Dy. Commissioner of Income Tax-4, Kanpur V. Shri Shailendra Mohan Gupta, Kanpur

ITA 400/LKW/2012

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 83432 (ITAT-LUCKNOW)
• Duration Of Justice: 2 year(s) 5 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 18-12-2014
• Appeal Filed By: Department
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 16-10-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 18-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: ALOK MITRA
• Assessee Lawyers: P K KAPOOR
• Keywords: Capital asset; Share purchase agreement; Corroborative evidences; Commercial expediency

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL LUCKNOW BENCH A, LUCKNOW BEFORE SHRI SUNIL KUMAR YADAV, JUDICIAL MEMBER AND SHRI. A. K. GARODIA, ACCOUNTANT MEMBER ITA NO.400/LKW/2012 ASSESSMENT YEAR:2008-09 DY. CIT-4 KANPUR V. SHRI. SHAILENDRA MOHAN GUPTA 7/51, TILAK NAGAR KANPUR TAN/PAN:ACZPG8335M (APPELLANT) (RESPONDENT) ITA NO.531/LKW/2012 ASSESSMENT YEAR:2008-09 DY. CIT-4 KANPUR V. SHRI. DEVENDRA MOHAN GUPTA 7/51, TILAK NAGAR KANPUR TAN/PAN:ACZPG8336J (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI. ALOK MITRA, D.R. RESPONDENT BY: SHRI. P. K. KAPOOR, C.A. DATE OF HEARING: 16 10 2014 DATE OF PRONOUNCEMENT: 18 12 2014 O R D E R PER SUNIL KUMAR YADAV: THESE APPEALS ARE PREFERRED BY THE ASSESSEES AGAINST THE RESPECTIVE ORDER OF THE LD. CIT(A) ON COMMON GROUNDS THAT THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN DELETING THE DISALLOWANCE OF SHORT TERM CAPITAL LOSS INSPITE OF THE FACT THAT THE SHARES WERE PURCHASED BY THE ASSESSEE ON AN EXTRANEOUS CONSIDERATION FOR THE BENEFIT OF PREFERENCE SHARE HOLDERS BEING THE ASSESSEE HIMSELF A PROMOTER DIRECTOR OF THE COMPANY, WHICH IS IN :- 2 -: VIOLATION OF SECTION 40A(2A)(B) OF THE INCOME-TAX ACT, 1961 (HEREINAFTER CALLED IN SHORT THE ACT'). 2. SINCE THESE APPEALS WERE HEARD TOGETHER, THESE ARE BEING DISPOSED OF THROUGH THIS CONSOLIDATED ORDER. 3. SINCE THE FACTS IN BOTH THE CASES ARE ALMOST SIMILAR AND THE DISALLOWANCE WAS MADE UNDER SIMILAR CIRCUMSTANCES, WE PREFER TO DISCUSS THE FACTS IN APPEAL NO.400/LKW/2012, ACCORDING TO WHICH THE ASSESSEE FILED ITS RETURN OF INCOME DECLARING THE INCOME OF RS.1,12,03,795/-, AGAINST WHICH A SHORT TERM CAPITAL LOSS AMOUNTING TO RS.7,85,92,860/- WAS CLAIMED ON TRANSFER OF CERTAIN SHARES WHICH WAS DISALLOWED BY THE ASSESSING OFFICER AND ASSESSED THE INCOME AT RS.1,12,03,795/- AFTER TREATING THE ENTIRE TRANSACTION OF SALE AND PURCHASE OF SHARES AS SHAM. WHILE DOING SO, THE ASSESSING OFFICER HAS MADE DETAILED ENQUIRY AND CLARIFICATION WITH REGARD TO THE PURCHASE OF SHARES AT HIGHER RATE I.E. @ RS.27/- PER SHARE ON 11.9.2007 AND ITS SALE ON 15.12.2007 @ RS.3.02 PER SHARE. FOR THE SAKE OF REFERENCE, WE EX TRACT THE RELEVANT PORTION OF THE ORDER OF THE ASSESSING OFFICER AS UNDER:- 4. FROM THE COMPUTATION OF INCOME FILED IN THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS NOTICED THAT ASSESSEE COMPANY HAD INTER-ALIA DISCLOSED SHORT TERM CAPITAL LOSS AMOUNTING TO RS.7,85,92,860/-. ACCORDINGLY, VIDE PARA-4 OF ORDER SHEET ENTRY DATED 09.11.2010 ASSESSEE WAS SPECIFICALLY REQUIRED TO FURNISH COMPLETE DETAILS PERTAINING TO THE LOSS SHOWN ON ACCOUNT OF SALES OF SHORT TERM CAPITAL ASSETS DISCLOSED IN THE COMPUTATION OF INCOME. HE WAS ALSO REQUIRED TO SUBSTANTIATE THE AFORESAID LOSS WITH NECESSARY SUPPORTING EVIDENCE. THE BASIS ADOPTED FOR HIGHLY DISCOUNTED SALES PRICE WAS ALSO REQUIRED TO BE JUSTIFIED WITH CREDIBLE SUPPORTING EVIDENCE PARTICULARLY IN VIEW OF THE FACT THAT THE SAID SHARES WERE PURCHASED AT FACE VALUE OF THE SHARES ONLY FEW DAYS BEFORE THE SAME WERE SOLD AND THAT THE TRANSACTION RESULTED IN SUBSTANTIAL SHORT TERM CAPITAL LOSS. THE WORKING OF ABOVE REFERRED SHORT TERM CAPITAL LOSS AS :- 3 -: APPEARING IN THE ANNEXURE-G OF WRITTEN SUBMISSION DT.21.07.2010 IS AS UNDER:- SHORT TERM CAPITAL GAIN SHAKUMBARI-5370000 SHARES SALE VALUE : RS.1,69,27,140/- LESS: PURCHASE VALUE 2460000 @ RS.27/-PER SHARE RS.66420000/- (11.09.2007) 1010000 @ RS.10/- PER SHARE RS.10100000/- (07.12.2007) 1900000 @ RS.10/-PER SHARE