Case Law Details
JCIT (OSD) Vs Public Employees Retirement System of Ohio (ITAT Mumbai)
ITAT held that addition of loss from traded in penny stock not justified if no information about engagement of assessee in manipulative activities and details of purchase/sales of shares submitted by him was not doubted.
The assessee is a statutory authority in the state of Ohio, United States of America and is a tax resident of USA. It is engaged in providing retirement benefit to certain public employees of that state. It is also registered with SEBI as a foreign portfolio investor and is regularly investing in Indian market earning capital gain, dividend and interest income. During the year, the assessee incurred a loss of ₹6,66,454/- in the shares of Kailash Auto Finance Limited which is flagged as penny stock by the Revenue authorities and therefore, the above loss was disallowed.
Assessee submitted all the details of purchases and sales in the above script, such as the purchase and sale bills of the registered brokers as well as the demat statement of National Securities and Depository Limited. The transactions in the above shares were made through stock exchange and further, the learned Assessing Officer made the addition only because of the reason that assessee traded in the shares of Kailash Auto Finance Limited which has been classified as a penny stock. Neither the information is available that assessee has engaged into any manipulative activities with respect to the purchase and sale of above shares and further the complete details was filed before the learned Assessing Officer was not at all doubted. Therefore, we do not find any reason to state that the short term capital loss by the assessee is not genuine.
FULL TEXT OF THE ORDER OF ITAT MUMBAI
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