Commissioner Of Income Tax vs Bhushan Capital & Credits ...
2013 Latest Caselaw 424 Del

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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

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.

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

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 mb