The petitioner sold its business undertaking as a going concern for a lump-sum consideration and computed long-term capital gains under section 50B. Out of the surplus funds available, it purchased shares of listed companies before the declaration of bonus issues and sold shares after allotment of bonus shares, resulting in a short-term capital loss of Rs. 49,32,71,673, which was set off against long-term capital gains of Rs. 1,75,91,50,508 arising from the slump sale under section 70(2). The Approving Panel held that the transactions constituted an impermissible avoidance arrangement under section 96(1)(b) and (d), read with section 102(1), on the ground that the principal purpose was to obtain a tax benefit.  On writ, the  High Court held that the Revenue was required to establish the existence of an arrangement, that its main purpose was to obtain a tax benefit and that it satisfied at least one of the conditions specified in section 96(1). The purchase and sale of listed shares through a recognised stock exchange at prevailing market prices, in arm’s-length and transparent transactions, could not, on the facts, be characterised as a preordained scheme or operation, since the gains or losses depended upon market movements beyond the petitioner’s control. The Court further held that the mere fact that a loss resulted in a tax advantage did not establish that obtaining a tax benefit was the main purpose of the transactions. The set-off of a genuine short-term capital loss against long-term capital gains was permissible under section 70(2) and represented the statutory method of computing total income. The transactions were undertaken through the ordinary and bona fide mode of dealing in securities and did not involve misuse or abuse of the Act under section 96(1)(b), or a means or manner not ordinarily employed for bona fide purposes under section 96(1)(d). The Revenue failed to establish the ingredients of an impermissible avoidance arrangement. The impugned directions dated 23-02-2022 passed under section 144BA(6) were set aside, and the writ petition was allowed. (A.Y. 2018-19) (W.P. No. 21210 of 2022, dt. 13-10-2026)