Digitallyincome Tax Appeal v. Asara Sales And Investment Pvt. Ltd

IN THE HIGH COURT OF JUDICATURE AT BOMBAYORDINARY ORIGINAL CIVIL JURISDICTION DigitallyINCOME TAX APPEAL NO. 2 OF 2018signed bySHRADDHASHRADDHAKAMLESHKAMLESHTALEKARTALEKARDate:The Pr. Commissioner of Income Tax-1,2022.02.1710:05:48Pune+0530 ...Appellant vs. Asara Sales and Investment Pvt. Ltd....Respondent Mr.Sham V. Walve for appellant. Mr.Mihir Naniwadekar a/w. Mr.Rohan Deshpande, Mr.Suyog Bhave i/b Ms.Farzeen Khambatta for respondent. P.C.: CORAM :K.R. SHRIRAM &N. J. JAMADAR, JJ.DATE : 16 FEBRUARY, 2022 1.The following questions of law are proposed by appellant : (A) Whether the sale of listed shares of a groupconcern in off market mode was not a device only tocircumvent the provisions of section 10(38) of theIncome Tax Act, 1961 and to set off the resultant longterm capital loss against the long term capital gainsarising from sale of unlisted shares on the same day? (B) Whether the claim of assessee to adopt offmarket sale of shares to save a meager STT ofRs.2,20 Lakh can be allowed especially when therewas a dubious intention to offset the capital gainsagainst the capital loss? (C) Whether there is such intention of thelegislature to allow sale of shares through stockexchange in case of gain to claim beneft of exemptionu/s. 10(38) but in case of losses; allow it to be soldthrough off market and pave the way for revenueleakages? 2.Respondent had sold certain shares of two companies in offmarket transaction to its subsidiary. In the sale of one, there wasa gain. In the sale of other, there was a loss. Respondent set offthe proft against the loss. The Assessing Offcer’s conclusion was,this was a colourable device to avoid capital gains tax. 3.We have heard the counsel for the parties and consideredthe orders passed by the Assessing Offcer, Commissioner ofIncome Tax (Appeals) and Income Tax Appellate Tribunal, Mumbai(‘ITAT’). 4.The ITAT has, after taking into consideration all facts andcircumstances, accepted respondent’s explanation for selling theshares to its subsidiary off market transaction. One primary pointthat impressed the ITAT in the case of respondent is that therewas nothing contrary to provisions of law in the sale byrespondent. We are in agreement with the conclusions arrived atby the ITAT. 5.In our view, the ITAT has not committed any perversity orapplied incorrect principles to the given facts and when the factsand circumstances are properly analysed and correct test isapplied to decide the issue at hand, then, we do not think thatquestion, as pressed, raises any substantial question of law. 6.The appeal is devoid of merit and is dismissed with no order as to costs. (N. J. JAMADAR, J.) (K.R. SHRIRAM, J.)