From: editor@itatonline.org <itatonline.org@gmail.com>
Date: Tue, Mar 13, 2012 at 12:43 PM
Subject: Message from EGroup of SolapurCAs Impact Of Vodafone Verdict On Tax Planning: High Court Explains Law
To: editor@itatonline.org
The following important judgement is available for download at itatonline.org.
Killick Nixon Ltd vs. DCIT (Bombay High Court)
Transaction within four corners of law can be treated as "sham" & "colourable device" by looking at "human probabilities"
In AY 2000-01 the assessee borrowed Rs. 48 crores from the G. K. Rathi group and used that to buy shares in three 100% subsidiary companies. Though the fair value of the shares was Rs. 24, the assessee paid Rs. 150 for each share. The amount received by the said subsidiary companies was transferred back to another company of the G.K. Rathi group. In AY 2001-02, the said shares were sold for Rs. 5 each and a short-term capital loss was claimed and this was set-off against other long-term capital gains. The AO, CIT (A) & Tribunal (order attached) rejected the transaction of investment into, and sale of, shares as a sham. On appeal by the assessee, HELD dismissing the appeal:
Regards,
Editor,
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