THE INDRA COMPANY LIMITED(AS SAUMYA TRADE & FISCAL SERVICES P. LTD. MERGED INTO THE INDRA CO. LTD.),KOLKATA V. I.T.O., WARD - 12(3), KOLKATA

ITA 2038/KOL/2024

AI Insights

The case involves The Indra Company Limited, which appealed against the order of the Commissioner of Income Tax (Appeals) - NFAC, Delhi, concerning the assessment year 2016-17. The primary issues revolved around the disallowance of a long-term capital loss claimed by the assessee on the sale of shares of Shree Rama Newsprint Ltd. (SRNL). The Assessing Officer (AO) had disallowed the loss, questioning the business expediency and the price at which the shares were sold compared to their market value. The CIT(A) partly sustained the AO's decision, leading to the current appeal. The Tribunal found that while the transactions were accepted, the loss claimed was not fully justified and directed a recomputation based on the remand report.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 397175 (ITAT-KOLKATA)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-05-2025
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: B
• Assessment Year: 2016-2017
• Other Referred Cases: CIT Vs. George Handerson & Co. Ltd. (1967) 66 ITR 622 (SC), CIT Vs. Gillanders Arbuthnot & Co. (1973) 87 ITR 407 (SC), Arjun Malhotra Vs. CIT (2018) 92 taxmann.com 338 (Delhi) (2018) 403 ITR 354 (Delhi), ACIT Vs. Manoj Arjun Menda 2021 TaxPub(DT) 0167 (Bang-Trib)
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Set aside; Capital asset; Question of law; Fair market value; Cost of acquisition; Capital expenditure; Capital Gains; Share purchase agreement; Bogus
• Section: 147; 143(3); 142(1)

Judgement Text

"आयकर अपीलीय अधिकरण कोलकाता 'बी' पीठ, कोलकाता में IN THE INCOME TAX APPELLATE TRIBUNAL KOLKATA ‘B’ BENCH, KOLKATA श्री संजय शमाा, न्याधयक सदस्य एवं श्री राक ेश धमश्रा, लेखा सदस्य क े समक्ष Before SONJOY SARMA, JUDICIAL MEMBER & SRI RAKESH MISHRA, ACCOUNTANT MEMBER I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.) Vs. I.T.O., Ward -12(3), Kolkata (Appellant) (Respondent) PAN: AAACT9202G Appearances: Assessee represented by : P.R. Kothari, FCA. Department represented by : Sailen Samadder, Add. CIT, Sr. DR. Date of concluding the hearing : 03-April-2025 Date of pronouncing the order : 29-May-2025 ORDER PER RAKESH MISHRA, ACCOUNTANT MEMBER: This appeal filed by the assessee is against the order of the Ld. Commissioner of Income Tax (Appeals)-NFAC, Delhi [hereinafter referred to as “the Ld. CIT(A)”] passed u/s 250 of the Income Tax Act, 1961 (hereinafter referred to as “the Act”) for AY 2016-17 dated Page | 2 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). 05.08.2024, which has been passed against the assessment order u/s 143(3) of the Act, dated 19.12.2018. 2. The assessee is in appeal before the Tribunal raising the following grounds of appeal: “01. Against partly sustaining the disallowance of long term capital loss: For that on the facts and circumstances of the case and in law, ld. Commissioner of Income tax (appeals) [CIT(A)], National Faceless Centre(NFAC), erred in partly sustaining the disallowance of long term capital loss made by ld. Jurisdictional Assessing Officer (JAO) to the extent of Rs.26019396 out of the loss of Rs.59862950 incurred by appellant on sale of shares of Shree Rama Newsprint Limited (SRNL) (Formerly Rama Newsprint and Papers Ltd.) 02. Against omitting to allow indexing of accepted cost of acquisition as provided in section 48: For that on facts and circumstances of the case and in law, Id. CIT(A), NFAC erred in not undoing the omission of not allowing the inflation indexing of cost of acquisition of equity shares of SRNL sold now accepted by ld. JAO in his remand report in the sum of Rs. 34999984/- 03. Against substitution of assumed amount in place of 'full value of consideration' actually received: For that on facts and circumstances of the case and in law, Id. CIT(A), NFAC erred in sustaining the substitution made by ld. JAO of 'full value of consideration' actually received by appellant in respect of sale of equity shares of SRNL in the sum of Rs.2529/- by a figure of Rs.8980588/- assumed by ld. JAO disregarding section 48 of Income tax Act, 1961. 