RS.19000000/- (12.12.2007) RS.9,55,20,000/- PROFIT/(LOSS) (RS.7,85,92,860) 4.1 A CAREFUL ANALYSIS OF THE ABOVE WORKING INDICATED THAT AFORESAID LOSS AMOUNTING TO RS.7,85,92,860/- ACCRUED TO ASSESSEE MAINLY ON ACCOUNT OF ACQUISITION OF AS MANY AS 5370000 SHARES OF M/S SHAKUMBARI SUGAR & ALLIED INDUSTRIES AT THEIR FACE VALUE OF RS.10/- PER SHARE WITHIN FEW DAYS BEFORE THE DATE OF THEIR SALES AT HIGHLY DISCOUNTED PRICE OF RS.3.02/- PER SHARE ON 15.12.2007 EXCEPT 2460000 SHARES PURCHASED ON 11.9.2007 @ RS.27/- PER SHARE. ACCORDINGLY, THE ASSESSEE VIDE PARA-4 OF THE ORDER SHEET ENTRY DT. 09.11.2010 WAS SPECIFICALLY REQUIRED TO CLARIFY THE ISSUE INCLUDING THE REASON FOR ACQUIRING THE SHARES AT A FACE PRICE AS ALSO ON SUBSTANTIALLY HIGHER PRICE THEN THE FACE VALUE (2460000 SHARES WERE PURCHASED @ RS.27/- PER SHARES ON 11.9.2007 AND WERE SOLD ON 15.12.2007 @ RS.3.02 PER SHARE) WITHIN IN THREE MONTHS BEFORE THEY WERE SOLD AT HIGHLY DISCOUNTED VALUE OF RS.3.02/- PER SHARES. THIS ASPECT WAS REQUIRED TO BE EXPLAINED WITH SUPPORTING EVIDENCE. FOR THE SAKE OF CLARITY THE RELEVANT PORTION OF THE ORDER SHEET ENTRY IS EXTRACTED HEREUNDER:- 'LONG TERM & SHORT TERM CAPITAL LOSS ON SALES OF SHARES OF M/S. SHAKUMBARI SUGAR & ALLIED INDUSTRIES LTD. HAVE BEEN DISCLOSED. THE GENUINENESS OF THE LOSS CLAIMED BE SUBSTANTIATED WITH NECESSARY SUPPORTING EVIDENCE. THE BASIS OF ADOPTING THE SALE :- 4 -: PRICE OF THE SHARE BE JUSTIFIED WITH CREDIBLE EVIDENCE. IT MAY ALSO BE EXPLAINED AS TO WHY THE SHARES OF SAID COMPANY WHICH WERE PURCHASED AT THE FACE VALUE JUST ONLY FEW DAYS BEFORE THE SAME WERE SOLD AT HIGHLY DISCOUNTED PRICE AND TRANSACTION RESULTED IN THE SUBSTANTIAL LONG TERM & SHORT TERM LOSSES. ' 4.2 IN RESPONSE THE ASSESSEE VIDE WRITTEN SUBMISSION DT. 16.11.2010 AND 29.11.2010 MADE FOLLOWING SUBMISSIONS:- 'THE SHARES WERE ACQUIRED A FEW DAYS BEFORE THE SAME WERE SOLD BY SUBSCRIBING TO THE FRESH ISSUE OF CAPITAL BY THE COMPANY AND IF THESE WERE NOT SUBSCRIBED, THERE WOULD HAVE BEEN A DILUTION OF MY HOLDING IN THE COMPANY RESULTING IN FURTHER DEPLETION IN VALUE OF MY STAKE. THE REASON FOR FRESH ISSUE OF CAPITAL AS COMMUNICATED BY THE COMPANY WAS NECESSITATED BY NEED TO REDEEM THE PREFERENCE SHARES WHICH UNDER LAW CAN BE REDEEMED EITHER OUT OF THE PROCEEDS OF THE FRESH ISSUE OF CAPITAL OR OUT OF THE PROFITS. SINCE /HE COMPANY HAD HUGE ACCUMULATED LOSSES, THE COMPANY DID NOT HAVE ANY OPTION BUT TO RAISE THE CAPITAL. IT MAY ALSO BE NOTED THAT THE COMPANY BEING A CLOSELY HELD COMPANY AND HAVING HUGE ACCUMULATED LOSSES OF AROUND RS.28 CRORES AS AT 31.10.2010 COULD NOT HAVE RAISED THIS CAPITAL FROM ANYONE ELSE THAN THE EXISTING SHAREHOLDERS. 4.3 FURTHER, VIDE PARA-3 OF THE WRITTEN SUBMISSION DT. 29.11.2010, THE ASSESSEE ALSO MADE FOLLOWING SUBMISSIONS:- 'IN CONTINUATION OF OUR SUBMISSIONS DATED J8LH NOVEMBER 2010, WE BEG TO STATE THAT THE TOTAL UNSECURED LOANS AND PREFERENCE SHARE CAPITAL RAISED FROM PROMOTERS AGGREGATED RS. 22.92 CRORES AS AT 31 ST OCTOBER 2007 (I.E.RS.13.42 CRORES UNSECURED LOANS + RS.9.50 CRORS PREFERENCE SHARE) VIDE-AUDITED BALANCE SHEET AS AT THAT DATE (COPY OF BALANCE SHEET AS AT 31.10.2007 ENCLOSED HEREWITH FOR YOUR HONOR'S READY REFERENCE). AS SUBMITTED AND EXPLAINED, IN ORDER TO REDEEM THE PREFERENCE SHARES AND REPAY THE UNSECURED LOANS, EQUITY CAPITAL OF RS.23 CRORES WAS RAISED IN TERMS OF UNDERSTANDING WITH THE PURCHASER. YOUR :- 5 -: HONOR'S ATTENTION IS INVITED TO ANNEXURE 3 TO THE AGREEMENT WHICH CLEARLY SHOWS THE ENTERPRISE VALUE AND EQUITY VALUE OF THE COMPANY AS AT 31 ST OCTOBER 2007 BEING THE DATE CONSIDERED FOR VALUATION AND TRANSACTION. IN THE SAID ANNEXURE, YOU WOULD NOTICE THAT THESE UNSECURED LOANS AND PREFERENCE SHARES HAVE NOT BEEN DEDUCTED FROM THE ENTERPRISE VALUE TO ARRIVE AT THE EQUITY VALUE OR PURCHASE PRICE OF 100% EQUITY SHARES BECAUSE BEFORE THE SALE OF SHARES WE WERE OBLIGATED TO REDEEM THE PREFERENCE SHARES AND UNSECURED LOANS BY RAISING EQUITY CAPITAL AS IN NO OTHER WAY THE NON-REFUNDABLE FUNDS COULD HAVE BEEN BROUGHT IN THE COMPANY TO COMPLY WITH THE CONDITION PRECEDENT TO SALE OF SHARES. ' 4.4 THE SUBMISSIONS MADE BY THE ASSESSEE IN HIS REPLY DT.16.11.2010 AND 29.11.2010, THE RELEVANT PORTION FROM WHICH HAVE BEEN EXTRACTED HEREIN BEFORE, WERE CAREFULLY CONSIDERED AND AS A RESULT THEREOF THE FOLLOWING FACTUAL POSITION IN THE MATTER EMERGES I) THE ASSESSEE HAD ACQUIRED 5370000 SHARES OF M/S SHAKUMBARI SUGAR & ALLIED INDUSTRIES EFFACE VALUE OF RS.10/- AND ALSO AT THE PRICE WHICH WAS SUBSTANTIALLY HIGHER THEN THE FACE VALUE AS DETAILED UNDER. 