NILIMA MAHESHWARI, Kota V. JCIT, Jaipur

ITA 473/JPR/2015

• Counselvise Citation: [2016] 131 COUNSELVISE.COM (IT) 5021 (ITAT-JAIPUR)
• Duration Of Justice: 1 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-10-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2009-2010
• Appeal Filed On: 14-05-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MUKESH VERMA CIT DHK
• Keywords: Capital asset; Search and seizure; Accommodation entries
• Section: 153A; 15

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES, JAIPUR JH HKKXPAN] YS[KK LNL; ,OA JH DQY HKKJR ] U;KF;D LNL; DS LE{K BEFORE: SHRI BHAGCHAND, AM & SHRI KUL BHARAT, JM VK;DJ VIHY LA-@ ITA NO. 473/JP/2015 FU/KZKJ.K O'K Z@ ASSESSMENT YEAR : 2009-10 SMT. NEELIMA MAHESHWARI, 112, SHAKTI NAGAR, KOTA. CUKE VS. J.C.I.T., (OSD)- CENTRAL CIRCLE-3, JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: ACKPM 6442 L VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ LS@ ASSESSEE BY : SHRI VIJAY GOYAL (CA) JKTLO DH VKSJ LS@ REVENUE BY : SHRI MUKESH VERMA (CIT) LQUOKBZ DH RKJH[K@ DATE OF HEARING : 13/10/2016 MN?KKS'K .KK DH RKJH[K @ DATE OF PRONOUNCEMENT : 17/10/2016 VKNS'K@ ORDER PER: BHAGCHAND, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25/03/2015 PASSED BY THE LD CIT(A), ALWAR FOR THE A. Y. 2009-10. 2. THE BRIEF FACTS OF THE CASE ARE THAT A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT AT THE PREMISES OF CAREER POINT GROU P OF KOTA, TO WHICH THE ASSESSEE BELONGS. THE ASSESSEE DERIVED INCOME FROM H OUSE PROPERTY, CAPITAL GAIN AND OTHER SOURCES. THE RETURN WAS FILED ON 31/12/2009 IN RESPONSE TO THE NOTICE U/S 153A OF THE INCOME TAX AC T, 1961 (IN SHORT THE ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 2 ACT) ON 29/07/2011 FOR THE YEAR UNDER CONSIDERATION DECLARING TOTAL INCOME OF RS. 5,03,830/- AND THE ASSESSMENT WAS COMPLETED AT RS. 20,49,290/-. THUS, THE ASSESSING OFFICER HAD BEEN ALLOWED SET OFF SHORT TERM CAPITAL LOSS ON SALE AND PURCHASE OF RS. 16,21,247/- AGAINST THE LONG TERM CAPITAL GAIN OF RS. 15,45,455/- EARNED ON SALE OF A PLOTS. 3. THE LD. CIT(A) HAD CONFIRMED THE ACTION OF THE ASS ESSING OFFICER. 4. NOW THE ASSESSEE IS IN APPEAL BEFORE US. ORIGINAL LY, THE ASSESSEE HAS TAKEN THREE GROUNDS OF APPEAL, BUT REVISED FORM NO. 36 WAS FILED BY THE ASSESSEE WHERE SHE HAS TAKEN FOUR GROUNDS OF APPEAL, WHICH IS AS UNDER:- 1 ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD. CIT (A) ERRED IN CONFIRMING THE DISALLOWAN CE OF RS. 16,21,247/- ON ACCOUNT OF LOSS INCURRED ON TRANSACTION IN SHARES BY REJECTING THE CLAIM OF THE ASSESSEE TO SET OFF THE SAME AGAINST LONG TERM CAPI TAL GAINS ARISING ON SALE OF PLOTS. 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E AND IN LAW THE LD CIT(A) ERRED IN HOLDING THAT THE GENUINEN ESS OF SHARE TRANSACTION IS DOUBTFUL AND SHARE TRANSACT IONS APPEAR TO BE ACCOMMODATION IN NATURE WITHOUT APPRECIATING THE FACT THAT THE ASSESSMENT OF M/S MAHESHWARI BROS U/S 153A/143(3) OF INCOME TAX ACT WAS MADE BY SAME AO, WHEREIN THE SALE OF SHARES TO TH E ASSESSEE HAS BEEN ACCEPTED. IT IS FURTHER CONTENTED THAT THE FINDINGS OF LD CIT(A) IS ON SURMISES, CONJECTURE S, NOT BASED ON EVIDENCE OR INQUIRY AND WITHOUT ISSUING SHO W CAUSE NOTICE TO THE ASSESSEE. ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 3 3. THAT THE ORDER OF THE LD CIT (A), CONFIRMING THE ADDITION MADE BY THE AO IS ARBITRARY, WHIMSICAL, CAPRICIOUS, PERVERSE AND AGAINST THE LAW AND FACTS OF THE CASE. THE ORDER OF LD CIT-(A) IN THIS REGARD DESERVES TO BE S ET ASIDE AND ADDITION MADE BY THE ID AO DESERVES TO BE DELETED. 4. THE ASSESSEE PRAYS FOR LEAVE TO ADD, TO AMEND, T O DELETE, OR MODIFY THE ALL OR ANY GROUNDS OF APPEAL ON OR BEFORE THE HEARING OF APPEAL. 5. GROUNDS NO. 3 AND 4 OF THE APPEAL ARE GENERAL IN NATURE AND DOES NOT REQUIRE ANY ADJUDICATION. 6. IN GROUND NO. 1 OF APPEAL, THE ASSESSEE HAS CHAL LENGED THE CONFIRMING THE DISALLOWANCE OF RS. 16,21,247/- ON AC COUNT OF LOSS INCURRED ON TRANSACTION IN SHARES AND IN GROUND NO. 2 OF APP EAL, THE FINDING OF THE LD. CIT(A) REGARDING THE GENUINENESS OF THE TRANSACT ION HAS BEEN CHALLENGED. 7. BEFORE US, IT WAS SUBMITTED THAT THERE IS NO DISP UTE REGARDING THE QUANTUM OF LOSS IN SHARES. THUS, THE ASSESSING OFFIC ER HAS NOT EVEN DOUBTED THE GENUINENESS OF LOSS IN SHARES. LD. CIT( A) HAS OBSERVED THAT NO BILLS WERE FOUND DURING THE SEARCH OPERATION REGARDI NG SALE OF SHARES AND TRANSACTIONS WERE IN THE GROUP CONCERNED, THEREFORE, HE DOUBTED THE GENUINENESS OF TRANSACTIONS. ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 4 8. BEFORE US, THE AR OF THE ASSESSEE HAS SUBMITTED THAT THIS ISSUE IS DIRECTLY COVERED BY THE DECISION OF THE HONBLE ITA T IN ASSESSEES GROUP CASE M/S IMPERIAL INFIN PVT. LTD. IN ITA NO. 472/JP /2015 ORDER DATED 06/11/2015. HE ALSO SUBMITTED THAT THE FACTS OF THE ASSESSEES CASE ARE SIMILAR TO THE FACTS OF THAT CASE AND THE ORDER OF THE LD. CIT(A) IS ALSO ON SIMILAR LINES. THE COPY OF THE ORDER OF THE HONBLE ITAT AND CIT(A) IN THE CASE OF M/S IMPERIAL INFIN PVT. LTD. WAS ALSO SUBMIT TED BEFORE US. THE HONBLE ITAT IN DECIDING THE CASE OF M/S IMPERIAL I NFIN PVT. LTD. HAS HELD AS UNDER:- 2. AFTER HEARING THE RIVAL SUBMISSIONS AND GOING T HROUGH THE ORDERS OF THE TAX AUTHORITIES BELOW, I NOTED THAT THE ISSU E INVOLVED IS DIRECTLY COVERED BY THE PROVISIONS OF SECTION 70(2) OF THE I T ACT. THIS SECTION STIPULATES AS UNDER :- SEC. 70(2) : WHERE THE RESULT OF THE COMPUTATION MADE FOR ANY ASSESSMENT YEAR UNDER SECTIONS 48 TO 55 IN RESPECT OF ANY SHORT TERM CAPITAL ASSET IS A LOSS, THE ASSESSEE SHALL BE ENTI TLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS ARRIVED AT UNDER A SIMILAR COMPUTATION MADE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET. IN VIEW OF THE AFORESAID PROVISIONS, THE SHORT TERM CAPITAL LOSS CAN BE SET OFF AGAINST THE INCOME, IF ANY, FOR THE ASSESSM ENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET. NO CONTRARY PROVISION W AS BROUGHT TO MY NOTICE BY THE LD. D/R EVEN THOUGH HE RELIED ON THE ORDER OF THE LD. CIT (A). IN VIEW OF THE PROVISIONS OF SECTION 70(2), I DIRECT THE ASSESSING OFFICER TO SET OFF THE SHORT TERM CAPITAL LOSS AGAI NST THE LONG TERM CAPITAL GAIN EARNED BY THE ASSESSEE FROM THE TWO PR OPERTIES. ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 5 3. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ON THE ISSUE, WHETHER THE SHORT TERM CAPITAL LOSS C AN BE SET OFF AGAINST THE LONG TERM CAPITAL GAIN, THE ASSESSEE HAS MADE FOLLO WING SUBMISSIONS: SECTION 70 AS SUBSTITUTED BY THE FINANCE ACT, 2002 W.E.F. 1ST APRIL, 2003 PROVIDES THAT WHERE THE NET RESULT IN RESPECT OF ANY SHORT-TERM CAPITAL ASSET IS A LOSS, SUCH LOSS SHALL BE ALLOWED TO BE SET OFF AGAINST INCOME, IF ANY, FOR THAT ASSESSMENT YEAR UNDER THE HEAD 'CAPITAL GAINS' IN RESPECT OF ANY OTHER CAPITAL ASSET, AND W HERE THE NET RESULT IN RESPECT OF ANY CAPITAL ASSET OTHER THAN A SHORT-T ERM CAPITAL ASSET IS A LOSS, SUCH LOSS SHALL BE ALLOWED TO BE SET OFF AG AINST THE INCOME, IF ANY, FOR THAT ASSESSMENT YEAR IN RESPECT OF ANY OTH ER CAPITAL ASSET NOT BEING A SHORT-TERM CAPITAL ASSET. PROVISIONS OF SECTION 70(2) AND 70(3) ARE AS UNDER:- (2) WHERE THE RESULT OF THE COMPUTATION MADE FOR AN Y ASSESSMENT YEAR UNDER SECTIONS 48 TO 55 IN RESPECT OF ANY SHOR T-TERM CAPITAL ASSET IS A LOSS, THE ASSESSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST THE INCOME, IF ANY, AS AR RIVED AT UNDER A SIMILAR COMPUTATION MADE FOR THE ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET. (3) WHERE THE RESULT OF THE COMPUTATION MADE FOR AN Y ASSESSMENT YEAR UNDER SECTIONS 48 TO 55 IN RESPECT OF ANY CAPI TAL ASSET (OTHER THAN A SHORT-TERM CAPITAL ASSET) IS A LOSS, THE ASSE SSEE SHALL BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AG AINST THE INCOME, IF ANY, AS ARRIVED AT UNDER A SIMILAR COMPUTATION MADE FOR THE ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 6 ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASS ET NOT BEING A SHORT-TERM CAPITAL ASSET.] AS PER CL. (2) OF SECTION 70, WHERE THERE IS A SHOR T-TERM CAPITAL LOSS, THE ASSESSEE IS ENTITLED TO SET OFF THE AMOUNT OF S UCH LOSS AGAINST CAPITAL GAINS RELATING TO ANY OTHER CAPITAL ASSET. AS PER CL. (3) OF SECTION 70, LONG-TERM CAPITAL LOSSES CAN BE SET OFF ONLY AGAINST LONG- TERM CAPITAL GAINS. THUS, THOUGH SHORT-TERM CAPITAL LOSSES CAN BE SET OFF AGAINST BOTH SHORT-TERM CAPITAL GAINS AS WELL A S LONG-TERM CAPITAL GAINS, LONG-TERM CAPITAL LOSSES CAN BE SET OFF ONLY AGAINST LONG-TERM CAPITAL GAINS. WITH REGARD TO SHORT TERM CAPITAL LOSS IN SHARES ON WHICH THE STT IS ASSESSABLE AT SPECIAL RATE OF TAX U/S 111A OF THE A CT CAN BE SET OFF FROM THE CAPITAL GAIN NOT ASSESSABLE AT SPECIAL RATE OF TAX U/S 111A OF THE ACT. THE LD AR OF THE ASSESSEE HAS SUBMITTED AS UNDER:- SECTION 111A PROVIDES THE RATE OF TAX TO BE LEVIED FOR SPECIFIED SHARES. NO SEPARATE HEAD OF INCOME IS PROVIDED IN S ECTION 111A. COMPUTATION OF GROSS TOTAL INCOME INTO DIFFERE NT HEAD HAS BEEN PROVIDED IN SECTION 15 TO 59 UNDER CHAPTER IV. THERE IS NO BAR IN SECTION 111A FOR SET OFF OF SHORT TERM CAPITAL LOSS IN SHARES TAXABLE AT THE RATE PRESCRIBED U/S 111A OF I NCOME TAX ACT FROM CAPITAL GAIN ARISING FROM OTHER CAPITAL AS SETS. PROVISIONS OF SECTION 111A AS APPLICABLE FOR AY 200 9-10 ARE REPRODUCED AS UNDER:- ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 7 (1) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME CHARGEABLE UNDER THE HEAD 'CAPITAL GAINS', ARISING FROM THE TRANSFER OF A SHORT-TERM CAPITAL ASSET, BEING AN EQ UITY SHARE IN A COMPANY OR A UNIT OF AN EQUITY ORIENTED FUND [OR A UNIT OF A BUSINESS TRUST] AND (A) THE TRANSACTION OF SALE OF SUCH EQUITY SHARE OR UNIT IS ENTERED INTO AN OR AFTER THE DATE ON WHICH CHAPTER V II