04. Against disbelieving or non consideration of evidences furnished: For that on facts and circumstances of the case and in law, Id. CIT(A), NFAC and Id. JAO erred in disbelieving the share purchase agreement dated 21.05.2015 regarding sale of equity shares of SRNL without proper appraisal of material before both the authorities including Minutes of Joint Lenders Forum (JLF) of bankers of SRNL. 05. Against non deletion of certain observation of Ld. JAO: Page | 3 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). For that on facts and circumstances of the case and in law, Id. CIT(A), NFAC erred in not deleting the allegation made by Id. JAO to the effect that subject transaction of sale of shares of SRNL are allegedly nothing but collusive transactions with the motive to incur huge losses to be set off in subsequent years when only a sum of Rs.117993/- has been set off out of total long term capital loss of Rs.59862950. Ground no. 6 is alternative ground to ground no. 1 to 5 06. Against addition of long term capital loss as income: For that on facts and circumstances of the case and in law, Id. CIT(A), NFAC, erred in not undoing the addition as income on account of long term capital loss made by ld. JAO in respect of sale of equity shares of SRNL (now found out in the sum of Rs.26019396 as per Remand Report of ld. JAO as against the original addition of Rs. 59862950), even if claim of long term capital loss is not accepted, as no set off of such loss was made by the appellant in the year under consideration and only a carry forward of subject loss was claimed.” 3. Brief facts of the case are that the assessee company had e-filed its return of income for the AY 2016-17 on 06.10.2016 disclosing total income of Rs. 8,45,610/-. The case was selected for scrutiny through CASS and statutory notices u/s 143(2) and 142(1) of the Act were issued and duly served upon the assessee. The Ld. AO noticed that the assessee had sold 7,15,015 shares of Shree Rama News Print Ltd. (SRNPL) [Formerly known as Rama Newsprint Paper Ltd. (RNPL)] @ Rs. 0.0035 on 25.08.2015 for a consideration of Rs. 2,529/- and as per the assessee, the cost of acquisition of these shares on 22.01.2010 was Rs. 3,49,99,984/-. The assessee had worked out long-term capital loss of Rs. 5,98,62,950/- after adopting the indexed cost of acquisition of Rs. 5,98,65,479/-. The Ld. AO asked the assessee to furnish detailed justification regarding the business expediency behind the sale of shares of SRNPL at such a throwaway price and instead of offering any justification behind the sale of shares, the assessee merely submitted Page | 4 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). details like copies of DEMAT statement, bank statement, copy of share purchase agreement, board resolution in terms of sale of the shares of SRNPL. The Ld. AO calculated that despite being provided with opportunities, the assessee failed to justify the business expediency behind the sale of the shares of Shree Rama Newsprint Ltd. at such a throwaway price. The shares were acquired on 22.01.2010 @ Rs. 48.95/- per share and the purchase price of Rs. 3,49,99,984/- was claimed to have been paid by the assessee and the sale price per share was worked out at Rs. 0.0035/-. The Ld. AO also verified the assessee’s records in the form of the ‘Extract from Minutes of the Proceedings of the Board of Directors of Saunya Trade & Fiscal Services Pvt. Ltd.’ dated 21.05.2015 which revealed that the Chairman of the meeting further informed that Shree Rama Newsprint Ltd. (‘SRNL’/‘SRNPL’) had been incurring losses since accounting year 2008-09 and had accumulated net loss before tax of Rs. 438.84 crores and cash loss of Rs. 220.22 Crores (including gain on land sale of Rs. 52.46 Crore), otherwise the cash loss was Rs. 272.68 Crore from 01.04.2008 to 31.12.2014. The Ld. AO therefore, concluded that the assessee was well aware of the financial crisis of Shree Rama Newsprint Ltd. which had been incurring losses from accounting year 2008-09 and even at the time of purchase of shares on 22.01.2010, yet the assessee went ahead with the purchase of the shares of Shree Rama Newsprint Ltd. @ Rs.48.95/- which, subsequently was found to be higher than the market price on the date of purchase being was only Rs. 38/-. No justification was filed for such purchases. Further, the Ld. AO noted that the assessee was seen selling the shares at a throwaway price of Rs. 0.0035/- per share on 25.08.2015, thus incurring huge loss. No justification for such sale had Page | 5 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). been furnished by the assessee. The Ld. AO compared the price of each share of SRNL on BSE as on 25.08.2015 i.e. the date of sale, which stood at Rs.12/- per share. The Ld. AO therefore, concluded that there is little justification to the sale transaction by the assessee regarding the disposal of the shares of SRNL at Rs 0.0035/- per share when the price listed in the exchange stood at Rs. 12/-. From the discussion, the Ld. AO concluded that the assessee's transactions in equity shares defy all logic and business prudence and no sensible person could be imagined to enter into such transactions which are devoid of any motive to earn profit. Disposing of shares of SRNL at Rs. 0.0035/- per share when the same share was being listed at Rs. 12/- on the same day, defy all tests of human probabilities and such transactions were nothing but collusive transactions with the motive to incur huge losses to be set off in subsequent