2460000 @ RS.27/- PER SHARE RS.66420000/- 1010000 @ RS.10/- PER SHARE RS. 10100000/- 1900000 @ RS.10/- PER SHARE RS.19000000/- RS.9,55,20,000/- II) THE TOTAL HOLDING OF THE SHARES OF M/S SHAKUMBARI SUGAR & ALLIED INDUSTRIES WITH ASSESSEE AS ON 15.12.2007 (DATE OF SALE) WERE 5370000 SHARES VALUING RS.9,55,20,000/-. III) THE ENTIRE HOLDINGS OF SHARES AS MENTIONED AT (II) ABOVE WERE SOLD ON 15.12.2007 I.E. WITHIN THREE MONTHS AFTER THE DATE SAME WERE ACQUIRED AT THE RATE AS DETAILED ABOVE FOR RS.1,69,27,140/- @ RS.3.05/- PER SHARE AND THE TRANSACTION RESULTED IN SHORT TERM CAPITAL LOSS OF RS.7,85,72,319/-. THE REASON TENDERED BY THE ASSESSEE FOR ACQUIRING THE SHARES OF THE SAID M/S SHAKUMBARI :- 6 -: SUGAR & ALLIED INDUSTRIES IMMEDIATELY BEFORE THE SAME WERE SOLD WAS STATED TO BE THE FACT THAT THE ASSESSEE HAD TO SUBSCRIBE TO THE SHARES CAPITAL OF THE COMPANY IMMEDIATELY BEFORE THE DATE OF SALES OF SHARES BECAUSE THE COMPANY HAD TO REDEEM THE PREFERENCE SHARES AS ALSO HAD TO REPAY THE UNSECURED LOAN WHICH COULD BE POSSIBLE ONLY OUT OF THE ACCUMULATED PROFIT OF THE COMPANY IN THE SHAPE OF RESERVES AND SURPLUS OR BY RAISING THE SHARES CAPITAL. SINCE, COMPANY HAD HEAVY ACCUMULATED LOSSES, IT WAS SUBMITTED, THEREFORE THE ONLY OPTION AVAILABLE WITH THE SELLER WAS TO RAISE THE FUNDS THROUGH THE FRESH ISSUE. FURTHER, SINCE THE COMPANY WAS RUNNING INTO HEAVY LOSSES THEREFORE NO OUTSIDER WOULD HAVE SUBSCRIBED TO THE CAPITAL OF THE COMPANY THEREFORE THE SAME HAD TO BE SUBSCRIBED BY THE EXISTING SHARE HOLDERS INCLUDING THE ASSESSEE. AS REGARDS THE ADOPTION OF SALE PRICE OF SHARES @ RS.3.05/- PER SHARE, THE SAME WAS FIXED AS PER THE WORKING APPEARING IN THE SHARE PURCHASE AGREEMENT WITH THE PURCHASER. 4.5 FROM THE FACTS DISCUSSED HEREIN BEFORE IT IS ABSOLUTELY CLEAR THAT THE ASSESSEE WAS PROMPTED TO ACQUIRE THE SHARE OF SAID M/S SHAKUMBARI SUGAR & ALLIED INDUSTRIES LIMITED ONLY FEW DAYS BEFORE THE SAME WERE SOLD FOR EXTRANEOUS CONSIDERATIONS OF BENEFITING THE PREFERENCE SHARE HOLDERS OF THE COMPANY AS ALSO TO ENSURE THE PAYMENT OF LENDERS OF UNSECURED LOANS. IT IS ALSO SEEN FROM THE WRITTEN SUBMISSION DATED 06.12.2010 THAT THE PREFERENCE SHARE HOLDERS AND LENDERS OF UNSECURED LOAN WERE THE GROUP COMPANIES AND THE FAMILY MEMBERS OF THE ASSESSEER ACCORDINGLY IT IS MORE THAN CLEAR THAT THE SHARES WERE ACQUIRED AT THE FACE VALUE AND ALSO AT THE PRICE WHICH WAS SUBSTANTIALLY HIGH THEN THE FACE VALUE KNOWING FULLY WELL THAT THE MARKET VALUE OF THE SAME WAS MUCH BELOW THE PRICE AT WHICH THEY WERE PURCHASED ONLY TO EXTEND BENEFIT TO THE GROUP COMPANIES AND THE FAMILY MEMBERS OF THE ASSESSEE. FURTHER, IT WAS ALSO EQUALLY CLEAR THAT THE SHARES WERE ACQUIRED AT THE FACE VALUE KNOWING FULLY WELL THAT THE COMPANY WAS IN THE PROCESS OF SALE AS THE :- 7 -: ASSESSEE HAPPENED TO BE ONE OF THE PROMOTER DIRECTORS AND IN THAT CAPACITY WAS FULLY CONVERSANT AND IN THE KNOW OF THE DEVELOPMENTS RELATING TO TRANSFER OF MANAGEMENT WHICH WERE GOING AROUND. THESE FACTS ESTABLISHES BEYOND DOUBTS THAT THE TRANSACTION RELATING TO THE ACQUISITION AND SALES OF SHARES WHICH RESULTED IN THE HUGE SHORT TERM CAPITAL LOSS WAS NOT A NORMAL HUMAN TRANSACTION EXPECTED OF A NORMAL HUMAN BEING RATHER THE SAME WAS UNDER TAKEN TO BENEFIT THE OTHERS INCLUDING THE PREFERENCE SHARES HOLDER AND THE LENDER OF THE UNSECURED LOAN WHO WERE THE GROUP COMPANIES WITH WHICH THE ASSESSEE WAS ASSOCIATED INCLUDING THE FAMILY MEMBERS OF THE ASSESSEE. THIS IMPRESSION IS FURTHER STRENGTHENED FROM THE FACT THAT HAD THE TRANSACTION WHICH RESULTED INTO HUGE LOSSES BEEN A NORMAL TRANSACTION THE SHARES SHOULD HAVE BEEN ACQUIRED AT THEIR NORMAL MARKET VALUE