OF THE FINANCE (NO. 2) ACT, 2004 COMES INTO FORCE; AND (B) SUCH TRANSACTION IS CHARGEABLE TO SECURITIES TR ANSACTION TAX UNDER THAT CHAPTER, THE TAX PAYABLE BY THE ASSESSEE ON THE TOTAL INCOM E SHALL BE THE AGGREGATE OF (I) THE AMOUNT OF INCOME-TAX CALCULATED ON SUCH SHO RT-TERM CAPITAL GAINS AT THE RATE OF [FIFTEEN PER CENT]; AN D (II) THE AMOUNT OF INCOME-TAX PAYABLE ON THE BALANC E AMOUNT OF THE TOTAL INCOME AS IF SUCH BALANCE AMOUNT WERE T HE TOTAL INCOME OF THE ASSESSEE : PROVIDED THAT IN THE CASE OF AN INDIVIDUAL OR A HIN DU UNDIVIDED FAMILY, BEING A RESIDENT, WHERE THE TOTAL INCOME AS REDUCED BY SUCH SHORT-TERM CAPITAL GAINS IS BELOW THE MAXIMUM A MOUNT WHICH IS NOT CHARGEABLE TO INCOME-TAX, THEN, SUCH SH ORT-TERM CAPITAL GAINS SHALL BE REDUCED BY THE AMOUNT BY WHIC H THE TOTAL INCOME AS SO REDUCED FALLS SHORT OF THE MAXIMUM AMO UNT WHICH IS NOT CHARGEABLE TO INCOME-TAX AND THE TAX ON THE BALANCE OF SUCH SHORT-TERM CAPITAL GAINS SHALL BE C OMPUTED AT THE RATE OF TEN PER CENT. (2) WHERE THE GROSS TOTAL INCOME OF AN ASSESSEE I NCLUDES ANY SHORT-TERM CAPITAL GAINS REFERRED TO IN SUB-SECTION (1), THE DEDUCTION UNDER CHAPTER VI-A SHALL BE ALLOWED FROM T HE GROSS TOTAL INCOME AS REDUCED BY SUCH CAPITAL GAINS. ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 8 (3) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY SHORT-TERM CAPITAL GAINS REFERRED TO IN SUB-SECTION (1), THE R EBATE UNDER SECTION 88 SHALL BE ALLOWED FROM THE INCOME-TAX ON T HE TOTAL INCOME AS REDUCED BY SUCH CAPITAL GAINS. EXPLANATION : FOR THE PURPOSES OF THIS SECTION, THE EXPRESSION 'EQUITY ORIENTED FUND' SHALL HAVE THE MEANING ASSIG NED TO IT IN THE EXPLANATION TO CLAUSE (38) OF SECTION 10.] THUS, UNDER THE PROVISIONS OF SECTION 70(2), SHORT T ERM CAPITAL LOSS ARISING FROM ANY ASSET CAN BE SET OFF AGAINST BOTH SHORT-TERM CAPITAL GAINS AS WELL AS LONG-TERM CAPITAL GAINS. THE PHRASE 'UNDER SIMILAR COMPUTATION MADE' REFERS TO COMPUTATION OF INCOME, THE PROVISIONS FOR WHICH ARE CONTAINED UNDER SECTIONS 45 TO 55A OF THE ACT. THE MATTER OF COMPUTATION OF INCOME WAS A SUBJECT WHICH C AME ANTERIOR TO THE APPLICATION OF RATE OF TAX WHICH ARE CONTAIN ED IN SECTION 110 TO 115BBC. MERELY BECAUSE THE TWO SET OF TRANSACTIONS A RE LIABLE FOR DIFFERENT RATE OF TAX, IT CANNOT BE SAID THAT INCOM E FROM THESE TRANSACTIONS DOES NOT ARISE FROM SIMILAR COMPUTATIO N MADE AS COMPUTATION IN BOTH THE CASES HAS TO BE MADE IN SIM ILAR MANNER UNDER THE SAME PROVISIONS. THUS SHORT TERM CAPITAL L OSS ARISING FROM STT PAID TRANSACTIONS CAN BE SET OFF AGAINST CAPITAL GAIN ARISING FROM NON SIT TRANSACTIONS. RELIANCE IS PLACED ON FOLLOWING DECISIONS:- (I) CAPITAL INTERNATIONAL EMERGING MARKETS FUND VS. DEPUTY DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) (2013 ) 145 ITD 491 (MUMBAI) ASST. YEAR 2007-08 HELD THAT SHORT TERM CAPITAL LOSS ARISING FROM STT P AID TRANSACTIONS CAN BE SET OFF AGAINST SHORT TERM CAPI TAL GAIN ARISING FROM NON STT TRANSACTIONS ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 9 3.2. