Anantula Vijay Mohan Vs DCIT (ITAT Bangalore)
ITAT Bangalore held that expansion of scope of limited scrutiny without obtaining required prior approval as directed under CBDT Order No. F.No.225/402/2018/ITA.II dated 28.11.2018 is bad-in-law and hence order of AO is liable to be quashed.
Facts- The Assessee is a Resident individual who was employed by SmartPlay Technologies India Pvt. Ltd. The Assessee also held shares in SmartPlay Global PCC [‘Smartplay’]. During the year, the Assessee sold his investment in SmartPlay. The short-term capital gains of Rs 75,73,97,892/- arose from such sale.
The assessee in the same previous year also purchased 87,000 shares of Bharat Electronics Limited amounting to Rs.29,69,98,853/-. Further on 14.09.2015, the BEL allotted 1,74,000 bonus shares to the Assessee. The Assessee sold 87,000 original shares for consideration of Rs. 9,45,84,420 on 16.09.2024 which resulted in short-term capital loss of Rs. 20,24,90,717/-. The said short-term capital loss was set off against short-term capital Gain arising from the sale of investment in SmartPlay and the net short-term capital gain of Rs. 55,49,07,175/- (Rs.75,73,97,892 – Rs.20,24,90,717/-) was offered to tax.
Thereafter, the case of the assessee was selected for scrutiny. After taking into consideration the submission of the assessee, the AO, while passing the assessment order and treated the transaction of purchase and sale of BEL shares as an adventure in the nature of trade. The main contention of the AO in his assessment order was that the assessee has made artificial arrangements to generate the capital loss and accordingly the claim of capital loss amounting to Rs.20,24,90,717/- was disallowed & business loss of Rs. 44,91,482 was determined which in the opinion of AO, the assessee can set off against capital gains from acquisition of SmartPlay start-up by Aricent.
