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TMI Blog2014 (8) TMI 805X X X X Extracts X X X X X X X X Extracts X X X X ..... ector as secondary transaction. Any trace of any connection of Mr. K Narayanan to be associated with the primary seller, i.e. DSD Builders and Developers, to give even a faint hint that the transaction was a collusive transaction - when the assessee sold the property to its director or there was a downward valuation - treading only on macro-economic theory would be unjustified - The burden is squarely on the assessee to prove as to how a loss is justified and acceptable - The assessee sold the property to its director, who actually retained the same and that it did not get eclipsed from the assessee, or its director clearly shows that the impugned flat was meant to be retained – thus, the order of the CIT(A) is set aside and the AO is di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Appellant craves leave to add, alter, delete or modify all or any of the above ground at the time of hearing . 2. In the grounds as raised in the appeal, the solitary issue that emerges is the disallowance of ₹ 62,73,440/- claimed as Short Term Capital Loss (STCL) on the sale of flat. 3. The facts as submitted before the AO and stated in SOF are that the assessee purchased a flat situated at Natura, J K Mehta Road, Santacruz (West), Mumbai from M/s DSD Builders Developers for ₹ 3,93,73,440/-. This flat was sold by the assessee to Mr. K. Narayanan, Director of the assessee company within the financial year for a consideration of ₹ 3,31,00,000/-, thereby, incurring a loss of ₹ 62,73,440/-, which the assesse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... face of it, the transaction was a device to reduce taxable profits of the assessee and hence it was a sham transaction. The AO, therefore, disallowed the claim of STCL of ₹ 62,73,440/-. 7. The assessee approached the CIT(A) against the above disallowance and pleaded before him that there was no inherent device and reiterated the submissions made before the AO. 8. The CIT(A), after considering the submissions and detailed explanation, held, I have carefully considered the facts of the case, the submissions of the appellant and the assessment order. From the assessment order, it is seen that Assessee Company is a private limited Company and the Director of the company has complete hold over the affairs of the company. I fa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion has taken through banking channels but none the less no prudent businessman will indulge in a transaction like this where complete equity base of company is eroded. In view of this, the short term capital loss incurred by the company Amounting to ₹ 62,73,440/- is not allowed. The AO may examine the taxability of ₹ 62,73,440/- in the hands of the Director u/s 28(iv) or u/s 17 of the I.T. Act 9. The CIT(A), thus sustained the disallowance. 10. Aggrieved, the assessee is now before the ITAT. 11. Before us, the AR reiterated the submissions made before the revenue authorities and submitted that the revenue authorities erred in observing that the assessee bought and sold the flat from Mr. K. Narayanan. The AR submitted ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... irector as secondary transaction. 16. On going through the documents appended in the APB, we do not find any trace of any connection of Mr. K Narayanan to be associated with the primary seller, i.e. DSD Builders and Developers, to give even a faint hint that the transaction was a collusive transaction. 17. Coming to the macro economic theory, at no point, the assessee/AR provided any evidence to show that at the time when the property was sold to Mr. K. Narayanan, there was actual melt down in the property rates as well, or in the same spectrum, any evidence of comparable rates within the vicinity, showing that the rates of similar type of property had been depressed, on the date when the assessee sold the impugned property to its dir ..... X X X X Extracts X X X X X X X X Extracts X X X X
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