9911796707
TMI Blog2018 (8) TMI 913X X X X Extracts X X X X X X X X Extracts X X X X ..... into by the assessee company with its group companies off market. - Held that:- In the present case, the transactions of sale of shares were duly supported by the required documentary evidence and the fact that delivery instructions were also issued by the assessee company to the depository participant on the date of sale itself clearly shows that the same were followed by actual delivery of shares. Moreover, the relevant share transactions were affected at the same price as was quoted on the stock exchange on the same date. Ld. CIT(A) was fully justified in deleting the disallowance made by the AO on account of assessee’s claim for long term capital loss by relying on the said decision [2010 (4) TMI 293 - PUNJAB & HARYANA HIGH COURT] - Decided against the revenue. - I.T.A. No. 2089/Kol/2014 - - - Dated:- 22-6-2018 - Shri P.M. Jagtap, AM And Shri S.S. Viswanethra Ravi, JM For The Revenue : Shri P.K. Srihari, CIT For The Assessee : Shri A.K. Tibrewal, FCA ORDER Per P.M. Jagtap, AM This appeal is preferred by the revenue against the order of Ld. CIT(A) VI, Kolkata dated 28.08.2014. 2. In ground no 1, the revenue has challenged the action ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d of computing disallowance had been held to be unsatisfactory by my ld. predecessor. Following the reasoning given by him and after considering the facts mentioned by the assessing officer in the assessment order, I am not satisfied with the correctness of claim to, expenditure incurred in relation to the exempt income made by the appellant. Once the assessee's claim is rejected, the disallowance has to be made in accordance with Rule BD as prescribed in the sub-section (2) of section 14A. However, it is noted that during the year, net amount of interest in the appellant's profit loss account is income of ₹ 2, 93, 82, 451/-. Therefore, there is no net expenditure on account of interest. Jurisdictional bench of tribunal has held in the case of DCIT, Cir-4, Kol vs. M/s. Trade Apartment Ltd. ITA No.1277/Ko112011, that for purpose of disallowance u/s 14A read with Rule 8D, only net expenditure is to be taken into account. In the appellant's own case also this view has been upheld by the ITAT vide order dated 29.11.2013 in ITA No. 640/Koll2012 for A.Y.2008-09. Hence, no disallowance has to be made under clause (ii) of Rule 8D(2). Coming now to clause (iii), it has b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or A.Y. 2008-09 has allowed the netting of interest while deleting the disallowance made under section 14A on account of interest vide its order dated 29.11.2013 passed in ITA No. 640/Kol/2012. He also relied on the decision of Hon ble Gujarat High Court in the case of Principal CIT vs Nirma Credit Capital Pvt. Ltd. (tax appeal no 409 and 514 of 2017 dated 31.08.2017 wherein it was held that for the purpose of applying rule 8D(2)(ii) of the Income Tax Rules, 1962 prior to amendment with effect from 02.06.2016, what would be considered as amount of expenditure by way of interest would be the interest paid by the assessee on the borrowings minus the taxable income earned in the financial year. He contended that it is therefore not necessary to have any inextricable link between the interest earned and interest paid for applying the theory of netting for the purpose of making disallowance under section 14A read with Rule 8D(2)(ii). 7. We have heard the arguments of both the sides and also perused the relevant material available on record. It is observed that the interest income earned by the assessee during the year under consideration being more than the interest expenditure inc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: That on the facts and in circumstances of the case, the CIT(A) erred on facts as well as in law in holding that disallowance of loss incurred in off market sale of shares of group company was not warranted, ignoring the fact that delivery of shares were not done within 31.03.2009, which indicates that it was afterthought and as such, colourable device used by the assessee to lower its tax liability as decided by the Hon ble Apex Court in the case of M/s. Mc. Dowell Company Ltd. (154 ITR 148), wherein the Hon ble Supreme Court held that the colourable device means something which seems to be real but not actual, used to lower the burden of tax is not allowable. 9. In the return of income filed for the year under consideration, a long term capital loss of ₹ 13, 25, 28, 636/- was claimed by the assessee on the sale of 722008 equity shares of Usha Martin Infotech Ltd. and long term capital gain of ₹ 1, 83, 61, 185/- was shown on the sale of 1575000 equity shares of Usha Martin Ltd. On verification of the relevant documentary evidence produced by the assessee in the form of Demat accounts, bills, contract notes etc., it was noticed by the AO that out of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansaction is between group companies, the same does not become a colourable device. At most, it may involve same amount of tax planning. However, an assessee is always at liberty to do tax planning as long the same is in a legitimate manner within the frame work of law. Various decisions cited by the appellant, including that of jurisdictional bench of tribunal in the case of ACIT vs Turner Morrison Co. Ltd. 47 ITD 638 and of Punjab Haryana High Court in the case of CIT vs Pivet Finance Ltd. 192 Taxman 21 also provide support to the appellant on this point. As mentioned earlier, the loss under consideration has arisen on account of sale of shares at market value and the transactions were duly supported by documentary evidence, which has to be treated as genuine transaction. Considering this, the loss cannot be disallowed by making a vague assertion that this was a colourable device. The disallowance of long term capital loss of ₹ 8, 00, 31, 083/- is accordingly deleted. 11. The learned DR strongly relied on the order of the Assessing Officer in support of the revenue s case on this issue and contended that the transactions entered into by the assessee company for sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting to ₹ 8, 00, 31, 083/- was claimed as a long term capital loss. The AO however treated the said transactions as a colorable devise adopted by the assessee to reduce its tax burden inter alia on the ground that the shares sold by the assessee company had not been delivered till 31.03.2009. As submitted on behalf of the assessee company before the Ld. CIT(A) as well as before us, the shares were sold on 31.03.2009 itself and the instructions were also issued by the assessee company on 31st March, 2009 itself to the depository participant to deliver the said shares to the D-mat account of the buyer companies. The assessee company had also duly complied with all the statutory provisions of law relating to the sale of the said shares and even the information of the same was given to the regulatory authority i.e. SEBI in terms of Regulation 7(1A) of SEBI (substantial acquisition of shares and take over) Regulations 1997. The shares so sold were held by the assessee company for a long term and genuineness of the sale of the said shares involving legal transactions was never doubted by the A.O.. He however treated the said transactions as a colorable devise mainly because it r ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
