DCIT Vs Harsha Rajeshbhai Jhaveri (ITAT Ahmedabad)
ICDS Cannot Ignore a Demerger: ₹4.30 Crore Stock Valuation Addition Deleted
Adjusted Cost Must Reflect the Corporate Restructuring
The Ahmedabad Tribunal has upheld deletion of a ₹4.30 crore addition for alleged undervaluation of unlisted shares held as stock-in-trade, holding that the Assessing Officer had failed to account for an NCLT-approved demerger.
The Revenue insisted upon retaining the original acquisition cost by invoking ICDS VIII. The Tribunal, however, accepted that part of the original cost had shifted to securities received pursuant to the restructuring. The retained holding therefore required an adjusted cost, rather than mechanical continuation of the pre-demerger figure.
The Tribunal also upheld deletion of two additions relating to share-trading transactions and dismissed the Revenue’s appeal.
Reopening Based on Alleged Accommodation Entries
The assessee was a resident individual engaged in share trading and investment activities.
Reassessment proceedings arose from Investigation Wing information alleging that syndicates and entry operators provided accommodation entries and fictitious profits or losses in securities trading.
The information referred to transactions in Kushal Ltd. and Padmanabh Industries Ltd., together with an alleged ₹90 lakh accommodation loan transaction involving Shri Jignesh Shah.
The assessee denied having entered into any such loan transaction. She explained that the ₹90 lakh figure represented the aggregate purchase and sale turnover of Padmanabh Industries shares on the recognised stock exchange.
