TaxTMI 
TaxTMI 
2025 (6) TMI 62
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.... sustaining the disallowance of long term capital loss made by ld. Jurisdictional Assessing Officer (JAO) to the extent of Rs. 26019396 out of the loss of Rs. 59862950 incurred by appellant on sale of shares of Shree Rama Newsprint Limited (SRNL) (Formerly Rama Newsprint and Papers Ltd.) 02. Against omitting to allow indexing of accepted cost of acquisition as provided in section 48: For that on facts and circumstances of the case and in law, Id. CIT(A), NFAC erred in not undoing the omission of not allowing the inflation indexing of cost of acquisition of equity shares of SRNL sold now accepted by ld. JAO in his remand report in the sum of Rs. 34999984/- 03. Against substitution of assumed amount in place of 'full value of consideration' actually received: For that on facts and circumstances of the case and in law, Id. CIT(A), NFAC erred in sustaining the substitution made by ld. JAO of 'full value of consideration' actually received by appellant in respect of sale of equity shares of SRNL in the sum of Rs. 2529/- by a figure of Rs. 8980588/- assumed by ld. JAO disregarding section 48 of Income tax Act, 1961. 04. Against disbelieving or non consideration ....
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....RNPL at such a throwaway price and instead of offering any justification behind the sale of shares, the assessee merely submitted details like copies of DEMAT statement, bank statement, copy of share purchase agreement, board resolution in terms of sale of the shares of SRNPL. The Ld. AO calculated that despite being provided with opportunities, the assessee failed to justify the business expediency behind the sale of the shares of Shree Rama Newsprint Ltd. at such a throwaway price. The shares were acquired on 22.01.2010 @ Rs. 48.95/- per share and the purchase price of Rs. 3,49,99,984/- was claimed to have been paid by the assessee and the sale price per share was worked out at Rs. 0.0035/-. The Ld. AO also verified the assessee's records in the form of the 'Extract from Minutes of the Proceedings of the Board of Directors of Saunya Trade & Fiscal Services Pvt. Ltd.' dated 21.05.2015 which revealed that the Chairman of the meeting further informed that Shree Rama Newsprint Ltd. ('SRNL'/'SRNPL') had been incurring losses since accounting year 2008-09 and had accumulated net loss before tax of Rs. 438.84 crores and cash loss of Rs. 220.22 Crores (including gain on land sale of Rs. ....
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....as investment and not as any business asset. The Ld. AO did not find it logical as it led one to infer that a businessman does not need to be prudent while making investments. The Ld. AO was of the view that the question of business expediency and prudence were expected to be made use of both in the case of acquiring business asset as well as while making investments. The assessee's contention was therefore, not found to be acceptable. The Ld. AO further observed that while accepting that the purchase price paid by the assessee 'was not strictly comparable with the stock exchange price of the particular day', but the assessee also made a statement that 'had we attempted to purchase such a big quantity of shares through stock exchange, first of all, said quantity would not have been available through Stock Exchange and secondly, the price also would have been much higher than what the assessee had paid'. The Ld. AO did not find this reply also as plausible and the reply was found to be devoid of logic, irrelevant and, therefore, not acceptable. Since the assessee, despite being provided with sufficient opportunities, failed to offer any acceptable explanation regarding the conte....
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....o Biols Ltd. (RSGBL). It was submitted that there was no direct or indirect relation of the appellant company or its Directors or Promoters with RSGBL or with its Directors or Promoters. As the financial condition of SRNL was much more precarious in 2015, then that was in 2010, they have decided to off-load their shares held with SRNPL. 3. It was submitted that the appellant sold the shares through share purchase agreement as the number of shares sold was in bulk and it was not possible and practical to enter into such transaction through Stock Exchange. Hence, the Stock Exchange prices were not at all comparable in this case from any angle. 4. The appellant has raised specific ground that AO cannot question the business prudence, business expediency, test of human probability and logic as the decision to off-load the shares was purely on account of business prudence that SRNPL undergoing sustained loss was noted. Hence, they sold all the shares at throw-away price. 5. It was their contention that if at all the long-term capital loss is disallowed, the AO cannot add the same into total income by denying the benefit of set-off given in Sec.74 of the IT Act. 6. The extract fr....
