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Facts
The assessee company claimed a long-term capital loss of Rs. 5.98 Crores (later recomputed to Rs. 2.60 Crores by JAO) from selling shares of Shree Rama Newsprint Limited (SRNL) at Rs. 0.0035 per share, significantly below the BSE market price of Rs. 12.56. The Assessing Officer (AO) disallowed this loss, treating the transaction as a colorable device, and the CIT(A) partly upheld this by directing recomputation based on market price.
Held
The Tribunal found that the CIT(A) did not adequately examine the assessee's claim that the shares were sold at a negotiated price under pressure from a Joint Lenders' Forum, and failed to consider the applicability of SEBI regulations to such off-market bulk transactions. Therefore, the Tribunal set aside the CIT(A)'s order and remanded the case for fresh adjudication after a thorough examination of facts and the relevant legal framework, including a remand report from the AO.
Key Issues
Whether the long-term capital loss claimed on the sale of shares at a negligible price, significantly below market value, is genuine or a colorable device; and whether the 'full value of consideration' under Section 48 can be substituted by notional market value, especially for off-market negotiated bulk transactions under JLF pressure, considering SEBI regulations.
Sections Cited
Section 250 of Income Tax Act, 1961, Section 143(3) of Income Tax Act, 1961, Section 48 of Income Tax Act, 1961, Section 143(2) of Income Tax Act, 1961, Section 142(1) of Income Tax Act, 1961, Section 74 of Income Tax Act, 1961, Section 147 of Income Tax Act, 1961, Section 12B of 1922 Act, Section 12B(2) of 1922 Act, Sections 391 to 394 of Companies Act, 1956, Rule 46A of Income Tax Rules, 1962, Securities and Exchange Board of India Act, 1992
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Income Tax Appellate Tribunal, KOLKATA ‘B BENCH, KOLKATA
Before: SONJOY SARMA & SRI RAKESH MISHRA
order
: 29-May-2025 ORDER
PER RAKESH MISHRA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2016-17 dated Order pronounced in the open Court on 29th May, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 29.05.2025 Bidhan (P.S.)