TaxTMI 
TaxTMI 
2026 (4) TMI 330
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....,41,12,159/- is incurred in course of regular business of the assessee, purely out of business exigency and the same is allowable. 4. The Ld. CIT(A) ought to have appreciated that the assessee, being a trader in scrips and shares has made all the purchases and sales on BSE which is regulated by SEBI through a registered broker only. 5. The Ld. CIT(A) ought to have considered the fact that the assessee has purchased and sold the shares accordingly through Recognised SEBI which confirms the validity and genuineness of the transactions made by the assessee. 6. The Ld. CIT(A) erred not considering the fact that the share sold were acquired in earlier years and the AO has not doubted the purchase of shares. 7. The Ld. CIT (A) ought to have considered the various evidences filed by the assessee in the form of Bank Statements, Details of shares purchased, Share Bills, Statement of Accounts, Ledger copies about the existence, genuineness of the sales and purchases made during the year under consideration. 8. The Ld. CIT(A) ought to have appreciated the fact that the transactions were done through recognised stock exchange in electronic platform ....
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....stries Limited. The Assessing Officer asked the assessee to furnish details of the transactions relating to the sales of shares of these two companies. The assessee furnished the details of purchase and sales of shares of 03 scrips viz., (i) Amtek Auto Ltd., (ii) Shree Shaleen Textiles Ltd., and (iii) SRK Industries Limited. From the details filed by the assessee, the Assessing Officer noted that the assessee purchased 2 lakh shares of Shree Shaleen Textiles Ltd., @ Rs. 69.63ps per share on 13.12.2013, out of which, 1 lakhs share were sold on 22.03.2014 @ Rs. 17.71 per share and thereby, booked loss. Similarly, the assessee purchased 3,78,875 shares of SRK Industries Limited @ Rs. 191.65ps per share on 26.12.2013 and the same were sold @ Rs. 35.22ps per share on 27.03.2014 and thereby, booked loss. The Assessing Officer also noted that there was split of both the scrips and the trading by assessee was post-split of shares. The Assessing Officer has also considered the book value of the shares before split and after split and then, proposed to disallow the loss by issuing a show cause notice dated 05.12.2016. The assessee filed her submissions on 09.12.2016 and explained that the tr....
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....l report and financial statements of these two companies viz., (i) Shree Shaleen Textiles Ltd., and (ii) SRK Industries Limited and submitted that these two companies are active companies and doing their business. Therefore, the existence of these companies is not in dispute. He has also referred to the balance sheet and notes on accounts as part of the annual reports of the two companies and submitted that the market price of these two scrips at the stock exchange are also reported in the annual report of these companies and therefore, the assessee has purchased the shares as per the prevailing market price on the stock exchange on the date of purchase and sold the shares at the prevailing market price on stock exchange on the date of sales. Therefore, the transaction of purchase and sales were carried out on the stock exchange and as per the prevailing market price of these two scrips, then the book value of the shares as referred by the Assessing Officer as on 31.03.2013 and 31.03.2014 are not at all relevant to question the market price prevailing on the relevant dates on the stock exchange. The learned Authorised Representative of the Assessee has relied upon the Judgment of H....
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....ty on the Promoters/Directors of these two companies for violation of the disclosure under Clause-35 of the listing agreement to BSE. Thus, these two scrips were tainted scrips, and assessee has booked the huge loss which is not a genuine loss, but the timing of the transaction clearly shows that these losses are booked to adjust against the profits in respect of Future & Option [in short "F & O"] transactions during the year. Therefore, the assessee bas booked these losses on the trading of these two scrips with the sole motive and view to avoid the tax on the profits on the F & O transactions of the assessee. The learned CIT(A) has analysed the facts relating to these issues in para nos.7.2 and 7.3 of the impugned order wherein it was observed that the penny stock transactions are being used for the purpose of money laundering activity wherein shares of no value or negligible value are purchased and held for more than 12 months and transferred thereafter at an exorbitant price to convert the same into tax exemption long term capital gains u/sec.10(38) of the Act. The shares of Shree Shaleen Textiles Ltd., and SRK Industries Limited were selected by the assessee for the purpose of....
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....14 11,21,023 Amtek Auto Ltd 75,000 26-03-2014 1,1362,500 - - - Shree Shaleen 1,00,000 26-12-2013 59,63,500 1,00,000 17,71,000 22-3-2014 (41,92,500) Shree Shaleen 1,00,000 22-03-2014 59,62,500 - - - SRK Industries Ltd 3,78,875 26-12-2013 7,26,11,909 3,78,875 1,26,92,250 27-03-2014 (599,19,659) 7,53,875 10,95,11,800 291,95,664 (629,91,135) It is noticed from the details furnished by the assessee that the book value of shares of Shree Shaleen was Rs 10.60 per share (before split) as on 31-03-2013 and Rs 0.21 per share(after split) as on 31-3-2014 whereas the assessee has purchased 200,000/- shares @ Rs 59.63 per share on 23- 12-2013 out of which 100,000/- shares were sold @Rs 17.71 thereby booking losses. Similarly book value of shares of SRK Industries Ltd was R$ 1.04 per share (face value Rs 10) as on 31-03-2013 and Rs 5.32 per share (face value Rs 5) as on 31-3-2014 whereas the assessee has purchased 3,78,875 shares @ Rs 191.65 per share in Dec 2013 & Jan 2014. These shares were sold @ Rs 35.22 there by booking losses. The assessee was therefore required to explain wh....