I.E. RS.3.05/- PER SHARES AND BY DOING THIS THE ASSESSEE COULD HAVE DISCHARGED ITS LIABILITY OF SUBSCRIBING TO THE SHARE CAPITAL IN THE FRESH ISSUE OF THE COMPANY AND ALSO WOULD HAVE SAVED HIM FROM THE LOSS WHICH WAS IMMINENT AND WAS WELL WITHIN HIS KNOWLEDGE. ACCORDINGLY THE INCONTROVERTIBLE FACT WHICH EMERGES FROM THE ABOVE DISCUSSION IS THAT THE ASSESSEE HAD KNOWINGLY INCURRED THE LOSS AND THEREFORE THE TRANSACTION WAS ESSENTIALLY OF SHAM CHARACTER AND THEREFORE THE LOSS RESULTING FROM SUCH SHAM TRANSACTION IS OBVIOUSLY NOT ALLOWABLE AND THEREFORE WILL NOT BE ALLOWED. PENALTY PROCEEDINGS U/S 271(1) (C) ARE INITIATED SEPARATELY. 4. AGGRIEVED, THE ASSESSEE HAS PREFERRED AN APPEAL BEFORE THE LD. CIT(A) WITH THE SUBMISSION THAT THE ASSESSEE HAS FILED COPY OF ACCOUNT BEFORE THE ASSESSING OFFICER EVIDENCING THE SAID PAYMENT TOWARDS ACQUISITION OF SHARES AND THE SHARES WERE SOLD TO M/S INDIA GLYCOL LTD. AS PER AGREEMENT WHEREIN CONSIDERATION OF EACH SHARE OF THE COMPANY I.E. M/S SHAKUMBARI SUGAR AND ALLIED INDUSTRIES LIMITED (HEREINAFTER CALLED IN SHORT SSAIL') WAS FIXED AT RS.3.02 PER SHARE. IT WAS FURTHER CONTENDED BEFORE THE LD. CIT(A) THAT THE ASSESSING OFFICER HAS NOT DISBELIEVED THE DOCUMENTS PLACED ON RECORD. HE HAS SIMPLY DOUBTED THE TRANSACTIONS, SINCE THE SAME :- 8 -: HAD TAKEN PLACE AT A SHORT PERIOD OF TIME. THE FACT THAT THESE SHARES WERE SOLD AT MUCH LOWER RATE TO M/S INDIA GLYCOL LTD., CANNOT MAKE THE PURCHASE TRANSACTION AS BOGUS OR SHAM. BEING CONVINCED WITH THE EXPLANATIONS OF THE ASSESSEE, THE LD. CIT(A) HAS DELETED THE ADDITION AND DIRECTED THE ASSESSING OFFICER TO ALLOW CAPITAL LOSS AS COMPUTED TO BE CARRIED FORWARD FOR SET OF IN FUTURE AFTER TREATING THE TRANSACTION IN PURCHASE OF SHARES AS GENUINE. 5. AGGRIEVED, THE REVENUE HAS PREFERRED AN APPEAL BEFORE THE TRIBUNAL AND THE LD. D.R. HAS INVITED OUR ATTENTION TO THE ORDER OF THE TRIBUNAL IN THE CASE OF DY. CIT VS. SHRI. SANJAY GUPTA IN I.T.A. NO. 217/LKW/2012, COPY OF WHICH IS PLACED ON RECORD, WITH THE SUBMISSION THAT THIS COMPANY I.E. SSAIL WAS NOT A LISTED COMPANY AND SHARES OF THIS COMPANY WERE PURCHASED BY SANJAY GUPTA, SAMEER GUPTA, SANDEEP GUPTA AND YOGENDRA MOHAN GUPTA ALONG WITH THE ASSESSEE IN THE INSTANT CASE (SHAILENDRA MOHAN GUPTA) AT A HIGHER RATE AND WERE SOLD WITHIN A SHORT PERIOD OF TIME AT LESSER RATE. IN THE CASE OF YOGENDRA MOHAN GUPTA, THE SHARES WERE PURCHASED @ RS.10 PER SHARE ON 7.12.2007 AND THESE SHARES WERE SOLD AFTER 8 DAYS @ RS.3.15 PER SHARE. IN THAT CASE, THE TRIBUNAL IN PARA 5 OF HIS ORDER HAS OBSERVED THAT IT IS NOT UNDERSTANDABLE AS TO WHEN 19 LAKHS SHARES WERE ACQUIRED BY THE ASSESSEE ON 7.12.2007, HOW THE SHARES HELD IN SSAIL ON 15.12.2007 WAS ONLY 10.10 LAKHS SHARES. THE TRIBUNAL HAS ALSO HELD IN PARA 6 OF ITS ORDER THAT THE MARKET VALUE OF THESE SHARES SHOULD BE WORKED OUT ON THE BASIS OF NET ASSET VALUE OF THE COMPANY, SSAIL ON 7.12.2007 BY DIVIDING THE TOTAL NET ASSET VALUE ON THAT DATE BY THE TOTAL NUMBER OF SHARES OF THAT COMPANY BEFORE FURTHER ISSUE OF SHARES ON THAT DATE . THE TRIBUNAL HAS FURTHER OBSERVED THAT SALE OF SHARES ON 15.12.2007 SHOULD BE PRESUMED AT THE SAME PRICE, BECAUSE THE MARKET VALUE OF THE ASSET/SHARES OF THE COMPANY WILL REMAIN THE SAME, BECAUSE INCREASE IN SHARE CAPITAL WILL RESULT INTO DECREASE OF LIABILITY I.E. PREFERENCE SHARES, ACCUMULATED DIVIDEND AND OTHER BANK LOANS ETC. BY SAME AMOUNT AND AS A CONSEQUENCE THEREOF, THE :- 9 -: NEW SHARES TO BE ACQUIRED BY THE ASSESSEE ON 7.12.2007 WILL BE SOLD AT THE SAME PRICE AND IT WILL NOT RESULT INTO ANY SHORT TERM CAPITAL LOSS, BUT THE LONG TERM CAPITAL LOSS IN RESPECT OF SALE OF OLD SHARES WILL GO UP. IN THE LIGHT OF THE ORDER OF THE TRIBUNAL IN THE OTHER CASES UNDER SIMILAR CIRCUMSTANCES, AT LEAST THE MARKET VALUE OF THE SHARES AS ON 11.9.2007; 7.12.2007; 12.12.2007 AND 15.12.2007 BE WORKED OUT ON THE BASIS OF NET ASSET VALUE OF THE COMPANY I.E. SSAIL BY DIVIDING THE TOTAL NET ASSET OF THE VALUE ON THAT DATE BY TOTAL NUMBER OF SHARES ON THAT DATE IN ORDER TO WORK OUT THE ACTUAL SHORT TERM CAPITAL LOSS, AS THE COMPANY SHARES ARE NOT LISTED SHARES. 