2010 (11) TMI 799 - HC - Income Tax

Long term capital gain or income from other sources - sale consideration of shares Held that - CIT(A) and Tribunal have both given reasons in support of their findings as at the time of transactions, the broker in question was not banned by SEBI at the time of transaction and that assessee had produced copies of purchase bills, contract number share certificate, application for transfer of share certificate to demat account along with copies of holding statement in demat account, balance sheet as on 31st March, 2003, sale bill, bank account, demat account and official report and quotations of Calcutta Stock Exchange Association Ltd. thus CIT(A) directed AO to treat sale consideration of shares as long-term capital gain - present appeal does not raise any question of law, much less any substantial question of law, appeal is accordingly dismissed

Summary

Issues:
1. Whether the sale consideration of shares should be treated as long-term capital gain or income from other sources.
2. Whether there was artificial jacking up of share prices and if the transactions were genuine.
3. Whether the Tribunal and CIT(A) were justified in reversing the additions made by the AO.

Issue 1:
The appeal was filed by the Revenue against the order of the Tribunal, which dismissed the appeal against the order of the CIT(A) directing the AO to treat the sale consideration of shares as long-term capital gain. The AO had initially treated the sale consideration as income from other sources due to discrepancies in the transactions. The Tribunal and CIT(A) found that the broker was not banned by SEBI at the time of the transaction, and the assessee provided supporting documents like purchase bills, share certificates, and balance sheets. The High Court held that the sale of shares and receipt of consideration at an appreciated value is a question of fact, and the appeal did not raise any substantial question of law. The appeal was dismissed.

Issue 2:
The Revenue argued that there was artificial jacking up of share prices and the transactions were not genuine. The Revenue contended that the broker had suffered a bar from SEBI at the time of the transaction, and the assessee converted undisclosed income into long-term capital gain through bogus sale consideration. The Revenue claimed that the Tribunal and CIT(A) erred in law by deleting the additions made by the AO under the head of income from other sources. The High Court noted that the broker was not banned by SEBI at the time of the transaction, and the assessee provided various documents to support the transactions. The High Court found no substantial question of law in this regard and dismissed the appeal.

Issue 3:
The High Court considered whether the Tribunal and CIT(A) were justified in reversing the additions made by the AO. The High Court observed that both the Tribunal and CIT(A) provided reasons for their findings and considered the documents provided by the assessee. The High Court concluded that the appeal did not raise any substantial question of law, and therefore, the appeal was dismissed.

In conclusion, the High Court dismissed the appeal filed by the Revenue against the order of the Tribunal and CIT(A) regarding the treatment of sale consideration of shares as long-term capital gain. The High Court found that the transactions were supported by relevant documents and did not raise any substantial question of law.