years. The Ld. AO accordingly asked the assessee to show cause vide notice dated 14.12.2018 along with the draft assessment order as to why the long-term capital loss of Rs. 5,98,62,950/- should not be disallowed and added back to the total income. The assessee's reply was required to reach within 3 days from the date of receipt of the communication, falling which it would be presumed that the assessee had nothing to state in the matter and the assessment would be completed as per law. In reply, the assessee objected to the usage of the terms ‘business expediency’ or ‘business prudence’ in the draft assessment order as the shares of SRNL were held by the assessee as investment and not as any business asset. The Ld. AO did not find it logical as it led one to infer that a businessman does not need to be prudent while making investments. The Ld. AO was of the view that the question of business expediency and prudence were expected to be Page | 6 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). made use of both in the case of acquiring business asset as well as while making investments. The assessee's contention was therefore, not found to be acceptable. The Ld. AO further observed that while accepting that the purchase price paid by the assessee ‘was not strictly comparable with the stock exchange price of the particular day’, but the assessee also made a statement that ‘had we attempted to purchase such a big quantity of shares through stock exchange, first of all, said quantity would not have been available through Stock Exchange and secondly, the price also would have been much higher than what the assessee had paid’. The Ld. AO did not find this reply also as plausible and the reply was found to be devoid of logic, irrelevant and, therefore, not acceptable. Since the assessee, despite being provided with sufficient opportunities, failed to offer any acceptable explanation regarding the contention of the Revenue expressed in the draft assessment order, therefore, the long-term capital loss claimed by the assessee to the tune of Rs. 5,98,62,950/- was disallowed and added back to the total income of the assessee which was assessed at Rs. 6,07,08,560/-. 4. Aggrieved with the assessment order, the assessee filed an appeal before the Ld. CIT(A) who has reproduced the assessment order as well as the submission of the assessee on the grounds of appeal. The Ld. CIT(A) has also noted in para 5 that in the written submission, the assessee claimed that the Ld. AO did not give any justification for disallowing the long-term capital loss of the assessee but it is noticed from the BSE Portal that the cost of share of SRNL was only Rs. 38/- as on 22.01.2010 as against Rs. 48.95 per share claimed by the assessee. The written submission was forwarded to the Ld. AO with a request to Page | 7 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). submit the remand report and the Ld. AO was also directed to verify the price difference. The Ld. AO submitted the remand report, analysed the documents submitted by the assessee and the said purchase agreement dated 06.09.2003 entered between the assessee and the seller and the acquisition price of Rs. 48.95 per share was written as per clause 9.2 of the Share Purchase Agreement (SPA). It was further stated in the remand report in which the complete transaction of the assessee was stated that as per the BSE Portal, the stock of SRNL had been traded on 28.08.2015 @ Rs.12.56 per share which was the Last Traded Price (LTP). Accordingly, the Ld. AO requested to treat this as the deemed price of transfer. A copy of the remand report was forwarded to the assessee and comments were called for by the Ld. CIT(A). A rejoinder to the remand report was filed by the assessee and on the basis of submission made by the assessee, the remand report and the rejoinder to the remand report, the Ld. CIT(A) concluded as under: “7. Perusal of the assessment order, grounds of appeal and the written submission revealed the following facts: 1. The appellant sold 7,15,015 equity shares of SRNPL for a consideration of Rs.2,529/-. As per the appellant, this was the full value of the consideration envisaged in Sec.48 of the IT Act. 2. The appellant claimed that this transaction was effected pursuant to a share purchase agreement dated 21.05.2015 and as per the agreement, it was sold to Riddhi Siddhi Gluco Biols Ltd. (RSGBL). It was submitted that there was no direct or indirect relation of the appellant company or its Directors or Promoters with RSGBL or with its Directors or Promoters. As the financial condition of SRNL was much more precarious in 2015, then that was in 2010, they have decided to off-load their shares held with SRNPL. 