Gujarat High Court
Principal Commissioner Of Income Tax vs Deepakbhai N. Parikh....Opponent(S) on 14 August, 2017
Author: Akil Kureshi
Bench: Akil Kureshi, Biren Vaishnav
O/TAXAP/591/2017 ORDER
IN THE HIGH COURT OF GUJARAT AT AHMEDABAD
TAX APPEAL NO. 591 of 2017
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PRINCIPAL COMMISSIONER OF INCOME TAX....Appellant(s)
Versus
DEEPAKBHAI N. PARIKH....Opponent(s)
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Appearance:
MRS MAUNA M BHATT, ADVOCATE for the Appellant(s) No. 1
MRS SWATI SOPARKAR, ADVOCATE for the Opponent(s) No. 1
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CORAM: HONOURABLE MR.JUSTICE AKIL KURESHI
and
HONOURABLE MR.JUSTICE BIREN VAISHNAV
Date : 14/08/2017
ORAL ORDER
(PER : HONOURABLE MR.JUSTICE AKIL KURESHI)
1. The Revenue is in appeal against the judgment of the Income Tax Appellate Tribunal dated 7.11.2016 raising the following question for our consideration :
"Whether the ITAT has erred in law and on facts in confirming the order of CIT(A) deleting the addition of Rs.3,85,28,505/ made by the Assessing Officer on account of long term capital loss on sale of shares of M.H. Mills and Inds. Ltd. without appreciating the fact that a wrong claim made by the assessee in return, which had not been subjected to scrutiny would not enable the assessee to perpetuate the wrong claim in subsequent years?"
2. Brief facts are that for the assessment year 20082009, the Page 1 of 3 HC-NIC Page 1 of 3 Created On Tue Aug 15 00:10:28 IST 2017 O/TAXAP/591/2017 ORDER respondent assessee had claimed long term capital loss in sale of shares of two companies namel,y M.H. Mills and Industries Ltd and M.H. Packaging Pvt. ltd. The assessee set off such loss against the long term capital gain earned in sale of immovable property. The Assessing Officer objected to the loss mainly on the grounds that the shares were sold offmarket though the companies were listed companies. The assessee had acquired the shares from relatives as gifts so that loss arising out of the sale of shares can be offset against the gain on sale of land. The assessee had thus chalked out a plan to evade tax.
3. The CIT(Appeals) having deleted the additions, the Revenue went into appeal before the Tribunal. The Tribunal by the impugned judgment confirmed the view holding that there was no dispute about the genuineness of the transactions or the sale price of the shares. That being the position, merely because the shares were sold during the same financial year when the land was also sold, by itself, would not mean that the assessee indulged in tax evasion device.
4. Having heard learned counsel for the parties and having perused the documents on record, we notice that though the shares were sold offmarket, the Assessing Officer also confirmed that the sale prices were the same as those prevailing in the listed market. Thus there was no element of doubt about the correctness of the sale price of the shares. The volume of shares acquired through gifts by relatives has not been brought on record. These being the facts we are in agreement with the view of the Tribunal that merely because the shares were sold during the said Page 2 of 3 HC-NIC Page 2 of 3 Created On Tue Aug 15 00:10:28 IST 2017 O/TAXAP/591/2017 ORDER period when the land was also sold, the former leading to long term capital loss and the later to long term capital gain, would not by itself establish colourable device to evade tax. As is held by this Court as well as by the Supreme Court on large number of occasions, commercial expediency and legitimate tax planning is always open to an assessee. The Revenue cannot question the timing of shares only because effect thereof would be to reduce the assessee's capital gain arising out of sale of immovable property.
5. In the result, tax appeal is dismissed.
(AKIL KURESHI, J.) (BIREN VAISHNAV, J.) raghu Page 3 of 3 HC-NIC Page 3 of 3 Created On Tue Aug 15 00:10:28 IST 2017