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSE D THE MATERIAL. WE FIND THAT IDENTICAL ISSUE WAS DECIDED I N THE FAVOUR OF THE ASSESSEE BY THE TRIBUNAL IN THE CASE OF DWS I NDIA EQUITY FUND(SUPRA) IN FOLLOWING MANNER : '5.WE HAVE PERUSED THE RECORDS AND CONSIDERED THE R IVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING SET OFF OF SHORT TERM CAPITAL LOSS ARISING FROM STT PAID SHARE TRANSA CTIONS AGAINST SHORT TERM CAPITAL GAIN ARISING FROM NON ST T TRANSACTIONS. THE ASSESSEE HAD EARNED SHORT TERM CA PITAL GAIN OF RS.40,25,93,717/- FROM NON STT TRANSACTIONS AND I T HAD INCURRED SHORT TERM CAPITAL LOSS OF RS.1,26,45,10,0 06/- FROM STT PAID TRANSACTIONS. THE ISSUE IS WHETHER SHORT TERM CAPITAL LOSS CAN BE SET OFF AGAINST SHORT TERM CAPITAL GAIN MENTIONED ABOVE. UNDER THE PROVISIONS OF SECTION 70(2), SHORT TERM CAPITAL LOSS ARISING FROM ANY ASSET CAN BE SET OFF AGAINST SHORT TERM CAPITAL GAIN ARISING FROM ANY OTHER ASSET UNDE R A SIMILAR COMPUTATION MADE. THE AO HELD THAT SINCE GAIN WAS FRO M SHARES ON WHICH NO STT WAS PAID AND LOSS FROM STT PAID TRANSACTIONS, THESE FELL IN DIFFERENT CATEGORIES AN D COULD NOT BE SET OFF AGAINST EACH OTHER. WE FIND THAT THIS ASPEC T HAS ALREADY BEEN EXAMINED BY THE MUMBAI BENCH OF THE TRIBUNAL IN THE CASE OF FIRST STATE INVESTMENTS (HONG KONG) LTD. VS . ADIT(SUPRA), IN WHICH IT HAS BEEN HELD THAT THE PHRA SE 'UNDER SIMILAR COMPUTATION MADE ' REFERS TO COMPUTATION OF INCOME, THE PROVISIONS FOR WHICH ARE CONTAINED UNDER SECTIO NS 45 TO 55A OF THE ACT. THE TRIBUNAL ALSO HELD THAT THE MATT ER OF COMPUTATION OF INCOME WAS A SUBJECT WHICH CAME ANTER IOR TO THE APPLICATION OF RATE OF TAX WHICH ARE CONTAINED I N SECTION 110 TO 115BBC. THEREFORE, MERELY BECAUSE THE TWO SET OF TRANSACTIONS ARE LIABLE FOR DIFFERENT RATE OF TAX, IT CANNOT BE SAID THAT INCOME FROM THESE TRANSACTIONS DOES NOT A RISE FROM SIMILAR COMPUTATION MADE AS COMPUTATION IN BOTH THE CASES HAS TO BE MADE IN SIMILAR MANNER UNDER THE SAME PRO VISIONS. THE TRIBUNAL THEREFORE, HELD THAT SHORT TERM CAPITAL LOSS ARISING ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 10 FROM STT PAID TRANSACTIONS CAN BE SET OFF AGAINST SH ORT TERM CAPITAL GAIN ARISING FROM NON SIT TRANSACTIONS. THE C ASE OF THE ASSESSEE IS IDENTICAL. THEREFORE, RESPECTFULLY FOLLO WING THE DECISION OF THE TRIBUNAL, WE SEE NO INFIRMITY IN THE ORDER OF CIT(A) AND THE SAME IS, THEREFORE, UPHELD. (II) ASSISTANT DIRECTOR OF INCOME TAX (INTERNATIONAL TAXATION) VS. LANSFORSAKRINGAR ASIENFOND ITAT MUMBAI BENCH 'A' (2013) 37 CCH 361 MUM TRIB ASST. YEAR 200809 HELD THAT:- 4. WE HAVE HEARD THE PARTIES, AND PERUSED THE MATER IAL ON RECORD. WE HAVE IN THE CASE OF LEGG MASON ASIA (EX JAPAN) ANALYST FUND (SUPRA) ALREADY EXPRESSED A VIEW IN CON FORMITY WITH THE SAID VIEW; THE MATTER BEING EVEN OTHERWISE CO VERED BY A SERIES OF DECISIONS BY THE TRIBUNAL. THE ARGUME NTS ADVANCED BY THE LD. DEPARTMENTAL REPRESENTATIVE (DR ) BEFORE US WERE ALSO ON THE SAME LINES AS IN THE SAID CASE. THE TRIBUNAL IN THE CASE OF FIRST STATE INVESTMENTS (HONGKONG) L TD. (SUPRA) HAS DISCUSSED THE MATTER AT LENGTH, HOLDING AS UNDE R: 'HELD, ALLOWING THE APPEAL, THAT THE MATTER OF COMPU TATION OF INCOME WAS A SUBJECT WHICH CAME ANTERIOR TO THE APPLI CATION OF THE RATE OF TAX. ONLY WHEN THE INCOME WAS COMPUTED UN DER THE PROVISIONS OF THE ACT, WOULD THE QUESTION OF APP LICABILITY OF THE CORRECT RATE OF INCOME-TAX WOULD COME INTO BEING . THE COMPUTATION OF CAPITAL