M/S MERCANTILE VENTURES LIMITED,CHENNAI vs. ACIT, CORPORATE CIRCLE-4(1), CHENNAI

ITA 623/CHNY/2022Status: DisposedITAT Chennai14 February 2024AY 2017-18Bench: SHRI V. DURGA RAO, HON’BLE (Judicial Member), SHRI MANJUNATHA. G, HON’BLE (Accountant Member)14 pages
AI SummaryDismissed

What did the Tribunal hold?

The Tribunal held that the assessment order was erroneous and prejudicial to the interest of the revenue. It found that the transaction appeared to be a structured arrangement to derive undue benefit of short-term capital loss, as the fair market value of the shares at the time of allotment was significantly lower than the face value.

What were the facts?

The assessee converted unsecured loans advanced to eight financially distressed companies into equity shares at face value. Subsequently, the assessee sold these shares at a lower fair market value, resulting in a claimed short-term capital loss. The PCIT revised the Assessing Officer's order, deeming the transaction prejudicial to revenue.

What were the issues?

Whether the revision order passed by the PCIT under Section 263 was justified, and whether the short-term capital loss claimed by the assessee was genuine or a result of a collusive transaction.

Which sections of the Income-tax Act were involved?

Section 263,Section 143(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, ‘B’ BENCH: CHENNAI

Before: SHRI V. DURGA RAO, HON’BLE & SHRI MANJUNATHA. G, HON’BLE

Hearing: 02.01.2024

PER MANJUNATHA.G, AM:

This appeal filed by the assessee is directed against the order of the Principal Commissioner of Income Tax, Chennai, dated 31.03.2022, and pertains to assessment year 2017-18. 2. The assessee has raised the following grounds of appeal:

A. The order passed by the PCIT under Sec.263 of the I.T. Act revising the well considered order of the Assessing Officer is wrong, contrary to la

The order continues below.

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