THE INCOME TAX OFFICER vs. SHRI ARVIND NAROTTAM (HUF)

PDF · subscribers

TAXAP/372/1999HC GujaratGJHC24025702199917 June 2008Author: HONOURABLE MR. JUSTICE D.A.MEHTA,HONOURABLE MR. JUSTICE H.B.ANTANI3 pages

AI SummaryDismissed

What did the High Court hold?

The High Court held that the Appellate Tribunal was correct in law and on facts in directing the allowance of the assessee's claim for capital loss of Rs. 80,000/-. The Court's decision was based on its own prior judgment in the case of Commissioner of Income Tax vs. Manini Niranjan (Income Tax Reference No. 239 of 1994), which dealt with a similar question and was answered in favour of the assessee. The Court also noted that it had previously admitted this appeal and directed it to be heard with another similar matter, and that a similar question in another case had been answered in favour of the assessee. The ITAT had followed its own order in Shri Shrenik Kasturbhai (HUF) to allow the claim. The operative direction was that the appeal stands dismissed.

What were the facts?

The Income Tax Officer disallowed a short-term capital loss of Rs. 80,000 claimed by the assessee, Shri Arvind Narottam (HUF), for Assessment Year(s) not specified. The disallowance was based on the purchase of 1600 shares of a closely held company at face value (Rs. 100 each) and their subsequent sale within a short period to a Family Trust at a reduced price (Rs. 50 per share). The Commissioner of Income Tax (Appeals) allowed the claim. The Revenue appealed to the Income Tax Appellate Tribunal (ITAT), which dismissed the Revenue's appeal, following its own precedent. The Revenue then filed an appeal before the High Court of Gujarat.

What were the issues?

1. Whether the Appellate Tribunal is right in law and on facts in directing to allow the claim of the assessee for capital loss of Rs. 80,000/- as genuine? (Question of law and fact, concerning the genuineness of a capital loss claim). Assessee's Contention: Not recorded in the judgment. Revenue's Contention: The Revenue contended that the capital loss of Rs. 80,000/- was not genuine, given the circumstances of purchasing shares at face value and selling them at a lower price to a Family Trust. The Revenue challenged the ITAT's decision to allow the claim. Authorities/Precedents Relied On: Revenue: Not recorded. Assessee: Not recorded.

AI-generated summary — verify with the full judgment below

Cause title — parties, addresses and appearances

TAXAP/372/1999 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 372 of 1999 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MR.JUSTICE H.B.ANTANI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= THE INCOME TAX OFFICER Versus SHRI ARVIND NAROTTAM (HUF) ========================================================= Appearance : MR MANISH R BHATT for Appellant. NOTICE UNSERVED for Opponent. ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE H.B.ANTANI Date : 17/06/2008 TAXAP/372/1999 2/3

JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE H.B.ANTANI) At the time of admission of the appeal, the following substantial question of law has been formulated by this Court: “Whether the Appellate Tribunal is right in law and on facts in directing to allow the claim of the assessee for capital loss of Rs.80,000/- as genuine.” On 9th August 2000, this Court admitted this appeal and directed it to be heard with I.T.R. No. 38 of 1998. Similar question was referred for the opinion of this Court and this Court [Coram: Y.R. Meena, Acting CJ. & A.S. Dave, J.] by order dated 28.11.2006 has answered the question in affirmative, i.e. in favour of the assessee and against the Revenue. This appeal, therefore, must also meet with the same fate. In the instant case, the Income Tax Officer has disallowed a short term capital loss of Rs.80,000/- on the ground that the assessee has purchased 1600 shares of a closely held Company at their face value of Rs.100/- each and sold it within a short span to a Family Trust at Rs.50/- per share. In appeal, the Commissioner of Income Tax, [Appeals] – I, Ahmedabad by order dated 27.07.93 directed the Assessing Officer to allow the claim of the appellant for capital loss of Rs.80,000/-. The Revenue carried the matter before the Income Tax Appellate Tribunal, Ahmedabad Bench. The Tribunal, following its TAXAP/372/1999 3/3 JUDGMENT own order dated 08.10.96 in the case of Shri Shrenik Kasturbhai [HUF] in ITA No. 5524/Ahd/1991 wherein similar capital loss of Rs.80,000/-. In the result, the appeal stands dismissed. [D.A.MEHTA, J.] mathew [H.B.ANTANI, J.]

Recent GST High Court judgments

Search GST case law →