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TMI Blog2013 (10) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... the shares of Mackinon & Mackenzie Ltd., were sold at the price quoted at the Stock Exchange whereas low price of M/s. Hede Navigation Ltd., shares at the rate of 10 paisa per share stands explained by the fact admitted by the Assessing Officer that the said Company was in red. The Commissioner also noted that even in case the second transaction had not taken place, the long term capital loss would have been accepted by the Assessing Officer and the Company would have been allowed to carry forward the said loss - Where transactions were genuine, such long term capital loss can be allowed to be set off. In the Mcdowells case [2009 (5) TMI 27 - SUPREME COURT ], it has been held that approach of both the corporate and tax laws, particularly in the matter of corporate taxation, generally is founded on separate entity principle i.e. treat a company as a separate person. The Income Tax Act, 1961, in the matter of corporate taxation, is founded on the principle of the independence of companies and other entities subject to income tax. Companies and other entities are viewed as economic entities with legal independence vis-à-vis their shareholders/participants. It is fairly well accepte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act, by issuing a notice under Section 148. The Respondent filed a letter requesting that the return of Income filed on 02.12.1996 be considered as the return under Section 148. The assessment was completed by Order dated 30.03.2001 thereby disallowing the claim of the Respondents of long term capital loss of Rs.1,17,87,564/- and, consequently, a sum of Rs.45,99,337/- were brought to tax. The Commissioner of Income Tax in the Appeal preferred by the Respondent, by Order dated 18.10.2002, reversed the assessment Order holding that the transfer of the shares is not a colourable transactions and hence the long term capital loss is required to be set off against the short term capital gains made by sale of shares of Mackhinon Mackenzie Co. Ltd. The Appeal preferred before the Income Tax Appellate Tribunal, by Order dated 27.01.2006, upheld the Order of the Commissioner of Income Tax holding that both the transactions of transfer of shares of its group companies as well as sale os shares of Mackhinon Mackenzie Co. Ltd., are genuine transactions. Being aggrieved by the impugned Order dated 27.01.2006, the Appellants have preferred the present Appeal under Section 260A of the Income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt does not arise at all. Learned Counsel further pointed out that there is no challenged to the findings by the Tribunal below to the effect that the two transactions are genuine and the prices of the shares at which they have been sold are not inflated. Learned Counsel further pointed out that once the said findings have not been challenged, the question of this Court coming to any contrary conclusion would not arise, as such, substantial question of law framed by this Court does not arise at all. Learned Counsel further pointed out that there is no material on record to suggest that the transaction was colourable transaction and, as such, the Tribunal was justified to pass the impugned Judgment. In support of his submissions, the learned Counsel has relied upon the Judgments of the Apex Court reported in (2011) 1 S.C.C. 673 in the case of Vijay Kumar Talwar vs. Commissioner of Income Tax, Delhi and (2005) 2 S.C.C. 324 in the case of M. Janardhana Rao vs. Joint Commissioner of Income Tax. The learned Counsel as such submits that the above Appeal be accordingly dismissed. 6. We have considered the submissions of the learned Counsel and we have also gone through the records. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot been disputed by the Appellants nor have been assailed in the present Appeal, the question of contending that the transactions were colourable transactions has to be accepted. The findings of facts arrived at by the Tribunal cannot be re-assessed by this Court in the present Appeal. The Apex Court in the said Judgment in the case of M. Janardhana Rao vs. Joint Commissioner of Income Tax (supra) has observed at Paras 10 and 18 thus : 10. Some of the provisions of Section 260-A are in pari materia with various sub-sections of Section 100 CPC. The provisions are Sections 260-A(1), 260-A(2)(c), 260-A(3), 260-A(4) of the Act corresponding to Sections 100(1), 100(3), 100(4) and 100(5) CPC. ... 15. An appeal under Section 260-A can only be in respect of a substantial question of law . The expression substantial question of law has not been defined anywhere in the statute. But it has acquired a definite connotation through various judicial pronouncements. In Sir Chunilal V. Mehta Sons Ltd. v. Century Spg. Mfg. Co. Ltd.1 this Court laid down the following tests to determine whether a substantial question of law is involved. The tests are: (1) whether directly or indirec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... McDowell case, SCC p. 255) 46. On this aspect one of us, Chinnappa Reddy, J., has proposed a separate opinion with which we agree. The words this aspect express the majority s agreement with the judgment of Reddy, J. only in relation to tax evasion through the use of colourable devices and by resorting to dubious methods and subterfuges. Thus, it cannot be said that all tax planning is illegal/illegitimate/impermissible. Moreover, Reddy, J. himself says that he agrees with the majority. 69. In the judgment of Reddy, J. in McDowell there are repeated references to schemes and devices in contradistinction to legitimate avoidance of tax liability (paras 7- 10, 17 18). In our view, although Chinnappa Reddy, J. makes a number of observations regarding the need to depart from Westminster and tax avoidance these are clearly only in the context of artificial and colourable devices. 70. Reading McDowell, in the manner indicated hereinabove, in cases of treaty shopping and/or tax avoidance, there is no conflict between McDowell and Azadi Bachao or between McDowell and Mathuram Agrawal. 71. ... 72. The approach of both the corporate and tax laws, particularly in the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X
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