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Assistant Commissioner Of Income-Tax vs Turner Morrison And Co. Ltd. on 26 July, 1993 cites

M.V. Valliappan And Ors. vs Income-Tax Officer And Ors. on 13 January, 1988

The shares in any case would have to be sold only at a loss; that the assessee chose this particular year, that too towards the close of the accounting year which was the calendar year, does not automatically lead to the conclusion that the loss should be disallowed and should not be set off against the long-term capital gains. For one thing, as stated earlier, the transaction is a genuine transaction and nothing has been said against it. No facts have been brought on record to impeach the genuineness of the sale of shares. If so much is granted, there is nothing to prevent the assessee from selling the shares in order to reduce the tax liability in respect of the capital gains. The doctrine laid down in McDowell does not apply to the cases like the present one in M.V. Valliappan v. ITO [1988] 170 ITR 238, the Madras High Court held that a legitimate transaction which does not amount to a dubious device is not hit even by the new approach adopted by the Supreme Court in McDowell & Co. Ltd. 's case (supra). In that case a partial partition effected by the assessee was not recognised on the ground that under Section 171(9) of the Act, any partial partition effected after 31-12-1978 cannot be recognised by the ITO. The provisions of Section 171(9) were challenged as being violative of Article 14 of the Constitution of India.
Madras High Court Cites 61 - Cited by 91 - Full Document

Union Of India & Ors vs Playworld Electronics Pvt. Ltd. & Anr on 2 May, 1989

In Union of India v. Playworld Electronics (P.) Ltd. [1990] 184 ITR 308 the Supreme Court has held that tax planning may be legitimate provided it is within the frame work of the law. In the present case it can hardly be suggested that the assessee cannot take advantage of the provisions of the Income-tax Act to claim set off of the capital loss against the capital gain. The department would have to go to the extent of proving the sale of shares as a sham transaction if it were to so suggest. But that is not the case here and as stated earlier no evidence has been let in to show that the sale of the shares was not genuine or was a collusive transaction. Thus the transaction is genuine and is also within the frame work of law but it results in a tax advantage to the assessee. In such circumstances the tax advantage cannot be stated to the result of a dubious device.
Supreme Court of India Cites 13 - Cited by 72 - S Mukharji - Full Document
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