3. It was submitted that the appellant sold the shares through share purchase agreement as the number of shares sold was in bulk and it was not possible and practical to enter into such transaction Page | 8 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). through Stock Exchange. Hence, the Stock Exchange prices were not at all comparable in this case from any angle. 4. The appellant has raised specific ground that AO cannot question the business prudence, business expediency, test of human probability and logic as the decision to off-load the shares was purely on account of business prudence that SRNPL undergoing sustained loss was noted. Hence, they sold all the shares at throw-away price. 5. It was their contention that if at all the long-term capital loss is disallowed, the AO cannot add the same into total income by denying the benefit of set-off given in Sec.74 of the IT Act. 6. The extract from the Minutes of the Meeting of the appellant company, share purchase agreement dated 21.05.2015, Minutes of the Meeting of the Joint Lenders' Forum (JLF) held on 31.03.2015 at Mumbai issued by ICICI Bank, Financials of SRNPL, etc. submitted by the appellant before the CIT(A), Kolkata was also provided by the appellant during the course of appellate proceedings. 7. The details provided by the appellant revealed a fact that other than doubting the transaction as devoid of logic, the AO did not bring any other evidences on record in support his disallowance of long- term capital loss of Rs.5,98,62,950/-. 8. However, during the course of appeal proceedings, the AO submitted a detailed remand report wherein he has obtained the data from BSE Portal that the LTP of SRNPL was Rs.12.56 per share and hence, he has proposed the revised loss. 9. However, the appellant has disputed with this price quoted by the AO. 8. Upon perusal of the evidence on record, it is evident that the AO has obtained the data from BSE Portal that the LTP of SRNPL was Rs.12.56 per share. Being a listed company, the share cannot be sold below that price. The claim of the appellant that they have sold the shares as per the share purchase agreement is not reliable. In view of the above, the AO is directed to recompute the loss as per the facts brought on record in the remand report. Accordingly, the grounds taken by the appellant are partly allowed. 9. In the result, the appeal is partly allowed.” 5. The Ld. CIT(A) thus concluded that on the basis of the data obtained from the BSE Portal that LTP of SRNPL was Rs. 12.56 per Page | 9 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). share and being a listed company, the shares cannot be sold below that price and the claim of the assessee that they had sold the shares as per the share purchase agreement was not reliable. The Ld. AO was directed to recompute the loss as per the facts brought on record in the remand report and the grounds taken by the assessee were partly allowed. Aggrieved with the order of the Ld. CIT(A) the assessee has filed the appeal before this Tribunal. 6. Rival contentions were heard and the submissions made have been examined. The Ld. AR relied upon pages 9 to 55 of the paper book which is the share purchase agreement and in which the assessee was a party. It was submitted that due to pressure of the banks, the shares of SRNPL were sold. It was submitted that 7,15,015 shares were sold. It was argued that the assessee did not claim it as a set off but had carried forward the loss for subsequent years. It was submitted that primarily there were three issues and the Ld. CIT(A) had called for the remand report which is at page 1 to 5 of the paper book and is dated 25.06.2024. The transactions were accepted; purchase price was accepted but the loss claimed was not allowed. The impugned assessment year is AY 2016-17. The carry forward claim was reduced by the Ld. CIT(A). It was also submitted that loss has not been set off in the current year. The Ld. AR also referred to ground no. 6 of the appeal in which it is stated that the long-term capital loss worked out at Rs. 2,60,19,396/- as per the remand report of the Ld. JAO as against the original addition of Rs. 5,98,62,950/-, even if the said claim is not accepted, no such set off of loss was made by the assessee during the year under consideration and only a carry forward of such loss was claimed. This ground does not hold as even though the assessee has Page | 10 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). not set off the loss claimed against the income of the current year, however, since it was claiming carry forward and set off of loss in the subsequent year, the same amounted to only postponing the benefit of set off of the claimed loss in the future and in our view the Ld. AO was justified in assessing the correct loss to be carry forward. 