S. 56 : Income from other sources-Long term capital loss-Share transfer agreement-Shares sold at an undervalued price-Related party transaction-AO claimed that the transaction was structured to avoid tax-Shares valued at upwards of Rs 19,000/-, per share were sold for Rs.100 per share-Valuation was not in accordance with Rule 11UA-Matter remanded back to AO for recalculating capital gains. [S. 45 , 56(2)(vii)(b), 56(2)(x), R. 11UA(1)(c)(v)]
As regarding the valuation of long-term capital loss claimed on the sale of shares. The ITAT agreed with the AO’s findings that the assessee sold shares at a drastically undervalued price despite the recent valuations showing much higher values. The related-party transactions, including the sale of a valuable property to assessee’s wife were done at a lower price. However, it found that the AO’s computation method was not in line with Rule 11UA . The ITAT remanded the matter to the AO to recalculate capital gains based on the most credible valuation evidence available. (ITA Nos 1824 /1825 /1826 /Chy/2024 dt. 30 -5 -2025 )( AY. 2013-14 , 2014 -15 , 2019-20 )
DCIT v. M. Mahadevan (Chennai )(Trib.) www.itatonline.org.
(Coram : Hon’ble Shri SS Viswanethra Ravi, JM and Hon’ble Shri Amitabh Shukla, AM)