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TMI Blog2014 (1) TMI 332X X X X Extracts X X X X X X X X Extracts X X X X ..... Loss of Rs. 7,24,177/-. Reasons assigned for the impugned disallowance are wrong and contrary to provisions of law read with judicial propositions. 3. Having regard to the facts of the case, the provisions of law and judicial pronouncements, the disallowance of Long Term Capital Loss of Rs. 7,24,177/- is wrong and wholly untenable inasmuch as, nothing has been brought on record to show that transaction in question was not a genuine transaction." 3. Briefly stated relevant facts of the case are that the assessee filed the return of income declaring total income of Rs. 6,02,374/-. Further, assessee filed revised return of income validly declaring the revised income works out to Rs. 12,30,669/-. AO completed the assessment u/s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the assessee. AO rejected the above explanation of the assessee. On appeal, the matter travelled to the first appellate authority. 5. During the first appellate proceedings, assessee filed a computation of earning the loss on sale of shares of Rathi Udayawar Pvt. Ltd. and mentioned that AO was prejudiced to the fact that the shares were sold to his wife only. For this proposition, he mentioned that some shares were sold at the same price at par and the short term capital gains earned by the assessee was accepted by the AO without any disturbance. But when comes to long term capital loss computation, the AO rejected the claim of the assessee, which is not fair and the disallowance made by him is purely based on suspicion. CIT (A) went ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said transaction of sale of shares to his wife at such a low price constitutes a colourable device. Consequently, the loss generated is not a genuine loss. Thus, granting set off against the long term capital gains is a case of colourable device. He accordingly confirmed the addition of the AO. Aggrieved, assessee filed the present appeal before the Tribunal by raising the above mentioned grounds. 6. During the proceedings before us, Ld Counsel brought our attention to the paper book containing the submissions dated 28.12.2011 and 30.12.2011 filed before the CIT (A) and mentioned that the Revenue Authorities failed to appreciate that the shares have no buyers, being private company shares, therefore, they have to be sold at par value. Fur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly the disclosed income and nothing else from his wife. In such circumstances, AO should not disturb the computation of long term capital loss. 7. On the other hand, Ld DR relied on the order of the AO and CIT(A). Ld DR mentioned that the book value as well as the market value is much higher than the sale price received from Mrs. Manorama Rathi, the buyer of the shares. Therefore, selling shares to his wife at par value essentially constitutes the case of generation of loss artificially to reduce the tax liabilities of the assessee eventually. Thus, the order the CIT(A) does not call for any interference. 8. We have heard both the parties and perused the submission made before the authorities below and the legal position presented before ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i Udayawar Pvt. Ltd held by the assessee and sold on 9.10.2007 to his wife, there is dispute. While the assessee holds that there is no premium to the said shares in market and therefore, they were sold to his wife at par, the revenue demonstrates that the assessee quoted premium of Rs 900/- per each share with the fact value of Rs 100/- during the assessment years 2003-04 and 2004-05. It is not clear if the share value has fallen drastically from AY 2004-05 to AY 2008-09 (sale transaction held on 9.10.2007). The balance sheets of the said company confirms the fact of raising its equity with premium of Rs 900/-. Therefore, assessee, who is generally in possession of the company papers on the share value details, is not presenting all the fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of shares to Mrs. Manorama Rathi cannot be considered as ingenuine transactions. CIT(A) should have analysed why AO accepted the same sale price when comes to computation of short term capital gains, where the benefits of indexation are not available and reject for computation of LTCG. In our opinion, AO cannot accept the sale price for purpose of computation of STCG and reject for computation of LTCG. CIT(A) is silent on this divergence/ inconsistency. Therefore, in principle, we cannot approve the opinion of CIT(A) with the said deficiencies. Thus, we direct the CIT(A) to re-adjudicate issue afresh after granting reasonable opportunity of being heard to the assessee especially on the newly garnered facts relating to the premium on the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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