6.1 We have heard the rival submission and also gone through the facts of the case. Ground no. 1 being general in nature does not require any separate adjudication while Ground nos. 2, 3 and 4 relate to the disallowance of the long-term capital loss which has been reduced as per the direction of the Ld. CIT(A). It was submitted by the assessee that the agreement on page 71 of the paper book was relied upon in support of the claim that the shares had to be sold as per the meeting held by the Joint Lenders’ Forum (JLF) and the bankers of SRNL which comprised of ICICI Bank Limited, Bank of India (BOI) - Working capital consortium lead bank, Central Bank of India (CBI), Axis Bank, Oriental Bank of Commerce (OBC), Shree Rama Newsprint Limited (SRNL/Company) and The West Coast Paper Mills Limited (WCPML) – promoter and which approved the following: “i. Takeover of the Company by the proposed strategic investor (Riddhi Siddhi Gluco Biols Ltd.) for which the strategic investor has submitted a non-binding offer to WCPML and SRNL. The takeover shall be subject to and in compliance with all regulatory and statutory requirements. ii. Infusion of about 1,200.0 million by the proposed strategic investor in the Company as per SRNL's requirement. iii. Existing promoter (WCPML) to sell their entire shareholding for a nominal amount and cede control of the company in favour of the strategic investor. iv. Lenders to release existing corporate guarantees, undertakings, collaterals or any other credit comfort provided by WCPML or any other existing promoter / group company. Page | 11 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). v. Lenders shall proceed with bilateral legal documentation with SRNL at the earliest to facilitate expeditious revival of SRNL's operations. vi. SRNL has requested for further loans for funding of capital expenditure. Lenders to have the option to either modify the existing facilities as per the proposal or provide fresh facilities for long term working capital and/or capex purposes to SRNL provided SRNL gets exactly the same terms as per the proposal (including security). In case they do so, the outstanding amounts under their existing facilities would reduce to extent of the fresh facilities provided to SRNL. vii. Waiver by Lenders of all rights of recompense in favour of the new investor. The meeting concluded with a vote of thanks from ICICI Bank.” 7. M/s. Saumya Trade & Fiscal Services P. Ltd. had merged into the Indra Company Limited vide order of the NCLT dated 27.12.2021. The assessee reiterated that while the purchase price was accepted, transactions were accepted but the share price was adopted as listed and indexation was also not allowed. Reliance was placed upon the provision of section 48 of the Act and the decision of Hon'ble Supreme Court in the case of (i) CIT Vs. George Handerson & Co. Ltd. (1967) 66 ITR 622 (SC) and (ii) CIT Vs. Gillanders Arbuthnot & Co. (1973) 87 ITR 407 (SC), decision of the Hon’ble Delhi High Court in (iii) Arjun Malhotra Vs. CIT (2018) 92 taxmann.com 338 (Delhi) (2018) 403 ITR 354 (Delhi) and the decision of the Tribunal in (iv) ACIT Vs. Manoj Arjun Menda 2021 TaxPub(DT) 0167 (Bang-Trib) in support of the claim that the full value of the consideration received or accrued as appearing in section 48 of Act denotes the consideration actually received/accrued, which in the instant case of the appellant was Rs. 2,529/- only and the same cannot be substituted by any alleged notional market value for computing capital gain/loss u/s 48 of the Act. Page | 12 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). 8. We have gone through the facts of the case and also considered the judicial pronouncements relied upon in the case of George Handerson & Co. Ltd. (supra) wherein the fact was that the assessee- company transferred the shares at the rate less than the market value on the date of transfer. On the same date, the transferee further transferred the shares but retained the share scrips with blank transfer forms and the shares were later registered in the name of the second transferee. While assessing the assessee, the ITO took the difference between book value and market value of shares and treated it as capital gain under section 12B of the 1922 Act. On appeal, the AAC confirmed the order of the ITO and on second appeal, the Tribunal confirmed the order of the AAC. On reference, the High Court, however, held that the difference in book value and market price of the shares did not represent capital gains. On appeal to the Supreme Court, it was held as under: “It is manifest that the consideration for the transfer of capital asset is what the transferor receives in lieu of the asset he parts with, namely, money or money's worth and, therefore, the very asset transferred or parted with cannot be the consideration for the transfer. It follows that the expression \"full consideration\" in the main part of section 12B(2) of 1922 Act cannot be construed as having a reference to the market value of the asset transferred but the expression