2024 (9) TMI 352

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....red to as "the Act") dated 30.11.2017 by the Assessing Officer, ACIT, Circle-21(2), New Delhi (hereinafter referred to as "ld. AO"). 2. Ground Nos. 2, 3 and 5 raised by the assessee were stated to be not pressed by the ld AR for which necessary endorsement was duly made in our file. Accordingly, the Ground Nos. 2, 3 and 5 are hereby dismissed as not pressed. 3. Ground No. 1, 4, 6 and 7 are challenging the levy of penalty u/s 271(1)(C) of the Act in the sum of Rs. 57,98,464/-. 4. We have heard the rival submissions and perused the material available on record. During the year under consideration, the assessee company was engaged in the business of manufacturing of MS wires, bright steel bars, trading in iron and steel, acting as brokerage....

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....n the ITR. 5. The ld AO show caused the assessee that as per section 10(34A) of the Act, Income arising to an assessee/ shareholder on buy back of shares is exempt and hence finally the loss of Rs. 2,81,47,885/- could not be allowed for assessment year 2015-16. Assessee responded as under:- "RE NEGATIVE INCOME OF Rs 1,15,15,625/- SHOWN IN ITR: In the ITR the assessee has filed its income u/s 46A of Income Tax Act [read before insertion of section 115QA] Cost of acquisition FY 2007-2008 Rs 1,93,75,000/- Indexed cost of acquisition u/s 48 is   1,93,75,000 x 1024/551 Rs 3,60,07,260/- Sale price Rs. 78,59,375/- Book Loss Rs 1,15,15,625/- Long Term loss after Indexation Rs 2,81,47,885/- The assessee company filed its....

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....urnished inaccurate particulars of income. This was confirmed by the ld CIT(A). 7. We have heard the rival submissions and perused the material available on record. It is pertinent to understand that assessee company has shown negative income of Rs. 1,15,15,625/- in its profit and loss account and seeking to carry forward long-term capital loss of Rs. 2,81,47,885/- in its income tax return. This loss arose on account of buy back of 62500 shares held by the assessee of Kansil Alloys Pvt Ltd at a price of Rs. 125.75 per share. These shares were bought by the assessee company on 31.03.2008 at a price of Rs. 310 per share thus resulting in a book loss of Rs. 1,15,15,625/-(62500 X 184.25) and long-term capital loss of Rs. 2,81,47,885/- after in....

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.... shares is less than issue price. Hence, there cannot be any distribution of income. Accordingly, provisions of Section 115QA of the Act per se cannot be applied to the facts of the instant case. 10. Let us now see whether section 10(34A) of the Act could be made applicable to the instant case. For the sake of convenience, the provisions of section 10(34A) of the Act are reproduced below:- "(34A) any income arising to an assessee, being a shareholder, on account of buy back of shares by the company as referred to in section 115QA" 11. Since, we have already held that provisions of section 115QA of the Act per se cannot be made applicable to the facts of the instant case, the provisions of section 10(34A) also consequentially would not h....