TaxTMI 
TaxTMI 
2017 (8) TMI 1744
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.... that the assessee filed its return of income for the relevant assessment year declaring the total income of Rs. 2,84,820/-. The case was selected for scrutiny. The assessee had shown profits and gains of business, income from other sources, loss on sale of shares and short term capital gain in its return of income. It was noticed that the assessee had immovable property i.e. office having carpet area of 392 sq.ft. along with car parking in Matharu Arcade Premises Co-operative Society Ltd., Plot No. 32, Subhash Road, Ville Parle (East), Mumbai and had claim depreciation during the the assessment year under consideration. The assesses during the financial year relevant to the assessment year under consideration sold its business premises and....
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....the Tribunal on the following effective grounds:- 1. Order dated 7th October, 2014 The learned CIT (A) erred on facts and in law in confirming the disallowance of capital loss of Rs. 70,24,000/- made by the AO in his Assessment Order dated 14th March, 2013. 2. Conclusion not warranted The learned CIT (A) erred on facts and in law in reaching the conclusion that the transaction resulting in loss of Rs. 70,24,000/- was a same transaction. Relief Claimed: Capital loss of Rs. 70,24,000/- be allowed. 5. Before us, the Ld. counsel for the assessee submitted that the company M/s Trends Pharma Pvt. Ltd. is closely held company with Mr. Amit Parikh and family holding the entire capital of the company. The company had accumulated l....
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....Tribunal. 7. We have heard the rival submissions and also perused the material on record. The only issue to be adjudicated in this case is whether the action of Ld. CIT (A) in confirming the disallowance of capital loss of Rs. 70,24,000/- is legally sustainable or the same is bad in law. To answer this question, it is necessary to ascertain whether the transaction of sale and purchase of the shares in question are genuine as alleged by the assessee or the same is colorable device as has been held by the authorities below. The Ld. CIT (A) has confirmed the action of the AO holding as under: "3.3 I have perused facts of the case & appellant's submissions carefully. The appellant, in his submissions, has tried to justify that M/s Trends Pha....
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....ated by AO, and also the sale in short span of time clearly proves that the prime objective of appellant in the whole transaction was only to evade the payment of legitimate tax on STCG, in the guise of financial assistance to a sister concern. In my opinion, such an action on the part of the appellant clearly falls within the preview of a "Colorable Device". I find that in the case of Mcdowell & Co. Ltd. V. CTO [1985] 154 ITR 148 (SC) relied upon by the AO, the Hon'ble Supreme Court has held that "So far as the contention that it is open to everyone to so arrange his affairs as to reduce the brunt of taxation to the minimum was concerned, the tax planning may be legitimate provided it is within the framework of law. Colourable devices cann....
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....cquisition of shares at unrealistic price, & subsequent sale within a short span of time at substantially low price, constitutes a complete series of sham transactions, which has been used as a tool to evade payment of legitimate taxes. As far as the evidence from purchaser of said shares i.e. Pragna D. Bharwada is concerned, it only proves one leg of the transaction, and does not any way validate the complete series of transactions in appellant's hands. Having discussed the above, I uphold the view of the AO that the transaction of purchase & sale of shares entered into by the appellant, generating short term capital loss of Rs. 70,24,000/- is nothing but a sham transaction, and the assessee has used colorable device to evade payment of ta....