only means the full value of the thing received by the transferor in exchange for the capital asset transferred by him. The consideration for the transfer is the thing received by the transferor in exchange for the asset transferred and it is not right to say that the asset transferred and parted with is itself the consideration for the transfer. The main part of section 12B(2) of 1922 Act provides that the amount of a capital gain shall be computed after making certain deductions from the \"full value of the consideration for which the sale, exchange or transfer of the capital asset is made\". In case of a sale, the full value of the consideration is the full sale price actually paid. The legislature had to use the words \"full value of the consideration\" because it was dealing not merely with sale but with other types of transfer, such as exchange, where the consideration would Page | 13 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). be other than money. If it was held in the present case that the actual price received by the respondent was at the rate the shares were transferred, the full value of the consideration must be taken at the same rate. In the first proviso to section 12B(2) of 1922 Act the expression \"full value of the consideration\" is used in contradistinction with \"fair market value of the capital asset\" and there is an express power granted to the ITO to \"take the fair market value of the capital asset transferred\" as \"the full value of the consideration\" in specified circumstances. It is evident that the legislature itself has made a distinction between the two expressions \"full value of the consideration\" and \"fair market value of the capital asset transferred\" and it is provided that if certain conditions are satisfied as mentioned in the first proviso to section 12B(2) of 1922 Act, the market value of the asset transferred, though not equivalent to the full value of the consideration for the transfer, may be deemed to be the full value of the consideration. To give rise to this fiction the two conditions of the first proviso are: (1) that the transferor was directly or indirectly connected with the transferee, and (2) that the transfer was effected with the object of avoidance or reduction of the liability of the assessee under section 12B of 1922 Act. If the conditions of this proviso are not satisfied the main part of section 12B(2) applies and the ITO must take into account the full value of the consideration for the transfer. The expression 'full value of the consideration' cannot be construed as the market value but as the price bargained for by the parties to the sale. The dictionary meaning of the word 'full' is \"whole or entire, or complete\". The word 'full' has been used in this section in contrast to 'a part of the price'. The words 'full price' means 'the whole price'. Clause (2) of section 12B of 1922 Act itself clearly suggests that if no deductions are made as mentioned in sub-clause (ii) thereof, then that amount represents the full value of the consideration or the full price. When deductions are made as specified in sub-clauses (i) and (ii ), then that amount does not represent the full value. The expression 'full value' means the whole price without any deduction whatsoever and it cannot refer to the adequacy or inadequacy of the price bargained for. Nor has it any necessary reference to the market value of the capital asset which is the subject-matter of the transfer. It is true that the court is bound to proceed normally on the findings of fact which are mentioned in the statement of the case. But if the statement of the case does not correctly summarise or interpret the finding recorded in the order of the Appellate Tribunal which has been made part of the case, the court is entitled to look at the order itself in order to satisfy itself what was actually the finding of the Appellate Tribunal. Page | 14 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). In such circumstances, the instant case, question of law referred to the High Court could not be answered as language used by Appellate Tribunal in recording its finding as to actual contract price paid to assessee for sale of shares was obscure and its import could not be determined. The best course was for the Appellate Tribunal to rehear the appeal and record a clear finding after hearing the parties and after giving an opportunity to the respondent to explain the unusual nature of the transaction and the conduct of the parties concerned therein. After recording a clear finding as to what was the actual price received by the respondent for the sale of shares, the Appellate Tribunal would finally dispose of the appeal.” 