THE INCOME TAX OFFICER V. SHRI ARVIND NAROTTAM (HUF)

TAXAP/372/1999

AI Insights

The case involves the Income Tax Officer appealing against the decision of the Income Tax Appellate Tribunal, which had allowed the claim of Shri Arvind Narottam (HUF) for a short term capital loss of Rs.80,000. The loss was disallowed initially by the Income Tax Officer on the grounds of the transaction's genuineness, as the shares were sold at a significantly lower price to a Family Trust shortly after purchase. The Commissioner of Income Tax (Appeals) reversed this decision, which was upheld by the Tribunal, leading to the Revenue's appeal to the High Court. The High Court, referencing a similar precedent, dismissed the Revenue's appeal, thereby upholding the Tribunal's decision.

• Counselvise Citation: [2008] 140 COUNSELVISE.COM (IT) 730280 (HC-GUJARAT)
• Appeal Type: Others
• Pronouncement Date: 17-06-2008
• Assessment Year: misc
• Other Referred Cases: Commissioner of Income Tax vs. Manini Niranjan, Shri Shrenik Kasturbhai [HUF] in ITA No. 5524/Ahd/1991
• Laws Referred To: Income Tax Act
• Result in Favour of: Others
• Court: HIGH COURT
• Department Lawyers: NOTICE UNSERVED
• Assessee Lawyers: MANISH BHATT
• Keywords: Capital loss; Family trust; Income tax appellate tribunal; Short Term Capital Loss; Shares transaction
• Section: 80

Judgement Text

"TAXAP/372/1999 1/3 JUDGMENT IN THE HIGH COURT OF GUJARAT AT AHMEDABAD TAX APPEAL No. 372 of 1999 For Approval and Signature: HONOURABLE MR.JUSTICE D.A.MEHTA HONOURABLE MR.JUSTICE H.B.ANTANI ========================================================= 1 Whether Reporters of Local Papers may be allowed to see the judgment ? 2 To be referred to the Reporter or not ? 3 Whether their Lordships wish to see the fair copy of the judgment ? 4 Whether this case involves a substantial question of law as to the interpretation of the constitution of India, 1950 or any order made thereunder ? 5 Whether it is to be circulated to the civil judge ? ========================================================= THE INCOME TAX OFFICER Versus SHRI ARVIND NAROTTAM (HUF) ========================================================= Appearance : MR MANISH R BHATT for Appellant. NOTICE UNSERVED for Opponent. ========================================================= CORAM : HONOURABLE MR.JUSTICE D.A.MEHTA and HONOURABLE MR.JUSTICE H.B.ANTANI Date : 17/06/2008 TAXAP/372/1999 2/3 JUDGMENT ORAL JUDGMENT (Per : HONOURABLE MR.JUSTICE H.B.ANTANI) At the time of admission of the appeal, the following substantial question of law has been formulated by this Court: “Whether the Appellate Tribunal is right in law and on facts in directing to allow the claim of the assessee for capital loss of Rs.80,000/- as genuine.” On 9th August 2000, this Court admitted this appeal and directed it to be heard with I.T.R. No. 38 of 1998. Similar question was referred for the opinion of this Court and this Court [Coram: Y.R. Meena, Acting CJ. & A.S. Dave, J.] by order dated 28.11.2006 has answered the question in affirmative, i.e. in favour of the assessee and against the Revenue. This appeal, therefore, must also meet with the same fate. In the instant case, the Income Tax Officer has disallowed a short term capital loss of Rs.80,000/- on the ground that the assessee has purchased 1600 shares of a closely held Company at their face value of Rs.100/- each and sold it within a short span to a Family Trust at Rs.50/- per share. In appeal, the Commissioner of Income Tax, [Appeals] – I, Ahmedabad by order dated 27.07.93 directed the Assessing Officer to allow the claim of the appellant for capital loss of Rs.80,000/-. The Revenue carried the matter before the Income Tax Appellate Tribunal, Ahmedabad Bench. The Tribunal, following its TAXAP/372/1999 3/3 JUDGMENT own order dated 08.10.96 in the case of Shri Shrenik Kasturbhai [HUF] in ITA No. 5524/Ahd/1991 wherein similar type of capital loss claimed was directed to be allowed, dismissed the appeal filed by the Revenue. Being aggrieved, the Revenue has preferred the present appeal wherein this Court framed the aforesaid question. Having heard the learned advocates appearing in the matter at length, and in view of the decision in the case of Commissioner of income Tax vs. Manini Niranjan in Income Tax Reference No. 239 of 1994 wherein a similar question referred to this Court has been answered in favour of the assessee and against the Revenue, we hold that the Appellate Tribunal is right in law and on facts in directing to allow the claim of the assessee for capital loss of Rs.80,000/-. In the result, the appeal stands dismissed. [D.A.MEHTA, J.] mathew [H.B.ANTANI, J.] "