Business loss cannot be claimed when shares are traded through Benami: ITAT

Business loss cannot be claimed when shares are traded through Benami: ITAT

Rejects the assessees' declaration of losing over Rs.4 crores

The Ahmedabad Bench of the Income Tax Appellate Tribunal (ITAT) has held that share trading through 'Benami' cannot be claimed as a business loss by the assessee. While considering a bunch of appeals, the tribunal upheld the denial of a claim by the Commissioner of Income Tax (Appeals).

The assessee, Mukesh Rasiklal Shah claimed business loss while indulging in share-trading transactions.

The revenue department stated that the share trading business was the Benami of Suresh U. Gadhecha (SG) and not of the assessee. Hence, it denied the claim of loss. It observed that the balance sheet of the assessee did not give a clear picture of whether the business was run by the assessee himself.

The capital of the proprietor was shown as only Rs.15,000 out of the total balance sheet value of Rs.6.68 crores. The major portion of the amount had come from trade depositors of Rs.6.61 crores. The department held that the entire business was financed from the deposits from outsiders and the assessee was a man of no means at all to have attracted such deposits. Thus, the business could not be attributed to him.

The tribunal found that the assessee had not carried any business. It was, in fact, the Benami of SG.

The Coram of Suchitra Kamble (judicial member) and Annapurna Gupta (accountant member) upheld the order of the CIT(A). the bench ruled that the business of share-trading transactions carried on in the proprietorship concern was not that of the assessee. Therefore, denial of the claim of business loss amounting to Rs.4,13,11,931 was upheld.