2010 (4) TMI 1143 - AT - Income Tax

Summary

Issues involved: Disallowance of capital loss u/s 143(3) for assessment year 2004-05.

Summary:

Issue 1: Disallowance of capital loss

The appellant, a share broker, declared total income of &8377; 22,47,450/- but the AO completed the assessment at total income of &8377; 37,68,500/- by disallowing &8377; 15,29,049/- as short term capital loss. The AO found discrepancies in the transactions of 12 scrips listed on CSE & BSE/NSE. The AO communicated discrepancies to the assessee, who explained that transactions were carried out through registered brokers and payments were made via cheques. However, the AO disallowed the capital loss, citing irregularities like cross deals and trading on broker's own code. The Ld. CIT(A) deleted the disallowance, stating that the loss was genuine. The revenue appealed against this decision.

Issue 2: Arguments and findings

During the appeal, the Ld. DR supported the AO's decision, while the Ld. Counsel for the assessee defended the Ld. CIT(A)'s order. The Ld. CIT(A) found that the AO's disallowance was based solely on information from the Stock Exchange and lacked concrete evidence of non-genuineness. The Ld. CIT(A) also noted that the AO failed to prove connivance between the appellant and brokers. The Ld. CIT(A) referred to various case laws and concluded that the capital loss was genuine, relying on factual findings and legal precedents.

Issue 3: Decision

After considering submissions and lower authorities' orders, the Tribunal upheld the Ld. CIT(A)'s decision to delete the addition of &8377; 15,29,049/-. The Tribunal found no infirmity in the Ld. CIT(A)'s order, as it was based on factual findings and supported by relevant case laws. Consequently, the appeal of the revenue was dismissed.

This summary captures the key issues, arguments, findings, and the final decision of the Appellate Tribunal ITAT KOLKATA regarding the disallowance of capital loss for the assessment year 2004-05.