TaxTMI 
TaxTMI 
2022 (12) TMI 1159
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.... 3. On the facts and in the circumstances of the case, the Ld. 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....
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....alership business of M/s. Fairdeal Motors by paying a sum of nearly Rs. 3 lacs. 4.00 That, as per the terms and conditions 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, a....
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....nd other co-tenants, with the matter sub-judiced before the judicial forum "Shri Dipesh Khandelwal" was not in a position to get the premise redeveloped. 13.00 That under the aforesaid 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 posse....
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....h Shri Dipesh Khandelwal on 02-05-2014 i.e. during the previous year relevant to A.Y. 2015-16. For a ready reference, a copy of the said MOU is being submitted herewith, as Annexure B-2.00. It is submitted that from the subject MOU the details 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-tena....
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.... paying rent to Mr. Bakshi, the FMG started paying rent to M/s. Khandelwal Chambers. * The scanned image of letter though which FMG had to pay rent to Shri Khandelwal is as under: [Reproduced in appeal-order of CIT(A)] * As per the letter dated 01.11.1980 the tenants were required 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 ....
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....ble to sub-let the property to the assessee without consent of landlord in writing. In this case, the landlord was in dispute with original tenant itself since 1986. Therefore, the question of sub-letting the same property to the assessee does not arise. * The assessee referred clause (3) and (5) of the MoU dated 02.05.2014, and claimed that, the assessee was, inter alia, having physical possession 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 Pv....
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....CG) arose out of so called relinquishment of tenancy rights. Hence, the claim of Long term Capital Gain of Rs. 3,25,00,000/- shown as received from relinquishment of tenancy right is hereby rejected and the said amount is treated as income from other sources in the hand of assessee within meaning of section 56 of the Act." 7. During appellate proceeding, Ld. CIT(A) reversed the action of Ld. AO. Ld. CIT(A) accepted assessee's claim 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....
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..... 4.3.2. I find that the aforesaid facts have also been admitted by the AO herself, through findings given by her at page No. 16, 17 & 18 of the impugned order. I find that as per the findings given by the AO herself at para (5.8) at page No. 18 that in the year 1986, the first legal dispute regarding tenancy started between the landlord M/s. Khandelwal Chambers and M/s. FMG and again, from the findings given by the AO herself, it is evident that from 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 or....
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....no vested right or interest, in any capacity in the subject property. In my considered view, the reliance placed by the AO on the various provisions of Madhya Pradesh Accommodation Control Act, 1971 is also misplaced. In my view, even if for a moment it is presumed that the appellant did not derive the sub tenancy right in the subject property in accordance with the aforesaid lanner, then also, any compensation received by him from the landlord cannot get escaped to income-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 ....
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....he computer systems found kept in the search premises. It is submitted that if during the course of search action the draft copy of the said MoU was found, then it cannot be said that the said MoU was an afterthought or having no evidential value I found that such submission was also made by the appellant before the AO and the AO did not rebut such factual claim of the appellant. I find that in pursuance of the search in the premises of Shri R.K. Tekriwal, assessment proceedings u/s. 153A 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 ....
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....he property was in the occupation of the assessee. In such circumstances, the Hon'ble High Court allowed the claim of the assessee by holding that merely on the basis of suspicion, the claim of the assessee cannot be rejected. Hon'ble Supreme Court of the India in the case of CIT vs. D.P., Sandu Bros. Chembur (P) Ltd. (2005) 273 ITR 0001 (SC) has held that the monthly tenancy is admittedly a capital asset and the receipt on its surrender is a capital receipt. It was further held by their Lordships 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....
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....s to be assessed should be decided on legal principles and not on individual beliefs. Further, their Lordships of the Hon'ble Apex Court in the case of United Commercial Bank Ltd. us. CIT (1957) 32 ITR 688 (SC); again in the case of East India Housing and Event Development Trust, Ltd. vs. CIT: (1961) 42 ITR 49 (SC); and again in the case of Sultan Brothers Pvt., Ltd. vs. CIT (1964) 51 ITR 353 (SC) were pleased to hold that if an item of income falls specifically under one head, it has to be charged under 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 Al....
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....o placed in the Paper-Book, which clearly evidences that FMG has sub-let portion of the property to the assessee for a rent of Rs. 3,000/- per month. (ii) That even if the "Kirayanama" is executed without stamp-duty, firstly there is no provision in the M.P. Stamps Act for registration of subtenancy and secondly, the "Kirayanama" is duly sealed and signed by both parties, viz. FMG and assessee which is very much sufficient for income-tax purposes. Regarding non-joining of original owners as party in the "Kirayanama", according to Ld. AR, 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....
