Denial of Capital loss offset against Capital gains alleging collusion

Facts:

Assessee sold listed shares of Minda Stoneridge instruments Ltd. @ Rs. 107 and long term capital gains arose on the same for Rs. 27.09 crores. Against this long term capital gains assessee offset Short term capital loss of Rs. 27.19 crores which had risen from sale of JM Large cap fund (purchase price of Rs. 80 crores + interest borrowed exclusively for this investment for Rs. 2.32 crores while sale price was only Rs. 55.13 crores) (55.13-(80+2.32). AO denied the entire capital loss citing it to be a colourable device to offset the long term capital gains.On appeal CIT(A) allowed the capital loss citing that none of the parties were related and could influence the transactions in the market in this case. On appeal by the revenue -

Held against the revenue that the order of the CIT(A) requires no interference as the short term loss was allowable as an offset against the long term capital gains.

Ed. Note: Investors who keep a portfolio of investments and at times if they land up with capital gains, then it makes sense to review the portfolio and divest any sunk or dead loss investments. At least the tax liability of the transaction can be minimized and cash outflow be reduced.    

Case: ACIT v. Ashok Kumar Minda (HUF) 2023 TaxPub(DT) 4379 (Del-Trib)