Held that the loan given by the subsidiaries was based on business prudence to create specific rights and obligations amongst the entities in the regular course of business. Moreover, the movement of funds amongst the entities did not result in any creation of tax loss or tax claim and, therefore, there was no reason to dispute it. The sequence of transactions could not simply be stated as sham. The Assessing Officer had blurred the difference between legitimate tax planning and tax avoidance device. Loss is allowable as deduction. (AY.2017-18)
Dy. CIT v. Welspun Steel Ltd. (2024)114 ITR 107 /229 TTJ 485 (Mum)(Trib)
S. 45 : Capital loss-Sale of shares-Related entity-Avoidance of tax-Sham transaction-Capital Loss-Transactions not colourable device-Disallowance of long-term, and short-term, capital loss is not justified-Carry forward and set off-Amalgamation-Entitled to manage its business affairs as it deems fit within legal framework-Loss is allowable. [S. 72, Companies Act, 2013,S.19]
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