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....t the owner has paid a total sum of Rs. 3,25,00,000/- to the assessee. (v) Ld. AR submitted that the assessee has received a sum of Rs. 3,25,00,000/- from the owner through banking channel and the receipt is credited to the account held by assessee in ICICI Bank. A copy of bank statement is filed before Ld. AO and also placed at Page No. 157 of the Paper-Book. (vi) Ld. AR pointed out a serious lapse on the part of Ld. AO. Ld. AR submitted that the Ld. AO has stated on Page No. 15/16 of the assessment-order that he issued a notice u/s. 133(6) to the owner of property, Shri Dipesh Khandelwal, 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)....
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....d, disputed or controverted by revenue. We observe that when the transaction done by the parties on the basis of "Kirayanama" is accepted by revenue, any deficiency in the documentation, if at all be there, cannot be a ground to reject the evidentiary value of the document i.e. "Kirayanama". Regarding non-joining of owners as party, we find convincing reason in the explanation given by the assessee that due to legal battle, the relations of the owners and FMG (main tenant) were strained and it was not possible to obtain the owners to join "Kirayanama". At this stage, we also take note of the MOU dated 02.05.2014 under which the 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....
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....at the fact of filing reply by the owner, Shri Dipesh Khandelwal, in response to the notice u/s. 133(6) issued by Ld. AO, as recorded in the assessment-order is not very credible because the Ld. AO has neither supplied a copy of the reply to the assessee nor narrated the contents of reply in the assessment-order. Even during hearing before us, Ld. DR has not been able to rebut or defend this submission of Ld. AR. We also find merit in the submission of Ld. AR that FMG is an existent-company and the Ld. AO could have made enquiry from FMG but the same was not made. We also find strong force in the submission of Ld. AR that the revenue 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 pay....
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....rty is not registered in the name of assessee, the assessee has not given evidences of the additional investment of Rs. 53,13,484/- and Rs. 8,88,855/-. 15. Ld. CIT(A), however, allowed the claim of assessee partly upto Rs. 1,79,00,000/- (+) Rs. 53,13,484/-, aggregating to Rs. 2,32,13,484/- by making an elaborate analysis as under: "7.3 I have gone through the assessment order, the written submissions filled by the appellant and the documentary evidences placed on record. I find that during the previous year relevant to the assessment year under consideration, the appellant had received a sum of Rs. 3,25,00,000/-, through banking channels 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 recharacteri....
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....15 to 222 of the paper book, the appellant has furnished copy of his ledger account in the books of account of BPEL for the period from 01/04/2014 to 31/03/2015. On a perusal of the aforesaid documents, I am of the considered view that the appellant had aforesaid documents, I am of the considered view that the appellant had actually invested the aforesaid sum of Rs. 2,32,13,484/- uptil 31/01/2015 for purchase of incomplete residential structure and for making further construction on such incomplete structure to make the house inhabitable. However, for the remaining sum of Rs. 8,88,855/- claimed to have been incurred by the appellant during the period from 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 firs....
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.... benefit of deduction under s. 54, 54F etc., it is not necessary that the purchase of house is evidenced by a registered deed. Further, in respect of claim of deduction under s. 54 of the Act, the Hon'ble Jurisdictional High Court of Madhya Pradesh in the case of Smt. Shashi Varma vs. CIT (1997) 224 ITR 0106 (MP) has held that if the substantial investment has been made in the construction of new asset, then it should be deemed that sufficient steps have been taken and this satisfies the requirements of s. 54. Similar view was again taken by the Hon'ble MP High Court in the case of CIT vs. Ritesh Kumar Kumat 2014 (1) TMI 1491 (MP) in respect of deduction 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....
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....hat whether the transfer of rights in a property under a Joint Development Agreement in which was not got registered could be said to be valid transfer' The Hon'ble Apex Court held that in absence of the registration of the agreement, the transfer could not be said to have taken place. Thus, in the case of Maini supra., the question was regarding the transfer but here, the question is relating to the purchase which cannot be put on the same analogy. Further, for the propose of event of transfer, the registration or non-registration of an agreement can be said to be a relevant factor but for the purpose of grant of deduction, under s. 54F, which is a benevolent 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 recor....
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....mily, copy of electricity bill is also placed in Paper-Book. Ld. AR submitted that these evidences are sufficient enough to demonstrate that the assessee has purchased the house, made it habitable and starting using for residential purpose too. Regarding pendency of registration of the house in assessee's name, Ld. AR contested that section 54F of the act requires purchase/construction of house only and it does not require registration in assessee's name as a condition for giving exemption. Ld. AR submitted that once the factum of purchase/construction, investment therein and occupation for residential use, are proved, the pendency of registration cannot come in the way of granting exemption. 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....
