Case Law Details
ACIT Vs M/s. R J Corp. Ltd. (ITAT Delhi)
The A. O. has made a observation that the short term capital loss has been incurred on share of group companies and such shares have also been sold to group companies in such a manner that the entire shareholding of the investee company remains with the promoters and at the same time loss has been incurred in the books of the appellant company which has been offset against profit made on the sale of shares of M/s. Krizm Hotels Pvt. Ltd.
No discrepancy has been found in the transaction of purchase and sale of shares undertaken by the appellant company. Merely because the purchase and sale of shares have been made in the same financial year does not vitiate the genuineness of the transaction undertaken on the basis of commercial parameters and it cannot be said that there was an attempt to evade taxes.
It is not justified for the AO to conclude that merely because the shares under consideration have been sold by the appellant company to a group entity or that the shares under consideration belong to a group entity or that the purchase and sale of shares have been undertaken in the same financial year does not vitiate the genuineness of the transaction.
The A.O. in the assessment order has concluded that the appellant company has failed to give any scientific reason for the investment in these companies and also the certain desire to sell these investments at a very low price to other entities of the group. In this regard the appellant company has mentioned that the investment decisions in a business are purely governed by the commercial and market considerations. The AR has also mentioned that the AO cannot sit in the chair of businessman and dictate as to how the business is to be transacted. Relying on the order of the Hon’ble Supreme Court in the case of S.A. Builders Ltd. Vs. CIT reported in 288 ITR 1 and Hon’ble Delhi High Court in the case of CIT vs. Dalmia Cement (B) Ltd. 254 ITR 377, I hold that it is for the businessman to take such business decisions as are prudent for his business and the revenue cannot put itself in the armchair of the businessman or in the position of the Board of Directors.
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