9. Thus, in the above case, the Hon'ble Supreme Court held that in such circumstances as mentioned in the instant case, the question of law referred to the High Court could not be answered as the language used by the Appellate Tribunal in recording its finding as to actual contract price paid to the assessee for sale of shares was obscure and its import could not be determined. Hence, the decision relied upon is distinguishable on facts and therefore, not applicable to the facts of the case of the assessee. 10. Further in the case of Gillanders Arbuthnot & Co. (supra) which refers to section 147 of the Act, the proceeding initiated u/s 34(1)(a) of the 1922 Act were held to be validly initiated and since section 128 was incorporated into the Act with effect from 01.04.1947, at the time sale transaction took place, section 12B (equivalent to section 48 of the Income Tax Act, 1961) was not part of the Act and so first proviso to section 12B(2) of 1922 Act was not attracted on facts of the case. Hence, both these orders were rendered on different facts and in different context but the cases were relied upon by the Ld. AR in support of the claim that the sale consideration had to be taken as per the provision of section 48 of the Act being the actual price paid which was Rs. 2,529/- in this case. Page | 15 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). 11. We have considered the submission and also noted the fact that the cases relied upon by the assessee relate to 1967 and 1973 while the Securities and Exchange Board of India (SEBI) was established as a statutory body in the year 1992 and the provisions of the Securities and Exchange Board of India Act, 1992 (15th of 1992) came into force on 30.01.1992. SEBI has been given certain statutory powers and has been formulating rules for the shares and the same can be traded below the price listed on the stock exchange, as investors can place ‘limit orders’ to buy or sale at a specific price which may be lower than the correct market price to get a better deal on stock, however, the transaction did not take place on the stock market but the shares have been sold off market. As per regulation 76 pricing of equity shares for frequently traded shares the equity shares shall be allotted at a price not less than higher of the following: (a) The average of the weekly high and low of the volume weighted average price closing prices of the related equity shares quoted on the recognised stock exchange during the twenty-six weeks six months preceding the relevant date; or (b) The average of the weekly high and low of the volume weighted average prices closing prices of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date. (2) If the equity shares of the issuer have been listed on a recognised stock exchange for a period of less than twenty six weeks six months as on the relevant date, the equity shares shall be allotted at a price not less than the higher of the following: Page | 16 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). (a) the price at which equity shares were issued by the issuer in its initial public offer or the value per share arrived at in a scheme of arrangement under sections 391 to 394 of the Companies Act, 1956, pursuant to which the equity shares of the issuer were listed, as the case may be; or (b) the average of the weekly high and low of the volume weighted average prices closing prices of the related equity shares quoted on the recognised stock exchange during the period shares have been listed preceding the relevant date; or (c) the average of the weekly high and low of the volume weighted average prices closing prices of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date. (3) Where the price of the equity shares is determined in terms of sub-regulation (2), such price shall be recomputed by the issuer on completion of twenty six weeks six months from the date of listing on a recognised stock exchange with reference to the average of the weekly high and low of the volume weighted average prices closing prices of the related equity shares quoted on the recognised stock exchange during these twenty six weeks six months and if such recomputed price is higher than the price paid on allotment, the difference shall be paid by the allottees to the issuer. (4) Any preferential issue of specified securities, to qualified institutional buyers not exceeding five in number, shall be made at a price not less than the average of the weekly high and low of Page | 17 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). the volume weighted average prices closing prices of the related equity shares quoted on a recognised stock exchange during the two weeks preceding the relevant date. Explanation: For the purpose of this regulation, ‘stock exchange’ means any of the recognised stock exchanges in which the equity shares are listed and in which the highest trading volume in respect of the equity shares of the issuer has been recorded during the preceding twenty-six