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....es-tax laws, have issued statutory invoices and the payments have also been made through cheques, the details of cheque numbers have been mentioned in the ledger account. Thus, with such ample evidences on record, there does not remain any doubt qua the expenditure of Rs. 53,13,484/- incurred on completing the house. That brings us to conclude that the assessee has given proper and adequate evidences to prove the investment of Rs. 1,79,00,000/- (+) Rs. 53,13,484/-. 16. We have also perused the decision of Hon'ble Jurisdictional High Court in CIT Vs. Ajit Singh Khajanchi (supra) cited by Ld. AR, wherein it has been held thus: "11. In so far as the question No. 2 is concerned, the learned Counsel 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.....
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....d as his income earned from undisclosed sources and added to income for A.Y. 2015-16." 20. Ld. CIT(A) has, however, deleted addition by observing as under: "6.2 I have gone through the assessment order, the written submissions filed by the appellant and the documentary evidences placed on record. I find that during the course of the assessment proceedings itself, the appellant vide its counsel's letter dated 20/12/2017 as placed at page No. 76 of the paper book before me, had clearly denied to have made any transaction of shares through Aditya Birla Money Ltd., a broker having code No. 13470 in his Client Account No. 1017855. In support of such assertion, the appellant has also submitted a copy of his account statement with such 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 ....
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....GROUND No. 5: 24. In this Ground, the issue involved is the disallowance of interest expenditure of Rs. 8,48,892/- u/s. 57(iii). 25. On perusal of records, we note that the assessee has declared an interest-receipt of Rs. 9,74,814/- from BEPL, claimed deduction of interest expenditure of Rs. 8,48,892/- u/s. 57(iii) and thus offered a net income of Rs. 1,25,922/- for taxation. Ld. AO has, though assessed the interest-receipt of Rs. 9,78,814/- but not allowed deduction of interest expenditure of Rs. 8,48,892/- on the footing that the assessee has not filed any submission on merit. Ld. AO has also quoted section 57(iii) which provides that the deduction of expenditure is allowed only if an expenditure is incurred for the purpose of making or earning 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/-." ....
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....oly Products Ltd. is family concern of the assessee. * The company was incurring loss since 17 years. * The shares have been shown to be sold in F.Y. 2014-15 to Smt. Suchitra Agarwal * However, the consideration was receive after two years i.e. From 15.10.2016 to 20.03.2017. It is highly impossible that the shares were sold on credit. * It is also important to note that Smt. Suchita Agrawal is sister of the assessee. Thus, the shares remains in the family and loss has been artificially created in the hands of assessee. * It is evident from transaction that the whole script has been written to set off the remaining amount of LTCG generated on account of relinquishment of tenancy right. * As discussed in para 6.5 to 6.10 the transaction is nothing but a sham transaction 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 require....
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..... I find no merit in the findings of the AO that the securities transfer form was made on a simple paper and it was not a Legal document. I find that the Securities Transfer Form 'SH-4' is prescribed under section 56 of the Companies Act, 2013 read with sub-rule (1) of Rule 11 of the Companies (Share Capital and Debentures) Rules 2014 and under the Companies Act, a share transfer form can be filed on a plain paper and should bear the stamps of requisite value. Thus, I find that, the securities transfer form was complete and a legally admissible document if the same was duly filled, executed and signed by the transferor and transferee and also bears stamps of the requisite value. Thus, I find that there is no embargo in the Statute that the transfer of shares should only be on a legal document. I find that the appellant has transferred 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 certi....
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....t the due set-off to the appellant while computing his income from capital gain arising from the relinquishment of his sub tenancy rights. Consequently, the Ground No. 7 of the appellant is Allowed." 28. Before us, Ld. DR relied upon the order of Ld. AO. Per contra, Ld. AR relied upon the order of Ld. CIT(A) as also the evidences filed in the Paper-Book at Page No. 367 to 422. 29. We have considered rival submissions of both sides and perused the documents placed in the Paper-Book. On a careful consideration, we observe as under: (i) The assessee has sold 374193 shares of Pithampur Poly Products Limited on 26.03.2015 for Rs. 56,12,895/- to Smt. Suchira Agarwal through Form SH-4 "Securities Transfer Form". This Form is a statutory form pursuant to section 56(1) and Rule 4.9(1) of company laws. The Form contains all details, particularly, the name of seller, purchaser, 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 subseq....