GAIN PRESCRIBED UNDER SECTIO N 48 OF THE ACT CANNOT BE CONFUSED WITH THE RATE OF TAX LIABLE T O BE CHARGED ON THE INCOME UNDER SECTION 48 OF THE ACT C OULD NOT BE CONFUSED WITH THE RATE OF TAX LIABLE TO BE CHARGE D ON THE INCOME UNDER THE HEAD 'CAPITAL GAINS' SO COMPUTED. THE COMPUTATION OF CAPITAL GAIN IS GOVERNED BY SECTION 48 WHEREAS THE RATES OF TAX ARE GOVERNED BY SECTIONS 111A AND 115AD OF THE ACT. THE AUTHORITIES BELOW HAD ERRED IN NEGATING THE ASSESSEES COMPUTATION OF SHORT-TERM CAPITAL GAIN.' ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 11 THE RATIO LAID DOWN IN THE ABOVE CASE EXPLAINING THE APPLICABILITY OF PROVISIONS OF SECTION 111A FOR SET OFF OF LOSS IS EQUALLY APPLICABLE IN OUR CASE ALSO. WITH REGARD TO GENUINENESS OF THE TRANSACTIONS, THE LD. AR OF THE ASSESSEE HAS SUBMITTED AS UNDER:- WHETHER THE LOSS IN SHARE IS GENUINE:- THE LD AO HAS MADE PROPER INVESTIGATION IN THIS REG ARD AND THE ASSESSEE HAS FILED COMPLETE DETAILS BEFORE THE AO. THE LD AO BEING SATISFIED WITH THE DETAILS FURNISHED BY THE ASSESSE E, HAS NOT RAISED ANY DOUBT ON GENUINENESS OF LOSS IN SHARES. HOWEVER , THE LD CIT(A) ON PROBABILITIES AND POSSIBILITIES AND WITHOUT MAKIN G ANY INQUIRY HAS HELD THAT THE LOSS WAS NOT GENUINE. IN THIS REGARD THE EXPLANATION OF ASSESSEE IS AS UNDER:- (I) PURCHASE OF SHARES WAS NOT CARRIED OUT THROUGH STO CK EXCHANGE:- IT IS NOT NECESSARY TO PURCHASE THE SHARES THROUGH STOCK EXCHANGE. IT IS PERMISSIBLE IN LAW TO PURCHASE THE SHARES IN OFF MARKET. PURCHASE OF SHARES IS EVIDENCED BY INVOICE AND PAYMENT BY AC COUNT PAYEE CHEQUE AND DEMAT ACCOUNT. (II) M/S MAHESHWARI BROTHERS IS SISTER CONCERN OF ASSES SEE: THE ASSESSEE PURCHASED THE SHARES FROM M/S MAHESHW ARI BROTHERS ON MARKET PRICES. THE PURCHASE IS SUPPORTED BY QUOTA TION OF EXCHANGE. THERE IS NO BAN IN ANY LAW TO PURCHASE OR SALE WITH SISTER CONCERN. THE PURCHASES WERE ON MARKET PRICE AND THIS MAY BE SEEN FROM FOLLOWING CHART:- NAME OF SHARE ITEM LEDGER INVOICE CENTURY TEXTILES PB PG 8 PB PG 24-25 MAHANAGAR TELEPHONE PB PG 9 PB PG 22-23 NIIT LTD PB PG 10 PB PG 26 ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 12 DURING THE COURSE OF ASSESSMENT PROCEEDINGS, THE AS SESSEE HAS SUBMITTED COMPLETE DETAILS AND THERE IS NO FINDING OF THE LOWER AUTHORITIES THAT THE ASSESSEE PURCHASED THE SHARES AT THE RATE MORE THAN PREVAILING IN MARKET. THE MARKET RATE OF THE SHA RE IS SUPPORTED BY QUOTATION OF BSE AND NSE (III) TRANSACTIONS APPEAR TO BE ACCOMMODATION ENTRIES. THE LD CIT(A) IN PARA 4.7 MENTIONED THAT THE TRANSA CTIONS APPEARS TO BE ACCOMMODATION ENTRY. ON ONE SIDE HE IS ACCEPTING THAT THE PAYMENT WAS MADE BY THE ASSESSEE DIRECTLY TO M/S MA HESHWARI BROS AND DATE OF PAYMENT IS MATCHING WITH THE DATE OF IN VOICE. IF IT IS SO THAN HOW IT CAN BE AN ACCOMMODATION ENTRY. PAYMENT HAS BEEN MADE BY ASSESSEE AND DATE OF PAYMENT IS ALSO MATCHI NG WITH THE DATE OF INVOICE. THE PRICE OF THE SHARES IS SUPPORT ED BY MARKET QUOTATION. MERELY THE TRANSACTION THROUGH THE RELAT IVE PARTY DOES NOT MAKE A TRANSACTION ACCOMMODATION ENTRY. FURTHER, THE SALE WAS MADE IN STOCK EXCHANGE AT THE PREVAILING MARKET PRICE . (IV) NO DOCUMENTS OF PURCHASE AND SALE WAS FOUND AT THE TIME OF SEARCH. THE LD CIT(A) MADE A WRONG AND PERVERSE