Narain Properties Limited Vs ACIT (ITAT Lucknow)
Share Trading Loss Held Speculative and Bogus — No Set-off Against Interest Income; Assessee’s Appeal Dismissed
The Lucknow Bench of the ITAT dismissed the appeal of Narain Properties Ltd. and upheld the order of the CIT(A) confirming the disallowance of share trading loss of ₹11.03 lakh, holding that the alleged purchase and sale of shares were not genuine and lacked proof of actual delivery.
The Assessing Officer had treated the loss as speculation loss under Sections 43(5) and 73, noting abnormal features such as delayed accounting entries, payments to the broker made several months after purchase and even after sale, and absence of convincing evidence of delivery of shares. The CIT(A) concluded that the entire arrangement was a colourable device to book fictitious loss.
Before the ITAT, the assessee relied on contract notes, bank statements, and earlier favourable High Court rulings in its own case. However, the Tribunal found that:
- Distinctive numbers of shares were handwritten and unauthenticated on contract notes, undermining credibility;
- Payment patterns were commercially implausible in genuine share transactions;
- The assessee failed to conclusively establish actual delivery and genuineness of transactions.
The ITAT held that the earlier High Court decisions relied upon by the assessee dealt mainly with Section 73 issues, whereas the present dispute involved genuineness and delivery under Section 43(5). Concluding that the CIT(A)’s findings were justified and based on facts, the Tribunal confirmed the disallowance and dismissed the appeal.
FULL TEXT OF THE ORDER OF ITAT LUCKNOW
This appeal vide I.T.A. No.354/Lkw/2010 has been filed by the assessee for Assessment Year 2016-17 against impugned appellate order dated 15/03/2010 (Appeal No. CIT(A)-II/195/ACIT-6/2009-10 of Commissioner of Income Tax (Appeals) II, Kanpur [“CIT(A)” for short].
