Revenue cannot object to legitimate tax planning: Bombay HC

Case: 

PRINCIPAL COMMISSIONER OF INCOME TAX vs. ADAR CYRUS POONAWALLA
 

– By HIGH COURT OF BOMBAY



Observation: 

 Capital gains Vis-a-vis business income

Transactions in shares

. Revenue cannot object to legitimate tax planning

. Legitimately, if the assessee had claimed set off of loss against the gain in sale of shares, the Revenue cannot frown upon the same simply by pointing out that in the process, the assessee reduced his tax liability

.Tribunal has examined both the transactions extensively

. With respect to the first transaction of sale of shares in CP (P) Ltd., the Tribunal noted that the shares were gifted by his father who himself had held the shares as investment—Company was unlisted private limited company

. There was no material on record to suggest that the assessee had entered into the business venture in the process

. Likewise in the second transaction also, the Tribunal noted that the Revenue has, in the preceding and succeeding assessment years, accepted, the sale of shares by the assessee as investment and the proceed was treated as capital gain

. Assessee was entitled to set off the capital gain earned in the process of sale of shares of CP (P) Ltd. against the capital loss suffered by him in the process of sale of shares of HCL

. No question of law arises