FINDING THA T NO DOCUMENT AS REGARD PURCHASE OR SALE OF SHARES WAS FOUND TO S EARCH PARTY. IN FACT, THESE DOCUMENTS WERE LYING WITH THE ASSESSEE AND THESE WERE SEEN BY SEARCH PARTY BUT THE SAME WERE NOT SEIZED B Y SEARCH PARTY. THE ASSESSEE CANNOT COMPEL TO SEARCH TEAM TO SEIZE EACH AND EVERY PAPER FOUND BY THEM. THE SEIZURE OF DOCUMENT IS MAD E AT WISDOM OF THE SEARCH PARTY. THERE WERE MANY OTHER DOCUMENTS L IKE BANK STATEMENT, FEES RECEIPTS, ATTENDANCE REGISTERS ETC WHICH WERE FOUND BY THE SEARCH PARTY BUT THE SAME WERE NOT INVENTORI SED BY THE SEARCH PARTY. (V) SALE OF SHARES IN STOCK EXCHANGE ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 13 THE SALES OF THE SHARES WERE MADE THROUGH SWASTIK I NVESTMART LTD. IN BSE, THEREFORE, AT THE POINT OF SALE STT WAS PAI D WHICH IS APPARENT FROM THE CONTRACT NOTE OF THE BROKER. THE SHARE SALE S ACCOUNT IS AT PB PG 7 . THE COPY OF BILLS AGAINST SALE OF SHARES/ CONTRAC T NOTE IS PLACED AT PB PAGE 28-31 . (VI) THE COPY OF LEDGER A/C OF MAHESHWARI BROTHERS IN THE BOOKS OF ASSESSEE IS PLACED AT PAGE 31. THE COPY OF BANK A/C OF THE ASSESSEE IS PLACED AT PB PAGE 33-34 SHOWING PAYMENTS AGAINST SHARES. (VII) THE COPY OF LEDGER A/C OF M/S SWASTIKA FIN-LEAS E LTD IN THE BOOKS OF ASSESSEE IS PLACED AT PB PG 35 . THE COPY OF ASSESSEES ACCOUNT IN BOOKS OF M/S SWASTIKA FIN LEASE IS ENCLOSED HEREWITH AT PG 36. THE COPY OF BANK ACCOUNT SHOWING THE RECEIPT OF MONEY AG AINST SALE OF SHARES IS PLACED AT PG 37-38. (VIII) DELIVERY IN DEMAT A/C THE DELIVERY OF SHARES WERE LYING IN THE DEMAT ACCO UNT OF M/S MAHESHWARI BROS. M/S MAHESHWARI BROS WAS HOLDING TH E SHARES ON BEHALF OF ASSESSEE. HOWEVER, THE LATER ON THESE SHA RES WERE TRANSFERRED IN ASSESSEES DEMAT ACCOUNT. THE COPY O F DEMAT ACCOUNT IS AT PB PG 39. IX) SUSPICION HOWEVER STRONG CANNOT TAKE PLACE OF PRO OF:- THE LD CIT(A) HAS NOT MADE ANY INQUIRY FROM M/S MAH ESHWARI BROS AND HELD THAT THE GENUINENESS OF SHARE LOSS IS DOUB TFUL. THE LD CIT(A) HAS NOT BROUGHT ON RECORD ANY POSITIVE MATERIAL TO ESTABLISH THAT LOSS IN SHARES IS MANIPULATED. HONBLE JUSTICE HIDAYATUL LAH OF THE SUPREME COURT IN THE CASE OF SREELEKHA BANERJEE VS C IT [1963] 49 ITR 112 (SC); 120 OBSERVED THAT THE INCOME TAX DEPA RTMENT CANNOT BY MERELY REJECTING UNREASONABLY A GOOD EXPLANATION , CONVERT GOOD PROOF INTO NO PROOF . HONBLE SUPREME COURT IN THE CASE OF UMA CHARAN SHAW & BROS CO VS CIT 37 ITR 271 HAS HELD THAT THE SURMISES AND CONJECTURES, AND THE CONCLUSION IS THE RESULT O F SUSPICION WHICH CANNOT TAKE THE PLACE OF PROOF. ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 14 HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS ANUPAM KAPOOR (2008) 299 ITR 179 (P & H) ALSO HELD THAT SUSPICION, HOWSOEVER STRONG CANNOT TAKE THE PLACE OF LEGAL PROO F. IN VIEW OF THE ABOVE SUBMISSION, THE HUMBLE ASSESSE E PRAYS YOUR HONOR KINDLY TO DELETE THE ADDITION. THE LD AR VEHEMENTLY PLEADED THAT THE ISSUE IS DIREC TLY COVERED BY THE DECISION OF THE HONBLE ITAT (SUPRA) AND THE FACTS A ND CIRCUMSTANCES OF BOTH THE CASES ARE SAME AND HE PRAYED TO ALLOW THE A SSESSEES APPEAL ON GROUND NOS. 1 AND 2. 9. ON THE OTHER HAND, THE LD CIT DR HAS RELIED ON TH E ORDERS OF THE AUTHORITIES BELOW AND SUBMITTED THAT THE ORDER OF T HE LD. CIT(A) MAY BE SUSTAINED. 