weeks six months prior to the relevant date. 12. Thus, there is a huge difference not only in the purchase price but also in the sale price when compared to the price on which the shares were last traded on the stock exchange on the dates of purchase as well as sale and the sale price does not appear to be inconsonance with the SEBI regulation. The assessee contends that it was under an obligation of the Joint Lender’s Forum to off load the shares; however, there is no valid justification for the contention that as against the average listed price of Rs. 12.56 in August, 2015, the shares were sold at an abnormal price of Rs. 0.0035/- per share while the purchase price per share at which the shares were acquired on 22.01.2010 was Rs. 48.95/- while the LTP was only Rs. 38/- as on 22.01.2010. The assessee contends that no set off of loss was carried out during the current year. However, the loss worked out can always be carried forward and set off in the subsequent assessment years as and when the income is available for setting off of the loss, thereby resulting in loss of revenue if the loss is not genuine. Thus, there is no force in the argument that since the shares have been sold in bulk therefore, the price as negotiated had to Page | 18 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). be adopted as the sale consideration received. Hence, on the facts of the case the entire transaction prima facie appears to be a colourable device for claiming huge loss which is not governed by the market price of the shares but is privately arranged between the buyer and the seller and the loss is held to be bogus and the order of the Ld. CIT(A) confirming the transaction subject to re-computation of the loss is upheld and the appeal of the assessee is dismissed. 13. However, in the course of appeal, the assessee submitted that the shares of the promoters were transferred for a consideration which appears to be low because the purchaser was investing huge amount in the concern and had invested a substantial amount because of which the promoters were getting rate of the personal guarantees for selling shares to the bank. It was also submitted that no other buyers were willing to purchase all shares and there is no bar in selling the shares at a price lower than the trading price when it is part of the overall settlement. We have considered the submission made. It is interesting to note that while the purchase of the shares was made by the assessee at a price which was more than the last traded price, however, the sale took place at a price which is much lower than the last traded price of the stock market as the shares were listed. But at the same time the fact that Joint Lenders Forum (JLF) had required the assessee to dispose of the shares at a nominal amount, which amount was not fixed but was negotiated by the assessee can also not be disregarded. The assessee contends that this is not an isolated transaction as all the promoters/shareholders had sold the shares at the agreed upon price. Neither the Ld. AO nor the Ld. CIT(A) has examined this issue nor examined the fact that though there is a regulation of SEBI and investor Page | 19 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). cannot sell the shares below the last traded price, however, the assessee contends that the regulation does not bar the sale of shares in a negotiated transaction. The assessee has relied upon the decision of Hon'ble Supreme Court in the case of George Handerson & Co. Ltd. (supra) however, at the time there was no regulator like the SEBI which is there in the present case. All these aspects have not been examined by the Ld. CIT(A). Therefore, in the interest of justice it is considered imperative to set aside the order of the Ld. CIT(A) who shall consider the submission made by the assessee, examine the facts and thereafter, pass an order in accordance with law and call for the remand report from the Ld. AO as required under Rule 46A of the Income Tax Rules, 1962. For statistical purposes, the appeal of the assessee is partly allowed. 14. In the result, the appeal of the assessee is partly allowed for statistical purposes. Order pronounced in the open Court on 29th May, 2025. Sd/- Sd/- [Sonjoy Sarma] [Rakesh Mishra] Judicial Member Accountant Member Dated: 29.05.2025 Bidhan (P.S.) Page | 20 I.T.A. No.: 2038/KOL/2024 Assessment Year: 2016-17 The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.). Copy of the order forwarded to: 1. The Indra Company Limited (As Saumya Trade & Fiscal Services P. Ltd. merged into The Indra Co. Ltd.), 707, Central Plaza, 2/6, Sarat Bose Road, Minto Park Area, Kolkata, West Bengal, 700020. 2. I.T.O., Ward -12(3), Kolkata. 3. CIT(A)-NFAC, Delhi. 4. CIT- 5. CIT(DR), Kolkata Benches, Kolkata. 6. Guard File. //True copy // By order Assistant Registrar ITAT, Kolkata Benches Kolkata "