6. THE LD. D.R. HAS FURTHER INVITED OUR ATTENTION TO THE RESOLUTION OF THE BOARD OF SSAIL APPEARING AT PAGE 67 OF THE COMPILATION, WITH THE SUBMISSION THAT VIDE RESOLUTION DATED 7.12.2007, SSAIL HAS ALLOTTED 1900000 SHARES TO THE ASSESSEE, SHAILENDRA MOHAN GUPTA, BUT AS PER RECORD AND THE CONTENTIONS OF THE ASSESSEE, THESE SHARES WERE PURCHASED ONLY ON 12.12.2007. THEREFORE, BEFORE PURCHASE HOW THESE SHARES WERE ALLOTTED TO THE ASSESSEE. THESE FACTS REFLECT THAT THE TRANSACTION OF PURCHASE AND SALE OF SHARES IS A SHAM TRANSACTION AND IS ONLY MANAGED TO BOOK THE SHORT TERM CAPITAL LOSS IN THE HANDS OF THE ASSESSEE. 7. THE LD. COUNSEL FOR THE ASSESSEE, BESIDES PLACING RELIANCE UPON THE ORDER OF THE LD. CIT(A), HAS CONTENDED THAT THE ASSESSEE IS ONE OF THE PROMOTER DIRECTORS OF SSAIL, WHICH ALTHOUGH A PUBLIC LIMITED COMPANY, HAD BEEN A CLOSELY HELD COMPANY EVER SINCE ITS INCEPTION AS IS BORNE OUT FROM THE LIST OF SHAREHOLDERS. WHEN ALL EFFORTS TO REVIVE THE SALE HAD FAILED, ITS PROMOTERS ENTERED INTO SHARE PURCHASE AGREEMENT WITH M/S INDIA GLYCOL LTD. WHEREIN THEY REPRESENTED SHAREHOLDING OF 3,21,24,200 FULLY PAID UP EQUITY SHARES OF THE FACE VALUE OF RS.10/- EACH, UNDER WHICH THE BUYER HAD AGREED TO PAY A CONSIDERATION OF RS.10,85,37,000/- AS PER AGREEMENT. THE ASSESSEE HAS ALSO FILED WRITTEN SUBMISSIONS ADMITTING THEREIN THAT THERE IS NO DISPUTE UNDER THE HEAD LONG TERM CAPITAL GAIN; THE DISPUTE WAS ONLY WITH REGARD TO THE LOSS INCURRED BY THE ASSESSEE ON SALE OF 53,70,000 SHARES. IT :- 10 -: WAS ALSO CONTENDED THAT THERE WAS SOME MISTAKES IN THE WORKING OF THE SHORT TERM CAPITAL GAIN AND THE STATEMENT OF TOTAL INCOME THAT HAD BEEN SUBMITTED ALONG WITH THE RETURN OF INCOME. THE CORRECTED COMPUTATION OF SHORT TERM CAPITAL GAIN WAS SUBMITTED BEFORE THE LD. CIT(A). IT WAS FURTHER CONTENDED THAT THE CASE LAWS REFERRED BY THE LD. D.R. ARE DISTINGUISHABLE ON FACTS. 8. HAVING GIVEN A THOUGHTFUL CONSIDERATION TO THE RIVAL SUBMISSIONS AND FROM A CAREFUL PERUSAL OF THE ORDERS OF THE AUTHORITIES BELOW, WE FIND THAT UNDISPUTEDLY SSAIL IS A CLOSELY HELD COMPANY, IN WHICH THE ASSESSEE IN THIS CASE AND OTHER CASES, WHICH WAS DISPOSED OF BY THE TRIBUNAL VIDE ITS ORDER DATED 13.6.2014 IN I.T.A. NO. 217 TO 221 AND 226/LKW/2012, ARE PROMOTERS OF THE COMPANY AND SHRI. MAHENDRA MOHAN GUPTA WAS CHAIRMAN AND SHRI. SHAILENDRA MOGAN GUPTA WAS THE MANAGING DIRECTOR OF THE COMPANY. THE DETAILS OF SHAREHOLDINGS BY THESE PROMOTERS ARE AVAILABLE AT PAGES 29 AND 30 OF THE COMPILATION OF THE ASSESSEE. IN THE INSTANT CASE, THE ISSUE IN DISPUTE IS WITH REGARD TO THE SHORT TERM CAPITAL LOSS CLAIMED BY THE ASSESSEE ON PURCHASE OF SHARES OF SSAIL ON 11.9.2007; 7.12.2007 AND 12.12.2007 AT A HIGHER RATE AND SOLD THESE SHARES TO M/S INDIA GLYCOL LTD. AT A LESSER RATE ON 15.12.2007. THE DETAILS OF PURCHASE AND SALE OF SHARES FROM THE ORDER OF THE LD. CIT(A) ARE EXTRACTED HEREUNDER:- QTY. DATE OF PURCHASE/SALE VALUE/SHARE 24,60,000 11.09.2007 RS.27/- (6,64,20,000/-) 10,10,000 07.12.2007 RS.10/- (1,01,20,000/-) 19,00,000 12.12.2007 RS.10/- (1,90,00,000/-) 53,70,000 15.12.2007 RS.3.02 9. AS PER THE DETAILS, 24,60,000 NOS. OF SHARES HAS BEEN SHOWN TO HAVE BEEN PURCHASED IN THE MONTH OF SEPTEMBER, 2007 FROM ONE M/S CROWN ALBA :- 11 -: PVT. LTD., MUMBAI FOR A TOTAL CONSIDERATION OF RS.6,64,20,000/-, BUT IT WAS CLAIMED THAT THE AMOUNT WAS ACTUALLY PAID AT RS.6,88,80,000/- @ RS.28/- PER SHARE AS MENTIONED BEFORE THE LD. CIT(A) VIDE HIS LETTER DATED 10.2.2012. FURTHER, THE ASSESSEE HAS ALSO SHOWN TO HAVE PURCHASED 10.10 LAKHS SHARES ON 7.12.2007 @ RS.10/- PER SHARE FOR A TOTAL CONSIDERATION OF RS.1,01,00,000/-, BUT BEFORE THE LD. CIT(A) IT WAS SUBMITTED VIDE LETTER DATED 10.2.2012 THAT ACTUALLY THE RATE/SHARE PAID WAS RS.27/- AND THE TOTAL CONSIDERATION PAID WAS RS.2,72,70,000/-. THUS, THE TOTAL NUMBER OF SHARES OF SSAIL PURCHASED BY THE ASSESSEE FROM M/S CROWN ALBA PVT. LTD., MUMBAI WERE 24,60,000 + 10,10,000 I.E. 34,70,000. THE ASSESSEE HAS ALSO APPLIED AND GOT 19.10 LAKHS SHARES OF SSAIL @ RS.10 PER SHARE FOR A TOTAL CONSIDERATION OF RS.1.90 CRORES. THUS, THE