10. WE HAVE HEARD THE RIVAL CONTENTIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON THE RECORD. AFTER HEARING OF BOTH SIDES, WE OBSERVE THAT THE ISSUE INVOLVED IS COVERED BY THE P ROVISIONS OF SECTION 70(2) OF THE ACT AND THESE PROVISIONS PROVIDE THAT THE SHORT TERM CAPITAL LOSS CAN BE SET OFF AGAINST THE INCOME, IF ANY, FOR THE ASSESSMENT IN RESPECT OF ANY OTHER CAPITAL ASSET. FURTHER WE ALSO OBSERVE THAT THE PHRASE UNDER SIMILAR COMPUTATION MADE REFERRED TO COMPUTATION O F INCOME, THE PROVISIONS OF WHICH ARE CONTAINED U/S 45 TO 55A OF T HE ACT. THE MATTER OF COMPUTATION OF INCOME WAS A SUBJECT WHICH CAME ANTERI OR TO THE ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 15 APPLICATION OF RATE OF TAX WHICH ARE CONTAINED IN SE CTION 110 TO 115BBC OF THE ACT. MERELY BECAUSE THE TWO SET OF TRANSACTIONS ARE LIABLE FOR DIFFERENT RATE OF TAX, IT CANNOT BE SAID THAT INCOME FROM THE SE TRANSACTIONS DOES NOT ARISE FROM SIMILAR COMPUTATION MADE AS COMPUTATION IN BOTH THE CASES HAS TO BE MADE IN SIMILAR MANNER UNDER THE SAME PROVISI ONS. IN VIEW OF THESE FACTS, SHORT TERM CAPITAL LOSS ARISING FROM STT PAID TRANSACTIONS CAN BE SET OFF AGAINST THE CAPITAL GAIN ARISING FROM NON STT TR ANSACTIONS. 10.1 WITH REGARD TO THE GENUINENESS OF THE TRANSACT IONS, WE OBSERVE THAT THE ASSESSING OFFICER WAS SATISFIED WITH THE GENUINEN ESS OF THE TRANSACTION AND HE HAS NOT RAISED ANY DOUBT IN THIS REGARD. THE LD. CIT(A) HAS ON THE BASIS OF PROBABILITIES AND POSSIBILITIES AND WITHOUT MAKING ANY INQUIRY MADE HIS OBSERVATIONS. THE SALES IN THE CASE OF M/S MAHES HWARI BROTHERS HAVE BEEN ACCEPTABLE AS GENUINE. THERE IS NO ALLEGATION O F ANY ACCOMMODATION ENTRY IN THAT CASE. THE LD. CIT(A)S OBSERVATION THA T THE ASSESSEE PURCHASED SHARES FROM M/S MAHESHWARI BROS ON MARKET PRICE, IN OUR VIEW, THERE IS NO BAN OF ANY TRANSACTION WITH THE SISTER CONCERNS IF I T IS DONE ON THE MARKET PRICES. FURTHER THE PAYMENTS HAVE BEEN RECEIVED BY THE ASSESSEE, THE PRICE OF THE SHARE IS SUPPORTED BY MARKET QUOTATIONS. NOT FINDING THE DOCUMENTS REGARDING PURCHASE AND SALES OF SHARES DURING SEARC H OPERATION CANNOT BE MADE A BASIS THAT THE TRANSACTION WAS NOT GENUINE. TH ESE SHARES WERE ITA 473/JP/2015_ SMT. NEELIMA MAHESHWARI VS JCIT (OSD) 16 TRANSFERRED IN THE DEMAT ACCOUNT PRIOR TO THE DATE OF SEARCH. THEREFORE, SUCH OBSERVATIONS OF THE LD. CIT(A) WERE NOT GENUINE. CONSIDERING ALL THE ASPECTS AND THE CASE LAWS RELIED UPON BY BOTH THE SI DES AND ALSO THE DECISION OF THE COORDINATE BENCH IN THE ASSESSEES GROUP CASE, WE ALLOW THE APPEAL OF THE ASSESSEE ON THE GROUND NO. 1 AND 2. 11. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/10/2016 SD/- SD/- DQY HKKJR HKKXPAN (KUL BHARAT) (BHAGCHAND) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 17 TH OCTOBER, 2016 *RANJAN VKNS'K DH IZFRFYFI VXZSFKR @ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ @ THE APPELLANT- SMT. NEELIMA MAHESHWARI, KOTA. 2. IZR;FKHZ @ THE RESPONDENT- THE JCIT, (OSD), CENTRAL CIRCLE-3, J AIPUR. 3. VK;DJ VK;QDR @ CIT 4. VK;DJ VK;QDRVIHY @ THE CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ @ DR, ITAT, JAIPUR 6. XKMZ QKBZY @ GUARD FILE (ITA NO. 473/JP/2015) VKNS'KKUQLKJ @ BY ORDER, LGK;D IATHDKJ @ ASST. REGISTRAR