Chandra N. Hingorani Vs ITO (ITAT Mumbai)
Merely because the assessee had sold the shares at face value in a distressed situation it could not be presumed that the assessee had engineered the transaction to manage its tax liability. Therefore, AO was not justified in disallowing the claim of assessee for set off of long-term capital loss on sale of unquoted equity shares against long-term capital gain on the sale of property.
FULL TEXT OF THE ITAT JUDGMENT
This appeal by the Assessee is arising out of the order of Commissioner of Income Tax (Appeals)-32, Mumbai, [in short CIT(A)] in appeal No. CIT(A)-32/IT-74/23(1 )(3)/1 3-14 dated 18-02-2015. The Assessment was framed by the Income Tax Officer, Ward-19(3)-1, Mumbai (in short ITO) for the assessment year 2010-11 vide order dated 25-03-2013 under section 143(3) of the Income Tax Act, 1961 (hereinafter ‘the Act’).
2. The only issue in this appeal of assessee is against the order of CIT(A) confirming the disallowance of the claim of long term capital loss on account of sale of shares of VRKP Steel Ind. Pvt. Ltd. and Ankola Papers Mills Pvt. Ltd. For this assessee has raised following three grounds: –
“On the facts and in the circumstances of the case and in law the Learned Commissioner of Income-tax (Appeals) erred in confirming the addition of Rs. 122,88,426/- as Long Term Capital Gain in the hands of the appellant.
On the facts and in the circumstances of the case and in law the Learned Commissioner of Income-tax (Appeals) erred in confirming the rejection of the claim of loss made by the appellant made on account of the sale of the shares of VRKP Steel Ind. Pvt. Ltd. and Ankola Papers Mills Pvt. Ltd.
On the facts and in the circumstances of the case and in law the Learned Commissioner of Income-tax (Appeals) erred in rejecting the setoff of the Long Term Capital Loss claimed by the appellant against the Long-Term Capital gain on the sale of property upholding the disallowance made by the Assessing Officer on account of unquoted shares.”
3. Briefly stated facts are that during the course of assessment proceedings, the assessee officer noticed that the assessee has disclosed capital gain on sale of investment in properties at ₹ 1,43,09,331/- and against which the assessee disclosed loss on sale of short term investment in unquoted equity shares at ₹ 1,45,50,000/-. Thereby the assessee has claimed to set off of this capital gain against the capital loss arising from sale of investment in unquoted equity shares. The AO required the assessee to file the details of purchase and sale of unquoted equity shares and he furnished information in the following chart: –
