TaxTMI 
TaxTMI 
2024 (7) TMI 992
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....ture is uncalled for and deserves to be allowed 3. Any other ground(s) that may be raised during the course of hearing of the appeal. 3. The solitary ground of dispute is whether CIT(A) has erred in confirming disallowance of short term capital loss of Rs. 3.59 crores. 4. The fact of assessee's case as contained in the assessment order is reproduced below: "5. From the computation of the total income, it is found that the assessee has claimed Short Term Capital Loss of Rs. 3.59 crore on sale of 2,10,000 shares of M/s. Dayal Energy and Proteins Ltd. These shares were purchased by the assessee for consideration of Rs. 4.01 crores in October, 2008 which were subsequently transferred on 30/04/2009; 30/06/2009 and 01/09/2009 to the family members and/or existing shares holders for a consideration of Rs. 42 lacs. The assessee was required to explain as to why the shares were sold out on loss within the short span of period. A copy of the balance sheet of M/s. Dayal Energy and Proteins Ltd., as on 31/03/2009 and 31/03/2010 was also obtained and placed on the records. It is seen therefrom that there was a surplus in the Profit & Loss account of Rs. 31,900/- as at 31/03/2009 and Rs. 1....
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....Year of sale of shares, M/s Dayal Energy and Proteins Ltd has declared net profit before tax at Rs. 14,24,999/- from sales of Rs. 97,46,12,710/- and other income of Rs. 98,26,487/- thereby making appellant's explanation of poor performance/ loss by it to justify the sale of these shares as devoid of merits. Also no evidence has been filed in support of basis for arriving at value of these shares at Rs. 20/- per share which had earned premium of Rs. 190/- per share when being purchased by the appellant company on 01.10.2008 i.e. just 8-9 months ago. No doubt, the money has been routed through banking channels but this fact alone does not reflect genuine business transaction. The profit motive, as normal in case of investment, is also found entirely absent. Any person, who would invest money or give loan, would certainly seek return or income as consideration which is not found in existence in the instant case. These are undoubtedly relevant and material facts to ascertain the genuineness of alleged share capital transactions. All these facts show that alleged share transactions are not genuine. There has been surrounding evidence and material manifesting and revealing involvement of....
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....is point of time, we posed a question to the ld.AR as to why this appeal is maintainable in view of the fact that the appellant is not at all aggrieved by way of any additional tax demand. Shri K.P. Dewani, Advocate, as usual, argued vehemently that since the A.O has invoked initiation of penalty u/s 271(1)(c) of the I.T. Act, 1961, there is always a possibility of contingent loss and damage for which the appellant is aggrieved. We find merit in the submission and allowed the process to ride the cycle of adjudication. 9. On the other hand, the Ld. CIT DR submitted that the order of CIT(A) is very cogent and legally sustainable and there is no need to interfere with the same. However, we put a question to him as whether there is any mechanism in the Act to disturb the full value of consideration of Rs. 42 lakh, which has attained the finality because the same was never doubted in the hands of the purchasers. He submitted that in view of the circumstantial evidences, the department has onerous power to disturb the value of consideration. But, he failed to point out the empowering provision in the Act. 10. We find that in the matter of Alok Ferro Alloys Ltd. (supra), exactly similar....
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....preme Court in the case of Azadi Bachao Andolan, reported in 263 ITR 706 (SC) observed as under:- "The court finds that notwithstanding a series of legal steps taken by an assessee, the intended legal result has not been achieved, the court might be justified in overlooking the intermediate steps, but it is not permissible for the court to treat the intervening legal step as non-est based upon some hypothetical assessment of the real motive of the assessee. An act which is otherwise valid in law cannot be treated as non-est merely on the basis of some under lying motive supposedly resulting in some economic detriment or prejudice to the national interests. While commenting on the words sham' and 'device', it was observed that "these words are not intended to be used as magic Mantras or catch all phrases to defect or nullify the effect of a legal situation and following para of Lord Atkin from Duke of Westminster's case (supra) was reproduced. "I do not use the word device in any sinister sense: for it has to be recognized that the subject, whether poor and humble or wealth and noble, has the legal heirs right so to dispose of his capital and income as to attract u....
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....is difficult to hold, the only intention of the assessee was to purchase loss and thereby cause loss to exchequer. The assessee's adventure may be in bad taste and it ultimately resulted in a loss. But that is not sole test for allowing or not allowing a deduction. Considering the fact that 1 year prior to the purchase of the shares one of the Director of the assessee company was agreed to be made additional director of M/s. DHPL, the purchase of shares by the assessee is to be treated as a genuine business adventure. The assessee tried to turn the share seller company into good performance company. The directors experience and understanding of the market also tried to be exploited. But the attempt did not gain the desired result. There is nothing illegal or illogical. The purchase of shares cannot be taken as devoid of any business acumens. The purchase of shares of loss making company and becoming the Board member of the company cannot be termed as mere attempt to purchase loss. Considering the facts and circumstances of the case, we are of the view that the addition made by AO and sustained by the CIT(A) at Rs. 6,30,000/- is unjustified and deserves to be deleted. We therefo....