RAJASEHAR BUVANESWARI,PERAMBALUR vs. ITO, WARD 1, PERAMBALUR, PERAMBALUR

ITA 3332/CHNY/2025Status: DisposedITAT Chennai22 May 2026AY 2020-2112 pages
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What were the facts?

The assessee acquired shares of a distressed company through an NCLT-supervised auction at Rs. 3.59 per share. Subsequently, the assessee sold some shares at Rs. 2.40 per share, declaring a short-term capital loss. The Assessing Officer (AO) invoked Section 50CA, deeming the fair market value at Rs. 104.917 per share based on a mechanical application of Rule 11UA, ignoring the company's liquidation status.

What did the Tribunal hold?

The Tribunal held that the AO mechanically applied Rule 11UA by not excluding unrealizable assets from the valuation. It further held that the fair market value should be based on the NCLT-supervised auction price of Rs. 3.59 per share, as it reflects the commercial reality of the distressed sale.

What were the issues?

Whether the AO erred in mechanically applying Rule 11UA for fair market value determination without considering the company's liquidation and unrealizable assets. Whether Section 50CA can be invoked to tax hypothetical gains disconnected from commercial realities.

Which sections of the Income-tax Act were involved?

Section 50CA

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Income Tax Appellate Tribunal, ‘A’ BENCH, CHENNAI

Before: SHRI GEORGE GEORGE K & SHRI S.R. RAGHUNATHA

Hearing: 06.05.2026Pronounced: 22.05.2026

PER S. R. RAGHUNATHA, AM : The present appeal is filed by the assessee against the order dated 17.09.2025 passed by the learned Commissioner of Income Tax (Appeals) Delhi, National Faceless Appeal Centre (hereinafter referred to as “ld.CIT(A)”), dismissing the appeal filed by the assessee against the assessment order dated 08.03.2025 passed u/s.147 r.w.s. 144/144B of the Income Tax Act, 1961

:-2-: ITA. No: 3332/Chny/2025 (hereinafter re

The order continues below.

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