India: Short-term capital loss on sale of business to subsidiary disallowed (tribunal decision)
Taxpayer failed to adequately substantiate considered received or value of business sold.
The Income-tax Appellate Tribunal (Chandigarh Bench) upheld the disallowance of a short-term capital loss claimed by the taxpayer on the sale of one of its businesses to its subsidiary because the taxpayer failed to adequately substantiate the amount of consideration received in the sale or the value of the business sold.
The tribunal emphasized that intra-group transactions must be examined in light of commercial realities, and when significant losses are claimed, the onus lies on the taxpayer to establish genuineness, valuation correctness, and fairness of consideration.
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