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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 ..... he loss emanated is legally allowed. CIT(A) have not dealt with the issues in details after obtaining replies of the assessee and after considering the arguments of the assessee – the reasoning is just adequate enough to create a suspicion but inadequate to sustain the additions as done by the CIT(A) - On such inadequate reasons, the transactions of sale 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 - 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 – Order of the CIT(A) set aside and the matter remitted back to the CIT(A) for re-adjudication – Decided in favour of Assessee. - ITA No.3102/Mum/2012 - - - Dated:- 5-6-2013 - I P Bansal And Karunakara Rao, JJ. For the Appellant : Shri G P Mehta, AR For the Respondent : Shri Meena, Sr. (AR) ORDER:- PER : Karunakara Rao This appeal filed by the assessee on 7.5.2012 is agai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fits of indexation provided in the Act, assessee earned impugned losses out of sale of shares to his wife, Mrs. Manorama Rathi. Further, assessee mentioned that the shares have to be sold to his wife considering the fact that the assessee has no buyers for the shares and they are sold to his wife at the rate of purchase price and earned losses due to indexation benefits available 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 through the submission of the assessee and noted that assessee earne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not stand the test of appeals. He also mentioned that AO has no information in his possession to demonstrate that the sale price of the share is undervalued and its value is much higher than one shown in the books of account by the assessee. In this regard, Ld Counsel relied on the judgment of Hon ble Supreme Court in the case of K.P. Varghese vs. ITO [1981] 131 ITR 597 (SC) for the proposition that the provisions of section 52(2) of the Act can be invoked only where consideration for transfer of capital asset has been under stated by the assessee or, in other words, full value of the consideration in respect of transfer is shown at a lesser figure than that actually received by the assessee. He also relied on another judgment of Apex Court in the case of CIT vs. Shivakami Co. P. Ltd [1986] 159 ITR 71 (SC) in his support. Ld Counsel mentioned that in this case, AO has not demonstrated that the consideration actually received from his wife in lieu of the sale of shares is higher than what was disclosed by the assessee. Regarding the additional facts garnered by the CIT(A) ie collecting share premium of Rs 900/- for each share with fact value of Rs 100/-, Ld counsel has nothing to st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o 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 facts before the AO. 10. Thus, it is an undisputed fact that the assessee sold the shares to his wife at par value, which is not the market value as per the AO. In computation, assessee generated capital loss in view of the provisions relating to indexation of investment in shares. Consequently, assessee reduced the total income by way of claim of set off of capital loss against the capital gains. Thus, in such circumstances, the onus is on the assessee to demonstrate that the loss is genuine and the total in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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