Tax Authority Cannot Disallow Losses Based on Assumptions; Court Upholds Legitimacy of Commercial Transactions.

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....The High Court held that the Assessing Officer cannot disallow losses merely based on assumptions and surmises regarding the commercial expediency of transactions undertaken by the assessee. The transaction for sale and purchase of dies was a pure commercial transaction entered into by the assessee in its commercial wisdom, and the fact that the assessee incurred a loss in the said transaction was not disputed. There was no allegation of any undisclosed consideration or clandestine transaction to reverse the loss. The Assessing Officer made the addition solely based on their perception of what was commercially expedient, which is not within their purview. The assessee had justified its commercial decision by reflecting enhanced turnover and.........