During the relevant AY assessee set off her STCG (Short Term Capital Loss), which arose from the sale of shares of Mindtree Ltd  against (LTCG) Long Term Capital Gain derived from the sale of shares of another company, Avendus Capital Pvt Ltd.  The AO opined that assessee had adopted ‘colourable device’ of selling shares having anticipated reduction in price due to issuance of bonus shares by M, by arranging her affairs in a manner so as to derive maximum benefit by selling shares purchased at a loss and reducing her tax liability on account of LTCG derived on sale of shares of Avendus Capital Pvt Ltd.   Accordingly, the STCL was disallowed and the LTCG added back to income of assessee. The ITAT noted that the AO had not expressed any doubt regarding the nature of loss. It was held that if an assessee arranges affairs within legal framework and through legitimate means to reduce its tax liability, AO cannot prevent the assessee from doing so. Since there was no evidence on record to doubt genuineness of transactions entered into by assessee, STCL derived by the assessee from sale of shares could not be prevented from being set off against LTCG by alleging adoption of colourable device. (AY. 2016-17)