PCIT Vs Zulu Merchandise Private Limited (Calcutta High Court)
Calcutta High Court held that merely because share transactions were done through stock exchanges it doesn’t make the transactions genuine. Accordingly, bogus capital loss claim rejected and appeal of revenue allowed.
Facts- The assesseee is a non banking financial company (NBFC) engaged in money lending and trading of shares and securities. Upon analysis of the entire data, the assessing officer held that there is no genuine business activity in the company, the thin trading volume, the low net profit, the low EPS, and meagre income are some characteristics of these types of stocks and these facts in no way commensurate with the steep rise and fall in the price of stock.
Further, AO on analysis of the facts found that the purchase of the shares of companies is done considering the future prospects of the companies and goodwill in the market which was conspicuously absent in respect of the two companies where the assessee traded in shares. Accordingly, the loss reported in the stock trading of Rs. 51,33,870/- in the two companies was disallowed and added back to the total income of the assessee.
CIT(A) dismissed the appeal. Tribunal allowed the appeal of the assessee. Being aggrieved, revenue has preferred the present appeal.