TOTAL NUMBERS OF SHARES OF 53.70 LAKHS WERE SOLD ON 15.12.2007 AFTER A GAP OF A SHORT PERIOD TO M/S INDIA GLYCOL LTD. @ RS.3.02 PER SHARE. ACCORDING TO THE ASSESSEE, THE PURCHASE AND SALES ARE VERIFIABLE FROM THE RECORD AND THE ASSESSEE HAS SUFFERED A SHORT TERM CAPITAL LOSS; WHEREAS THE REVENUE HAS CONTENDED THAT THERE CANNOT BE A SHORT TERM CAPITAL LOSS WITHIN A SHORT PERIOD. TOTAL 29.10 LAKHS SHARES WERE PURCHASED IN THE MONTH OF DECEMBER, 2007 AND WERE SOLD WITHIN A PERIOD OF 10 DAYS. THEREFORE, THERE CANNOT BE A DECLINE IN THE MARKET VALUE OF THE SHARES FROM RS.27/- TO RS.3.02 PER SHARE. IT WAS ALSO CONTENDED BY THE REVENUE THAT 24.60 LAKHS SHARES WERE PURCHASED ON 11.9.2007@ RS.27/- OR RS.28/- PER SHARE, ACCORDING TO THE ASSESSEE, AND WERE ALSO SOLD AT RS.3.02 PER SHARE ON 15.12.2007 WITHIN A PERIOD OF THREE MONTHS. IT WAS ALSO BROUGHT TO OUR NOTICE THAT THE SHARES OF SSAIL ARE NOT LISTED SHARES, THEREFORE, ITS MARKET VALUE IS NOT AVAILABLE. BUT WHEN THE SHARES ARE NOT LISTED SHARES, THE MARKET VALUE OF THE SHARES CAN BE WORKED OUT ON THE BASIS OF THE NET ASSET VALUE OF THE COMPANY, SSAIL ON 10.9.2007; 7.12.2007; 12.12.2007 AND 15.12.2007. THEREFORE, UNDER SUCH CIRCUMSTANCES, WHERE THE SHARES ARE NOT LISTED ON THE STOCK EXCHANGE, THE MARKET VALUE OF SHARES CAN BE DETERMINED BY ADOPTING THE AFORESAID :- 12 -: FORMULA AND IF THERE IS ANY SHORT TERM CAPITAL LOSS, THAT CAN BE ALLOWED. BUT, THE ASSESSEE CANNOT BE PERMITTED TO INFLATE THE PURCHASE PRICE AND TO SELL IT OUT AT A NOMINAL PRICE AND TO BOOK A SHORT TERM CAPITAL LOSS IN ORDER TO REDUCE ITS INCOME. IT WAS CONTENDED ON BEHALF OF THE ASSESSEE THAT THE ASSESSEE IS A PROMOTER OF SSAIL AND THE PURCHASE AND SALES WERE MADE PURSUANT TO THE AGREEMENT EXECUTED WITH M/S INDIA GLYCOL LTD. TO PROVIDE A FINANCIAL HELP TO SSAIL. THE ASSESSEE MAY BE FREE TO EXECUTE ANY AGREEMENT FOR THE COMMERCIAL EXPEDIENCY BUT IN THE GARB OF AGREEMENT, THE ASSESSEE CANNOT BE ALLOWED TO BOOK THE LOSS IN ORDER TO SET IT OFF AGAINST ITS INCOME AGAINST THE PROVISIONS OF LAW. IF THE ASSESSEE INTENDS TO PROVIDE A FINANCIAL HELP TO SSAIL, IT CAN BE DONE BY OTHER MEANS I.E. BY WAY OF INVESTMENT IN THE COMPANY, ETC. BUT FOR THAT PURPOSE, THE ASSESSEE CANNOT BE ALLOWED TO PURCHASE SHARES OF THAT COMPANY AT INFLATED RATE AND SELL IT OUT TO THE OTHER COMPANY AT A VERY NOMINAL RATE AND TO CLAIM SUBSTANTIAL SHORT TERM CAPITAL LOSS. 10. IN THE CASE OF DY. CIT VS. SHRI. SANJAY GUPTA (SUPRA), THE TRIBUNAL HAS TAKEN COGNIZANCE OF ALL THESE FACTS AND HAS HELD THAT IF THE ENTIRE SHAREHOLDINGS OF THE ASSESSEE IN SSAIL WERE SOLD TO SOME OTHER COMPANY AT A LESSER RATE, IN THE ORIGINAL SHAREHOLDINGS THE ASSESSEE MAY INCUR LONG TERM CAPITAL LOSS, BUT THE ASSESSEE CANNOT INCUR SHORT TERM CAPITAL LOSS BY PURCHASING FRESH SHARES AT AN INFLATED RATE AND TO SELL IT OUT AT A NOMINAL RATE. THE TRIBUNAL HAS ALSO OBSERVED IN THAT ORDER THAT WHATEVER VALUE OF THE SHARES ARE DECLINED, IT WAS DECLINED UPTO SEPTEMBER, 2007 AND THEREAFTER THERE WAS NO DECLINE IN THE VALUE OF SHARES, AS IT WAS PURCHASED AND SOLD WITHIN A PERIOD OF THREE MONTHS. IN THAT CASE, THE TRIBUNAL HAS ONLY ALLOWED LONG TERM CAPITAL LOSS TO THE ASSESSEE AND NOT SHORT TERM CAPITAL LOSS. THE RELEVANT OBSERVATIONS OF THE TRIBUNAL ARE EXTRACTED HEREUNDER:- 5. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND THE JUDGMENTS CITED BY BOTH THE :- 13 -: SIDES. WE FIND THAT THE OBJECTION OF THE ASSESSING OFFICER IS THAT THE PURCHASE PRICE PAID BY THESE ASSESSEES TO SSAIL FOR PURCHASE OF SHARES ON 07/12/2007 IS EXCESSIVE BECAUSE ONLY AFTER 8 DAYS, THESE SHARES WERE SOLD BY THE ASSESSEE AT RS.3.15 PER SHARE. THE ASSESSING OFFICER DID NOT FIND THE EXPLANATION OF THE ASSESSEE SATISFACTORY AND CONSEQUENTLY, HE HELD THAT THIS TRANSACTION OF PURCHASE AND SALE OF SHARES IS BOGUS IN RESPECT OF FRESH 19 LACS SHARES PURCHASED ON 07/12/2007 FOR RS.190 LACS, WHICH WERE SOLD ON 15/12/2007 FOR A SALE CONSIDERATION OF RS.59,84,119/- RESULTING IN LOSS OF RS.1,30,10,881/-. HOWEVER, IT SEEMS THAT THE ASSESSING OFFICER ALLOWED THE LONG TERM CAPITAL LOSS IN RESPECT OF SALE