TaxTMI 
TaxTMI 
2025 (9) TMI 105
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....d Senior Standing Counsel for Income Tax Department, for the respondents. 3. Vide the impugned order, respondent No.3 had found certain material and evidence to declare an impermissible avoidance arrangement done by the petitioner, and a further direction was given to the Assessing Officer with regard to the impugned transactions of sale and purchase of equity shares carried out by the petitioner- assessee during the Financial Year 2019-20 resulting in short-term capital loss with a view to set-off the same against long-term capital gains on sale of unlisted shares and the tax to be determined thereon. 4. The brief facts of the case are that, petitioner herein is a tax payer and is involved in making investment in shares and securities for many years. As on 31.03.2020, petitioner was holding shares of value equivalent to Rs. 31,88,81,428/- and also had mutual funds worth Rs. 47.59 crores. From the investment that was available with the petitioner, petitioner had sold shares of one Company held by her as an investment prior to the sale and earned long-term capital gains of Rs. 44,14,05,007/-. With so much of funds available with the petitioner, petitioner thought of other inve....
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....aged in Section 96(1) of the Act so as to treat the transaction as "impermissible avoidance arrangement". 8. In support of his contention, learned counsel for the petitioner submitted that the respondent-Department has not been able to show any sort of arrangement entered into by the petitioner with any other party involved in the transaction so far as sale and purchase of shares of M/s. HCL Technologies Pvt. Ltd. is concerned. It was also the contention of learned counsel for the petitioner that the findings recorded by respondent No.3 in the impugned order are factually incorrect inasmuch as, according to respondent No.3, the petitioner did not furnish her reply before respondent No.1 to the notice issued under Sub-Rule 1 of Rule 10UB of the Act. Whereas, the petitioner had in fact filed a detailed reply to respondent No.1 on 23.03.2022 and had also obtained e-filing acknowledgment of the same, and for which reason also the impugned order is bad in law. According to the learned counsel for the petitioner, all the sale and purchase transactions were undertaken through the stock market and the petitioner is totally unaware of the buyer and seller; and therefore, the said transac....
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....f the impugned order while applying GAAR provisions on the transactions made by the petitioner at relevant point of time. 11. The entire stand of the Department was that the transactions undertaken by the petitioner were one which falls under impermissible avoidance arrangement as is envisaged under Section 96 of the Act. 12. Now to ascertain whether the provisions of Section 96 of the Act would be attracted to the transactions undertaken by the petitioner, we need to first look into the provisions itself. For ready reference, the relevant portion of Section 96 i.e. Sub-Section (1) of Section 96 is being reproduced hereunder, viz., "Impermissible avoidance arrangement. 96. (1) An impermissible avoidance arrangement means an arrangement, the main purpose of which is to obtain a tax benefit, and it- (a) creates rights, or obligations, which are not ordinarily created between persons dealing at arm's length; (b) results, directly or indirectly, in the misuse, or abuse, of the provisions of this Act; (c) lacks commercial substance or is deemed to lack commercial substance under section-97, in whole or in part; or (d) is en....
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....as to bring the transaction holding it to be an impermissible avoidance arrangement. As has been already discussed, some of the admitted facts are that:- 1) The Department has not been able to show or has collected any material to prove that the purchase and sale of shares made by the petitioner was with any of their known persons or entity; 2) There was no nexus which could be established between purchase and sale of shares of M/s. HCL Technologies Pvt. Ltd. made by the petitioner; 3) All the shares have been sold through stock exchange; 4) The petitioner is an investor and has been carrying on the sale and purchase of shares continuously which would establish that the so-called transaction of sale of M/s. HCL Technologies Pvt. Ltd. shares by the petitioner was not one of the isolated transaction specifically made to save tax; 5) All the transactions i.e. the purchase and sale of shares have been made through the DMAT account of the petitioner; 6) These transactions are part of the investment portfolio and all the informations are part of the IT returns and that there was no new material available with the Department so as to h....