot be regarded....
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....urchaser, CIN of the company, distinctive numbers of shares, sales consideration, registered folio numbers, etc. Further the Form is duly signed by assessee, purchaser and witness. A stamp duty of Rs. 14,100/- is also paid on execution of this Form, which has gone to exchequer. (ii) The company has subsequently transferred shares in the name of buyer and issued new consolidated-certificates to the buyer, copies of share-certificate are placed in the Paper-Book. (iii) A copy of ledger account of the buyer and the bank statement are placed at Page No. 399 to 402 of the Paper-Book according to which entire sale-consideration has been received through banking channel. (iv) A copy of the certificate issued by Mr. Harish Modani, practicing Company Secretary, accompanied by the copies of Annual Return of the Company in Form No. MGT-7 filed to ROC containing a list of shareholders and list of share-transfers, is also placed in the Paper-Book. These documents are part of the statutory records under company laws and they clearly evident that the shares were transferred from assessee to the buyer. On the basis of these documents, which are statutory, we observe that the assessee has in....