OF OLD SHARES AT THE SAME PRICE @RS.3.15 PER SHARE BUT THIS IS ALSO NOT CLEAR BECAUSE OF SPECIFIC DIRECTION OF THE BENCH, THE LEARNED AR OF THE ASSESSEE HAS NOT FURNISHED THE COPY OF COMPUTATION OF INCOME AND THIS ASPECT IS NOT DISCUSSED AT ALL IN THE ASSESSMENT ORDER OR IN THE ORDER OF LEARNED CIT (A). IT IS NOTED BY THE ASSESSING OFFICER ON PAGE NO. 3 OF THE ASSESSMENT ORDER THAT THE TOTAL HOLDING OF THE SHARES OF SSAIL WITH THE ASSESSEE AS ON 15/12/2007 (DATE OF SALE) WAS 10.10 LACS SHARES VALUING RS.101 LAC INCLUDING 19 LACS SHARES ACQUIRED ON 07/12/2007 FOR RS.190 LAC. IN OUR CONSIDERED OPINION, EVEN IF IT IS NOTED BY THE ASSESSING OFFICER THAT THE SALE PRICE IN RESPECT OF FRESH PURCHASE OF SHARES TO THE EXTENT OF 19 LAC SHARES OF SSAIL ON 07/12/2007 ON THE FACE VALUE OF RS.10/- PER SHARE WAS EXCESSIVE, THEN HE CAN DISALLOW THE SHORT TERM CAPITAL LOSS IN RESPECT OF SALE OF 19 LACS SHARES BUT THE LOSS IN RESPECT OF REMAINING OLD SHARES HAS TO BE ALLOWED AS LONG TERM CAPITAL LOSS. IN COURSE OF HEARING, IT WAS REQUIRED BY THE BENCH AND THE LEARNED A.R. OF THE ASSESSEE WAS DIRECTED TO FILE COPY OF COMPUTATION OF INCOME FILED BY THE ASSESSEE ALONG WITH THE RETURN OF INCOME IN WHICH THE ASSESSEE HAS CLAIMED SHORT TERM CAPITAL LOSS OF RS.1,30,10,881/- AS PER NOTING :- 14 -: OF THE ASSESSING OFFICER IN PARA 4 OF THE ASSESSMENT ORDER BECAUSE IT IS NOT CLEAR FROM THE ASSESSMENT ORDER AS TO HOW MUCH LONG TERM CAPITAL LOSS WAS CLAIMED BY THE ASSESSEE IN THE RETURN OF INCOME IN RESPECT OF OLD SHARES OF THE SAME COMPANY HELD BY THE ASSESSEE PRIOR TO 07/12/2007. IN PARA 4.4 OF THE ASSESSMENT ORDER, THE ASSESSING OFFICER HAS NOTED THAT TOTAL HOLDING OF SHARES OF SSAIL WITH THE ASSESSEE AS ON 15/12/2007 (DATE OF SALE) WERE 10.10 LACS VALUING RS.101 LAC INCLUDING 19 LACS SHARES OF THE SAME COMPANY ACQUIRED BY THE ASSESSEE ON 07/12/2007 AT THEIR FACE VALUE @RS.10/- PER SHARE. IT IS NOT UNDERSTANDABLE AS TO WHEN 19 LACS SHARES WERE ACQUIRED BY THE ASSESSEE ON 07/12/2007, HOW THE SHARE HELD IN SSAIL ON 15/12/2007 WAS ONLY 10.10 LAC SHARES. THE CONFUSION IS FURTHER INCREASED AS PER THE DETAILS OF SHARE HOLDING AVAILABLE ON PAGE 30 & 31 OF THE PAPER BOOK. ON THIS PAGE, IT IS SEEN THAT THE SHARE HOLDING OF SHRI YOGENDRA MOHAN GUPTA IS STATED TO BE 21.60 LAC SHARES INCLUDING 19 LAC SHARES ACQUIRED BY THE ASSESSEE ON 07/12/2007. WE DO NOT KNOW WHICH FIGURE IS CORRECT REGARDING TOTAL SHARE HOLDING AND HOW MUCH LONG TERM CAPITAL LOSS WAS CLAIMED BY THE ASSESSEE IN RESPECT OF SALE OF OLD SHARES HELD BY THE ASSESSEE AND WHETHER THE SAME WAS ALLOWED BY THE ASSESSING OFFICER OR NOT. THE ORDER OF LEARNED CIT (A) IS WITHOUT THROWING ANY LIGHT ON THESE ASPECTS. HENCE, IN OUR CONSIDERED OPINION, THE MATTER HAS TO GO BACK TO THE FILE OF THE LEARNED CIT (A) FOR FRESH DECISION AFTER EXAMINING ALL THESE FACTS BUT SUCH DECISION SHOULD BE AS PER THESE GUIDELINES. 6. SINCE THE ASSESSEE WAS ALSO HOLDING 2.60 LAC SHARES AS ON 07/12/2007 (IF THE FIGURES GIVEN ON PAGES 30 & 31 OF PAPER BOOK ARE CORRECT) BEFORE ACQUIRING FURTHER SHARES OF SSAIL, THE MARKET VALUE OF THESE SHARES SHOULD BE WORKED OUT ON THE BASIS OF NET ASSETS VALUE OF THE COMPANY SSAIL ON 07/12/2007 BY DIVIDING TOTAL NET ASSETS :- 15 -: VALUE ON THAT DATE BY TOTAL NUMBER OF SHARES OF THAT COMPANY BEFORE FURTHER ISSUE OF SHARES ON THAT DATE. THE FRESH SHARES SHOULD BE CONSIDERED AS ISSUED AND THERE AFTER SOLD ON SUCH MARKET VALUE PER SHARE OF THE OLD SHARES FOR RAISING SAME AMOUNT RESULTING IN INCREASE IN NUMBER OF SHARES ISSUED BECAUSE WHATEVER LOSS IS INCURRED BY THE COMPANY AND CONSEQUENTLY THE SHARE HOLDERS, THE SAME WAS INCURRED TILL THIS DATE AND IT CANNOT BE SAID THAT FURTHER LOSS WAS INCURRED BETWEEN 07.12.2007 TO 15.12.2007. HENCE, THE LOSS IN THE HANDS OF THE SHARE HOLDER SHOULD ALSO BE IN RESPECT OF OLD SHARES ONLY HELD BY HIM ON 07.12.2007. IT SHOULD BE PRESUMED THAT MORE SHARES WERE ISSUED TO GARNER ENOUGH FUNDS FOR MAKING REPAYMENT OF PREFERENCE SHARES ALONG WITH THE ACCUMULATED DIVIDEND AND OTHER LIABILITIES. THEREAFTER, THE SALE OF SHARES ON 15/12/2007 SHOULD BE PRESUMED AT THE