Plaese refer case laws

Circulars 1580 views 1 replies

Hello friends, please refer me case laws related to the case that i am going to explain.....

CASE:

It is a transaction between two pvt limited co. 1st company had purchased some share of a public limited co. (off the market). But the company paid the amount by 3 chq at 3 differnt time. this is because, the purchasing co is getting interest income from market. Only After making full payment, the selling company had transferred the shares to puchasing company. After getting share in demat A\c the purchasing company sold the same at loss. Now the loss has been dissallowed on the assumption that :

1 it has been made for the back year.

2 it has been made to reduce the profit of the business as it is the time for finalisation of the accounts.

Replies (1)

First of all tell me how made that assumptions

1. If u sold the share with the help of demat a/c can u prove this the share has been purchased by the selling co.

2.If we assume that share has been purchased by selling co. then it is purchased from open mkt which is totally allowed

   and company who sold has to mentioned the reason for selling the share at a price below the purchase price.

3. Your second assumption is totally useless to say share are sold to reduce business profit where as the profit/loss earned by company from this transaction is capital gain/loss not a business profit/loss.

Often people sold share at a loss. so where is the problem


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