Escorts Ltd. Vs DCIT (ITAT Delhi)
Summary: The Delhi ITAT partly allowed the appeal filed by Escorts Ltd. against the order of the CIT(A)-II, Delhi dated 11.01.2010 arising from the assessment framed under section 143(3) for Assessment Year 2006-07. The Tribunal allowed the assessee’s claim of long-term capital loss arising from the sale of shares in Esconet Services Ltd. and Escosoft Technologies Ltd., holding that the shares of the unlisted companies could be transferred in physical form during the relevant period and that the date on which the sale consideration was received was not determinative of the date of transfer. The Tribunal noted that the Assessing Officer and CIT(A) had questioned the paltry consideration of Rs.40,000/- but had not evaluated the valuation in terms of the financial statements. It further noted the CIT(A)’s finding that the Assessing Officer had not been able to prove the transaction to be sham and that the AO had not made enquiries or investigations or presented evidence/material to establish that the transaction was bogus. The Tribunal therefore held that the assessee was within its legal right to dispose of its investments in accordance with law, including in the interest of business expediency and to reduce its tax liability, and allowed Ground 2.
