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TMI Blog2024 (7) TMI 992X X X X Extracts X X X X X X X X Extracts X X X X ..... ing motive supposedly resulting in some economic detriment or prejudice to the national interests. Assessee tried to turn the share seller company into good performance company. The directors experience and understanding of the market also tried to be exploited. But the attempt did not gain the desired result. There is nothing illegal or illogical. The purchase of shares cannot be taken as devoid of any business acumens. The purchase of shares of loss making company and becoming the Board member of the company cannot be termed as mere attempt to purchase loss. Considering the facts and circumstances of the case, we are of the view that the addition made by AO and sustained by the CIT(A) is unjustified and deserves to be deleted. Special provision considers fair market value as full value of consideration for transfer of unquoted shares has been brought into effect from assessment year 2018-19 u/s 50CA. This section specifically provides that where consideration for transfer of unquoted shares is less than fair market value of such share determined in accordance with the prescribed manner, the fair market value shall be deemed to be the full value of consideration for the purpose of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to the family members and/or existing shares holders for a consideration of Rs. 42 lacs. The assessee was required to explain as to why the shares were sold out on loss within the short span of period. A copy of the balance sheet of M/s. Dayal Energy and Proteins Ltd., as on 31/03/2009 and 31/03/2010 was also obtained and placed on the records. It is seen therefrom that there was a surplus in the Profit Loss account of Rs. 31,900/- as at 31/03/2009 and Rs. 12,35,230/- as at 31/03/2010. The balance sheet did not indicate any other negative factors for reduction in the value/price of the shares of this company computed on break up method being a closely held company. The assessee was also further required to explain as to why the loss should not be disallowed in as much as the shares were transferred to the family members and/or existing shareholders of the group and not to any outsider. In this regard, the assessee filed the explanation vide letter dt. 01/11/2012. . 5. Being aggrieved, the matter was carried to CIT (Appeals). The assessee has made a detailed submission before the CIT(A) as contained in paras 4.1 and 4.2 of the CIT(A) s order. On the other hand, the CIT(A) was not co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ound entirely absent. Any person, who would invest money or give loan, would certainly seek return or income as consideration which is not found in existence in the instant case. These are undoubtedly relevant and material facts to ascertain the genuineness of alleged share capital transactions. All these facts show that alleged share transactions are not genuine. There has been surrounding evidence and material manifesting and revealing involvement of the appellant in the transactions which has not been found entirely arm s length transactions. It would be incorrect to state that the onus to prove genuineness of the transaction stands discharged in all cases if payments are routed through banking channels. Whether or not onus is discharged depends upon facts of each case. It depends upon whether the two parties are related or known to each; the manner and mode by which the parties approached each other, whether the transaction was entered into through written documentation to project the investment; whether the investor progresses and was an angle investor; the quantum of money, creditworthiness of the recipient, and object and purpose for which payments/investments was made etc. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isturb the full value of consideration of Rs. 42 lakh, which has attained the finality because the same was never doubted in the hands of the purchasers. He submitted that in view of the circumstantial evidences, the department has onerous power to disturb the value of consideration. But, he failed to point out the empowering provision in the Act. 10. We find that in the matter of Alok Ferro Alloys Ltd. (supra) , exactly similar issue was considered by the Hon ble Nagpur Bench, which held in unequivocal terms in Paras 11 to 14 as follows; 11. Considering the rival submissions, we are of the view that appeal by the assessee is to be allowed. Assessee is a company manufacturing ferro alloys. The shares purchased by the assessee are from the company which is in the field of chemical and engineering. Page 10 to 13 of the paper book is a letter by the assessee to the Assessing Officer, there is a specific mention in this letter that there was a discussion between B.R.Agrawal, director of Alok Ferro Alloys Ltd., Raipur and Shri D.Bhattacharya, director of M/s DHPL, Raipur. The discussions are recorded in writing on 10.04.1993, in which it was agreed on following terms:- [a] induction of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used as magic Mantras or catch all phrases to defect or nullify the effect of a legal situation and following para of Lord Atkin from Duke of Westminster's case (supra) was reproduced. I do not use the word device in any sinister sense: for it has to be recognized that the subject, whether poor and humble or wealth and noble, has the legal heirs right so to dispose of his capital and income as to attract upon himself the least amount of tax, the only function of a Court of law is to determine the legal result of his disposition so far as they affect tax. 14. It is seen from the record that the factum of purchases of shares is not disputed by A.O. The payment for purchases of shares is made by account payee cheques as is evident from the assessment order. The disallowance made by A.O. is for the reason that loss is suffered with a view to avoid taxation and same is not borne out of record. In the case of assessee the purchase of shares is made by making payment of full consideration at Rs. 7,00,000/- directly by issue of shares by company. The said shares have been sold to Shri Goverdhan Agrawal at Rs. 70,000/-. The company has suffered loss of Rs. 6,30,000/-. The transaction o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rchase of shares cannot be taken as devoid of any business acumens. The purchase of shares of loss making company and becoming the Board member of the company cannot be termed as mere attempt to purchase loss. Considering the facts and circumstances of the case, we are of the view that the addition made by AO and sustained by the CIT(A) at Rs. 6,30,000/- is unjustified and deserves to be deleted. We therefore direct to delete the addition made by AO at Rs. 6,30,000/- on account of disallowance of loss on sale of shares. Hence, this ground of appeal by the assessee is allowed. We respectfully follows the line of reasoning adopted by the Co-ordinate Bench. 11. Further, the special provision considers fair market value as full value of consideration for transfer of unquoted shares has been brought into effect from assessment year 2018-19 under Section 50CA of the I.T. Act, 1961. This section specifically provides that where consideration for transfer of unquoted shares is less than fair market value of such share determined in accordance with the prescribed manner, the fair market value shall be deemed to be the full value of consideration for the purpose of concluded income under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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