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THE HIGH COURT OF DELHI AT NEW DELHI
% Judgment delivered on: January 30, 2013
+ ITA 247/2010
COMMISSIONER OF INCOME TAX ... Appellant
versus
BHUSHAN CAPITAL & CREDITS SERVICES PVT LTD
... Respondent
Advocates who appeared in this case:
For the Appellant : Mr Abhishek Maratha, Advocate
For the Respondent : Mr Ajay Vohra, Advocate
CORAM:-
HON'BLE MR JUSTICE BADAR DURREZ AHMED
HON'BLE MR JUSTICE R.V.EASWAR
JUDGMENT
BADAR DURREZ AHMED, J (ORAL)
This appeal under Section 260A of the Income Tax Act, 1961 has been
preferred by the Revenue, being aggrieved by the order dated 19.06.2009
passed by the Income Tax Appellate Tribunal in ITA No. 967/DEL/2008
pertaining to the assessment year 2005-06. The issue that has been raised in this
appeal pertains to the initial disallowance by the Assessing Officer of
`73,19,800/- claimed by the respondent-assessee on account of loss incurred on
ITA No.247/2010 Page 1 of 4
the sale of 49850 shares held by the respondent-assessee in Rail Track India
Ltd. and 63000 shares of Evergrowing Iron & Finvest Ltd.
2. It so happened that in the year in question the respondent-assessee sold
three sets of shares as would be evident from the table given below:-
S.No. Name of the No. Of Cost price Sale price Difference
Scrip shares
1. Nageshwar 94,500 1,95,710/- 76,45,995/- +74,50,285/-
Investments
Ltd.
2. Rail Track 49,850 50,09,925/- 7,97,600/- (-)42,12,325/-
India Ltd.
3. Evergrowing 63,000 41,15,475/- 10,08,000/- (-)31,07,475/-
Iron &
Finvest Ltd.
Total 1,30,485/-
Profit
3. It is apparent from the aforesaid table that in so far as the shares
pertaining to Nageshwar Investments Ltd. are concerned, the profit of
`74,50,285/- was realized whereas the sales of other two sets of shares of Rail
Track India Ltd. and Evergrowing Iron & Finvest Ltd. resulted in losses. The
extent of the losses incurred in respect of the sale of shares pertaining to Rail
Track India Ltd. and Evergrowing Iron & Finvest Ltd. was `73,19,800/-. The
Assessing Officer made the said addition on the purported reason that the
transaction did not appear to be of a commercial nature and that the
respondent-assessee had merely incurred losses to set off the profits that the
assessee realized in respect of the sale of shares of Nageshwar Investments Ltd.
ITA No.247/2010 Page 2 of 4
It was noticed by the Assessing Officer that the shares of Rail Track India Ltd.
had been purchased by the assessee at the price of `100.53 per share and the
shares of Evergrowing Iron & Finvest Ltd. have been purchased at `65.33 per
share. They were however sold at `16 each and it is because of this that there
was a loss of `73,19,800/-. The Assessing Officer as well as the Commissioner
of Income Tax (Appeals) doubted the values of these shares both, at the time of
purchase as well as at the time of sale.
4. Being aggrieved by the addition made by the Assessing Officer and the
addition being confirmed by the Commissioner of Income Tax (Appeals), the
assessee preferred the said appeal, being ITA No. 967/DEL/2008, before the
Tribunal which has allowed the respondent's said appeal. The Tribunal
observed that the transaction of purchase as well as sale of the shares of Rail
Track India Ltd and Evergrowing Iron & Finvest Ltd. were both done on the
basis of networth of the shares as would be evident from the workings given by
the assessee before the Assessing Officer as also before the Tribunal. The said
shares were not quoted shares and that the valuation of the shares both at the
time of purchase as well as at the time of sale of the said shares was on the
networth basis which has not been challenged by the Assessing Officer or the
CIT (Appeals). It is only that both these authorities have only raised certain
doubts as to why such a loss was incurred. However, they have not been able
to produce any evidence to dispel the credibility of the prices, as indicated by
ITA No.247/2010 Page 3 of 4
the respondent-assessee. When there is no evidence to upset the purchase and
sale prices of the said shares, the prices arrived at on the basis of networth of
the said companies, as provided by the assessee, would have to be accepted. If
that were to be done then the addition could not be made as the transactions
would be in order. There is also no finding that the transactions were not
legitimate or that the transactions were sham.
5. For the foregoing reasons, we find that no question of law arises for our
consideration as the Tribunal has arrived at the correct conclusion on the basis
of material on record. The appeal is dismissed.
BADAR DURREZ AHMED, J
R.V.EASWAR, J
JANUARY 30, 2013
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ITA No.247/2010 Page 4 of 4
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