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Tax Publishers
Denial of Capital loss offset against Capital
gains alleging collusion
Facts:
Assessee
sold listed shares of Minda Stoneridge instruments Ltd. @ Rs. 107 and long
term capital gains arose on the same for Rs. 27.09 crores. Against this long
term capital gains assessee offset Short term capital loss of Rs. 27.19 crores
which had risen from sale of JM Large cap fund (purchase price of Rs. 80 crores
+ interest borrowed exclusively for this investment for Rs. 2.32 crores while
sale price was only Rs. 55.13 crores) (55.13-(80+2.32). AO denied the entire
capital loss citing it to be a colourable device to offset the long term
capital gains.On appeal CIT(A) allowed the capital loss citing that none of the
parties were related and could influence the transactions in the market in this
case. On appeal by the revenue -
Held
against the revenue that the order of the CIT(A) requires no interference as
the short term loss was allowable as an offset against the long term capital
gains.
Ed. Note:
Investors who keep a portfolio of investments and at times if they land up with
capital gains, then it makes sense to review the portfolio and divest any sunk
or dead loss investments. At least the tax liability of the transaction can be
minimized and cash outflow be reduced.
Case: ACIT v. Ashok Kumar Minda (HUF) 2023 TaxPub(DT) 4379 (Del-Trib)
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