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....5,015 shares were sold. It was argued that the assessee did not claim it as a set off but had carried forward the loss for subsequent years. It was submitted that primarily there were three issues and the Ld. CIT(A) had called for the remand report which is at page 1 to 5 of the paper book and is dated 25.06.2024. The transactions were accepted; purchase price was accepted but the loss claimed was not allowed. The impugned assessment year is AY 2016-17. The carry forward claim was reduced by the Ld. CIT(A). It was also submitted that loss has not been set off in the current year. The Ld. AR also referred to ground no. 6 of the appeal in which it is stated that the long-term capital loss worked out at Rs. 2,60,19,396/- as per the remand report of the Ld. JAO as against the original addition of Rs. 5,98,62,950/-, even if the said claim is not accepted, no such set off of loss was made by the assessee during the year under consideration and only a carry forward of such loss was claimed. This ground does not hold as even though the assessee has not set off the loss claimed against the income of the current year, however, since it was claiming carry forward and set off of loss in the su....
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....ies provided to SRNL. vii. Waiver by Lenders of all rights of recompense in favour of the new investor. The meeting concluded with a vote of thanks from ICICI Bank." 7. M/s. Saumya Trade & Fiscal Services P. Ltd. had merged into the Indra Company Limited vide order of the NCLT dated 27.12.2021. The assessee reiterated that while the purchase price was accepted, transactions were accepted but the share price was adopted as listed and indexation was also not allowed. Reliance was placed upon the provision of section 48 of the Act and the decision of Hon'ble Supreme Court in the case of (i) CIT Vs. George Handerson & Co. Ltd. (1967) 66 ITR 622 (SC) and (ii) CIT Vs. Gillanders Arbuthnot & Co. (1973) 87 ITR 407 (SC), decision of the Hon'ble Delhi High Court in (iii) Arjun Malhotra Vs. CIT (2018) 92 taxmann.com 338 (Delhi) (2018) 403 ITR 354 (Delhi) and the decision of the Tribunal in (iv) ACIT Vs. Manoj Arjun Menda 2021 TaxPub(DT) 0167 (Bang-Trib) in support of the claim that the full value of the consideration received or accrued as appearing in section 48 of Act denotes the consideration actually received/accrued, which in the instant case of the appellant was Rs. 2,529/- onl....
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....ther types of transfer, such as exchange, where the consideration would be other than money. If it was held in the present case that the actual price received by the respondent was at the rate the shares were transferred, the full value of the consideration must be taken at the same rate. In the first proviso to section 12B(2) of 1922 Act the expression "full value of the consideration" is used in contradistinction with "fair market value of the capital asset" and there is an express power granted to the ITO to "take the fair market value of the capital asset transferred" as "the full value of the consideration" in specified circumstances. It is evident that the legislature itself has made a distinction between the two expressions "full value of the consideration" and "fair market value of the capital asset transferred" and it is provided that if certain conditions are satisfied as mentioned in the first proviso to section 12B(2) of 1922 Act, the market value of the asset transferred, though not equivalent to the full value of the consideration for the transfer, may be deemed to be the full value of the consideration. To give rise to this fiction the two conditions of the first pro....
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....d the conduct of the parties concerned therein. After recording a clear finding as to what was the actual price received by the respondent for the sale of shares, the Appellate Tribunal would finally dispose of the appeal." 9. Thus, in the above case, the Hon'ble Supreme Court held that in such circumstances as mentioned in the instant case, the question of law referred to the High Court could not be answered as the language used by the Appellate Tribunal in recording its finding as to actual contract price paid to the assessee for sale of shares was obscure and its import could not be determined. Hence, the decision relied upon is distinguishable on facts and therefore, not applicable to the facts of the case of the assessee. 10. Further in the case of Gillanders Arbuthnot & Co. (supra) which refers to section 147 of the Act, the proceeding initiated u/s 34(1)(a) of the 1922 Act were held to be validly initiated and since section 128 was incorporated into the Act with effect from 01.04.1947, at the time sale transaction took place, section 12B (equivalent to section 48 of the Income Tax Act, 1961) was not part of the Act and so first proviso to section 12B(2) of 1922 Act was....
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....ted equity shares quoted on the recognised stock exchange during the period shares have been listed preceding the relevant date; or (c) the average of the weekly high and low of the volume weighted average prices closing prices of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date. (3) Where the price of the equity shares is determined in terms of sub-regulation (2), such price shall be recomputed by the issuer on completion of twenty six weeks six months from the date of listing on a recognised stock exchange with reference to the average of the weekly high and low of the volume weighted average prices closing prices of the related equity shares quoted on the recognised stock exchange during these twenty six weeks six months and if such recomputed price is higher than the price paid on allotment, the difference shall be paid by the allottees to the issuer. (4) Any preferential issue of specified securities, to qualified institutional buyers not exceeding five in number, shall be made at a price not less than the average of the weekly high and low of the volume weighted average prices closing prices of the related ....