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2013 (4) TMI 873 - ITAT PUNEbogus LTCG - denying the long term capital gain exemption claimed by the assessee u/s. 10(38) - shares which the assessee sold was a “penny stock” - manipulation of share stocks - bogus claim - additions made u/s. 153A - Liability of tax on assessee for gift amount credited from a person who is not a relative of the assessee nor he has any business connections - the assessee brother has already offered receipt of such gift from a non relative as his own income - HELD THAT:- according to the assessee since shares were held for a period of more than 12 months, therefore, the income from sale of such shares is long term capital gain and the same is exempt u/s.10(38). It is the case of the revenue that the income so claimed as exempt u/s.10(38) is not long term capital gain and has to be treated as “income from other sources” since the shares so sold are penny stocks and the assessee, neither in the past nor in subsequent years, has traded in such shares and earned such huge income. Further, Arun Agrawal family, who originally had claimed such long term capital gain as exempt had subsequently offered such income as business income in the returns filed and earning of such huge income is against all human probabilities. Identical facts and circumstances we are of the considered opinion that the assessee is entitled to claim exemption u/s.10(38) of long term capital gain on account of sale of shares of Fast Tract Entertainment Ltd. decided by him. Accordingly, the order passed by the Ld. CIT(A) is set-aside and the AO is directed to allow the claim of the assessee. Application of section 056(v) of income tax on the facts of the case, admittedly the provision was introduced by the Finance Act, 2004 and is applicable to any sum of money exceeding ₹ 25,000/- received from any person other than the persons specified in the said provision on or after 01-09-2004. In the instant case the assessee has received the gift on 24-05-2004 which was credited in the bank account of the firm “Siva Agro Industries” in which the assessee is a partner. Therefore, the provisions of section 56(v) are not applicable to the facts of the present case. Merely because the amount was credited to the capital account of the partner on 31-03-2005 cannot be a ground to apply the provisions of section 56(v) when the gift was received on 29-05- 2004 by the assessee and the same was credited to the bank account in the firm wherein he is a partner. In this view of the matter, we set-aside the order of the CIT(A) and direct the AO to delete the addition. This ground by the assessee is accordingly allowed.
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