SAME PRICE BECAUSE THE MARKET VALUE OF THE ASSETS/SHARES OF THE COMPANY WILL REMAIN SAME BECAUSE INCREASE IN SHARE CAPITAL WILL RESULT INTO DECREASE OF LIABILITY I.E. PREFERENCE SHARES, ACCUMULATED DIVIDEND AND OTHER BANK LOANS ETC. BY SAME AMOUNT AND AS A CONSEQUENCE THEREOF, THE NEW SHARES TO BE ACQUIRED BY THE ASSESSEE ON 07/12/2007 WILL BE SOLD AT THE SAME PRICE AND IT WILL NOT RESULT INTO ANY SHORT TERM CAPITAL LOSS BUT THE LONG TERM CAPITAL LOSS IN RESPECT OF SALE OF OLD SHARES WILL GO UP. IN OUR CONSIDERED OPINION, SUCH INCREASED LONG TERM CAPITAL LOSS ON SALE OF OLD SHARES SHOULD BE ALLOWED TO THE ASSESSEE AS LONG TERM CAPITAL LOSS. LEARNED CIT (A) SHOULD DECIDE THE ISSUE IN THIS MANNER. WE WANT TO MAKE IT CLEAR THAT THE ASSESSEE SHOULD CO OPERATE AND BRING ON RECORD ALL DETAILS AND EVIDENCES BEFORE LEARNED CIT (A) TO ENABLE HIM TO CARRY OUT THESE DIRECTIONS. LEARNED CIT (A) MAY OBTAIN REMAND REPORT FROM THE A.O. IF HE FEELS NECESSARY OR HE CAN DECIDE THE ISSUE HIMSELF AS HIS POWERS ARE CO TERMINUS WITH A.O. NEEDLESS TO SAY, HE SHOULD PROVIDE ADEQUATE OPPORTUNITY OF HEARING TO BOTH SIDES. :- 16 -: 7. REGARDING THE JUDGMENTS CITED BY BOTH THE SIDES, WE ARE OF THE CONSIDERED OPINION THAT THESE JUDGMENTS ARE NOT RELEVANT IN THE PRESENT SITUATION BECAUSE COMPLETE FACTS ARE NOT AVAILABLE BEFORE US AS DISCUSSED ABOVE AND THEREFORE, WE HAVE HELD AS PER THE FACTS OF THE PRESENT CASE, AS DISCUSSED ABOVE THAT THE PURCHASE PRICE PAID BY THE ASSESSEE FOR ACQUIRING NEW SHARES ON 07/12/2007 HAS TO BE DETERMINED AS PER THE MARKET VALUE OF THE SHARES OF THE COMPANY SSAIL ON 07/12/2007 AND THESE JUDGMENTS ARE NOT ON THIS ASPECT. SO FAR THE ISSUE OF NEW SHARES AT A PRICE BELOW THAN THE FACE VALUE IS CONCERNED, WE FIND THAT SUCH ISSUE OF SHARES AT A DISCOUNT IS PERMISSIBLE AS PER THE COMPANIES ACT AND HENCE, THERE IS NO PROBLEM ON THAT ASPECT. ACCORDINGLY, THE ORDER OF CIT(A) IS SET ASIDE AND THE MATTER IS RESTORED TO HIS FILE FOR FRESH DECISION IN THE LIGHT OF THE ABOVE DISCUSSION. THE ASSESSEE SHOULD CO-OPERATE AND PROVIDE THE WORKING OF MARKET VALUE OF SHARES AS ON 07/12/2007 PRIOR TO ISSUE OF FRESH SHARES. THE PRICE OF NEW SHARES TO BE ISSUED SHOULD BE WORKED OUT ON THE BASIS OF MARKET VALUE OF ASSETS ON 07.12.2007 DIVIDED BY NO. OF OLD SHARES AND QUANTITY OF NEW SHARES TO BE ISSUED SHOULD BE WORKED OUT BY DIVIDING THE AMOUNT REQUIRED FOR REPAYMENT OF LIABILITY BY SUCH MARKET VALUE OF SHARES AS ON 07/12/2007. THE SALE PRICE OF THE SHARES AS ON 15/12/2007 SHOULD BE THE SAME PRICE AS DETERMINED BY MARKET VALUE ON 07.12.2007 AND THIS WILL RESULT INTO NO PROFIT NO LOSS IN RESPECT OF NEW SHARES TO BE ACQUIRED ON 07/12/2007 BUT THE LONG TERM CAPITAL LOSS IN RESPECT OF SALE OF OLD SHARES WILL GO UP. 11. THE FACTS IN THE INSTANT CASE ARE ALMOST SIMILAR TO THE FACTS OF THE ABOVE CASE AND IN THE INSTANT CASE, THE ASSESSEE HAS NOT CLAIMED ANY LONG TERM CAPITAL LOSS. ONLY SHORT TERM CAPITAL LOSS WAS CLAIMED ON PURCHASE MADE BETWEEN 11.9.2007 TO 12.12.2007 AND THE SALES MADE ON :- 17 -: 15.12.2007. THE PURCHASE AND SALES WERE MADE WITHIN A SHORT PERIOD, THEREFORE, THERE CANNOT BE CHANGE IN THE MARKET VALUE OF SHARES. THEREFORE, THERE IS NO QUESTION OF SHORT TERM CAPITAL LOSS TO BE SUFFERED BY THE ASSESSEE. WE, THEREFORE, FIND NO MERIT IN THE CLAIM OF SHORT TERM CAPITAL LOSS OF THE ASSESSEE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IS SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 12. THE FACTS ARE ALMOST SIMILAR IN THE CASE OF SHRI. DEVENDRA MOHAN GUPTA IN I.T.A. NO. 531/LKW/2012 AND FOLLOWING THE REASONS GIVEN HEREINABOVE, WE DECIDE THIS ISSUE IN FAVOUR OF THE REVENUE. ACCORDINGLY, THE ORDER OF THE LD. CIT(A) IN THIS CASE IS ALSO SET ASIDE AND THAT OF THE ASSESSING OFFICER IS RESTORED. 13. IN THE RESULT, BOTH THE APPEALS OF THE REVENUE ARE ALLOWED. ORDER WAS PRONOUNCED IN THE OPEN COURT ON THE DATE MENTIONED ON THE CAPTIONED PAGE. SD/- SD/- [A. K. GARODIA] [SUNIL KUMAR YADAV] ACCOUNTANT MEMBER JUDICIAL MEMBER DATED:18 TH DECEMBER, 2014 JJ:1212 COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR ASSISTANT REGISTRAR