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TMI Blog2014 (6) TMI 462X X X X Extracts X X X X X X X X Extracts X X X X ..... r any ground or add a new round which may be necessary. The Assessee prays that the order of the CIT(A) on the above grounds be set aside and that of the Assessing Officer restored." 2. Assessee-firm, engaged in sub-contracting diamond business, filed its return of income on 30.09.2008 declaring total loss of Rs.4.58 Crores. AO finalised the assessment order u/s.143(3) of the Income Tax 1961, (Act), on 30.12.2010, determining the total income at Rs.2.96 Crores. Brief Facts of the case : 2.1. First ground of appeal is related to substitution of value of consideration in place of sale consideration shown by the assessee while computing the capital gains. Assessee firm is fully owned by the family members of one Sh.Harshad Mehta group .M/s. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ily (38%) were transferred to RBIPL.As a result, IGIPL became a subsidiary company of RBIPL. Shares of IGIPL were transferred by the respective share holders to RBIPL at the cost of their acquisition thus resulting in long term capital loss on account of indexation.AO called for explanation from the assessee with regard to proposed disallowance of capital loss on account of indexation. After considering the submissions of the assessee he held that no method was prescribed for calculation of Fair Market Value (FMV) for the purpose of capital gains, that break up value of the shares was required to be adopted, that yield method valuation adopted by the assessee gave value at 44.79 per share, that break-up value of the shares was Rs.1225/- per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot otherwise, that transfer of shares was not one of the circumstances provided by the Act, that the provisions of section 52 were omitted with effect from April 1,1988,that w. e. f. AY.1988-89 it was not possible for the AO to adopt the market value or any other value other than the apparent consideration of sale. He held that the action of the AO in substituting the full value of the consideration received by an estimated value computed by him was not as per the provisions of law, that in case AO wanted to adopt a different amount as sale consideration he was duty bound to bring such material on record to substantiate his stand, that in the case under consideration there was no evidence of what so ever to suggest that shares were transfer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... O, for the purpose of calculating long term capital loss, had adopted a price without any basis.He did not bring on record any material for substituting the price shown by the assessee-firm.Once it is found that shares are sold at a particular price it is not possible for AO to disturb the figure,without bringing material facts that contradict the calculation made by the assessee. In our opinion FAA has analysed the provisions of capital gain tax in right perspective. There is no doubt that in certain circumstances, sale-price of shares can be substituted by the AO for determining the capital gains/loss. But, in the case under consideration those circum -stances were missing. We find that in the case of Orient Trading (supra) shares were ex ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the capital asset is made. In the case of a sale, the full value of the consideration is the full sale price actually paid." Similarly, in the case of Gillanders Arbuthnot and Co.(supra)issue of determining the full value of consideration on sale of shares had arisen. Hon'ble Apex Court had decided the issue as under: "...the transaction in question was a sale and not an exchange or a mere readjustment. Clause 1 of the agreement in specific terms said that the existing partners shall sell and the company shall purchase the shares and securities for Rs. 75 lakhs.Clause 3 merely provided a mode of satisfaction of the sale price. The sale price fixed by the parties was the sum of Rs. 75 lakhs and no more and the fact that the assessee-firm ..... X X X X Extracts X X X X X X X X Extracts X X X X
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