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.... reach this office by 9-12-2016. Copy of this letter has been emailed to your designated email ID: [email protected] & [email protected] as per IT Return & Email ID: [email protected] of your Authorised Representative for immediate compliance. The Authorised Representative attended on 9-12-2016 and vide his submissions dated 9-12- 2016 stated that the purchase & sale of shares were done on BSE which is regulated by SEBI and all trades were done through a registered broker. The AR stated that all the transactions were through Exchange only. He further stated that book value of any particular share does not reflect the price prevailing on the stock exchanges at which they are traded and that the prices fall was much and there was no other alternative except to book losses in order to ensure that there are no further losses. The financial details submitted by the assessee & the submissions of the assessee were carefully perused. The contention of the assessee is not acceptable. The holding period of the shares was very less. The buy rate & the sell rate of the scrips are given as under: Scrip Book Value 31-3-2013 Book Value 31-3-2014 Bought ....
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....f these two scrips is also reported in the annual reports of these companies, which is also not disputed by the Assessing Officer rather the Assessing Officer has given the reasons for disallowing the loss as the assessee booked the loss without any business prudence. The Assessing Officer cannot sit in the arm chair of the business person to take a decision and question the prudence of the assessee. It is also pertinent to note that to avoid tax at maximum marginal rate @ 30%, why one should book a bogus loss of Rs. 6.41 crore. We further note that all the transactions were carried out in the regular course of trading at BSE through the registered broker. The Assessing Officer has not disputed the acquisition of these shares by the assessee and reflected in the Trading/DEMAT A/c of the assessee against the consideration paid through banking channel as evident from the bank account statement filed by the assessee placed at Page nos.60 to 65 of the paper book. The assessee has also produced the assessee's ledger A/c in the books of the broker as well as the account statement reflecting the holding of the shares by the assessee after the acquisition in the month of December 2013 and ....
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....hereas in the case on hand, the assessee has not claimed any such exempt income rather the transactions are in the nature of trading of these scrips and assessee has booked the business loss. We further note that the learned CIT(A) has also given much emphasis on the decisions which were in respect of transactions carried out in the penny stock and declaration of the exempt income u/sec.10(38) of the Act as per Para nos.7.2 to 7.4 of the impugned order as under: "7.2. At the outset, it is a known fact that penny stock transactions are being used for the purpose of money laundering activities wherein shares of no value or negligible value are purchased and held for more than twelve months and transferred thereafter at an exorbitant price to convert the same into tax exempt LTCG u/s 10(38) of the Act. In certain cases, such shares are bought at an exorbitant price and held for less than twelve months and transferred thereafter at an abnormally low price so as to arrive at huge amount of business loss or STCL, as the case may be. Further, the said loss is adjusted against other taxable income of the assessee under the head business or capital gains, as the case may be. ....
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....the loss in question without doing the actual transaction of purchase and sale of shares. We find from the record that the assessee produced all the relevant records in support of the transaction of purchase and sales as well as the purchase/sales price and the prevailing price on the relevant dates of purchase and sale of shares on the stock exchange. It is not the case of the Revenue that the assessee is a party and played a role in manipulation of the market price on the stock exchange of these two scrips. Accordingly, the assessee has established her claim which is duly substantiated by the evidence brought on record that these transactions are real transactions carried out by the assessee in the normal course of trading on the stock exchange at the prevailing price on the relevant dates of purchase and sales and therefore, the loss incurred by the assessee from these transactions cannot be held as artificial or bogus loss. Even if assessee has acted in an un-prudent manner the same cannot be a reason or ground to disallow the loss actually incurred by the assessee. Hence, we are of the considered opinion that the Assessing Officer has disallowed the loss incurred by the assess....
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.... of the Company is April 1, 2014 to March 31, 2015. The tentative quarterly results will be adopted by the Board of Directors in accordance with the following schedule: For the Quarter Ending Time period June 30, 2014 2rd week of August, 2014 September 30, 2014 (Quarter as well as Half Year) 2nd week of November, 2014 December 31, 2014 2nd week of February, 2015 March 31, 2015 2nd week of May, 2015 Book closure: 28th September 2014 to 29th September 2014 (both days inclusive) Dividend Payment Date: Not Applicable as Interim Dividend has already been paid. Listing on Stock Exchange and the Stock Code allotted: The Equity Shares of the Company are listed on the Bombay Stock Exchange Limited. Bombay Stock Exchange Limited (BSE),Phiroze Jeejee bhoy Towers,Dalal Street Mumbai - 400 001 The Stock Codes allotted by Stock Exchange and Depositories are as follows: Name Code 531307 INE951M01037 S R K Industries Limited Demat ISIN Numbers in NSDL and CDSL The listing fees for the financial year 2014-15 have been paid to Bombay Stock Exchange Limited. The Company has also paid annual custodian fee for the year under review to NSDL & CDSL. Market Pri....