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2021 (6) TMI 923 - ITAT INDOREBogus STCG - Disallowance of taxable as Short Term Capital Gain from sale of equity shares chargeable to tax U/s. 111A of the Act And benefit u/s. 10(38) - HELD THAT:- Contract note of Eden Financial Services are issued in April, 2009 and the payments have been made almost after 21 months and that too at the time when the share have been sold by the assessee. Surprisingly payment for the purchase has been made after completing 3 transactions of sale of the equity shares of VIP Industries Limited. So one cannot deny that there is some flow in this transaction. However the fact remains that the VIP Industries Limited is a listed company and as on date also it is regularly traded and as submitted by the Ld. Counsel for the assessee the current price are almost four times of the price the assessee received at the time of sale. So sale transaction is far from any dispute as it has been entered through the registered broker on recognized stock exchange and consideration received. As far as purchase is concerned there is a purchase on record and 9000 equity shares have come into the Demat account of the assessee and consideration has been paid. So one cannot doubt the transaction of purchase and sales but doubt can be raised about the period of holding of the equity shares.. So in this case the seller of the shares i.e. Eden Financial Services is itself in dispute having no authority to trade but the moment the share are transferred to the Demat account then from that moment there is hardly any possibility to question the genuineness of purchase unless until anything contrary had been unearthed by the revenue authorities. Since the genuineness of sale is not doubted, the company of which the equity shares are sold i.e. VIP Industries Limited is not a penny stock company and sale effected through registered broker, we are satisfied with the genuineness of sale transactions. As regards purchase which is made by the payment through account payee cheque, there is a corresponding receipt of 9000 equity shares of VIP Industries Limited in the Demat account of the assessee. Had the identity of the broker has not been in doubt then this transaction of earning LTCG would be covered under the provision of Section 10(38) of the Act but since the identity of broker is in dispute the alleged transaction needs to be examined with the period of holding of equity shares in the Demat account of the assessee. As the identity of seller is in doubt and 9000 equity shares are held in the Demat account for less than 12 months, the net gain deserves to be taxed as Short Term Capital Gain. We find that similar type of issue came up before this Tribunal in the case of Smt. Annapurna Maheshwari V/s. ACIT [2018 (11) TMI 131 - ITAT INDORE] Thus issue of instant appeal hold that the assessee had earned capital gain after making a genuine sales and claiming cost of acquisition of shares by payment through banking channel and transaction of purchase and sale effected through Demat account. Since the source of purchase has been disputed as the registration of broker was cancelled much before the transaction of purchase made by the assessee, period of holding of equity share is reckoned from the date on which the 9000 equity shares of VIP Industries Limited were credited to the Demat account of the assessee up to the date when the shares were sold and equity shares sold were debited to the Demat account. This period in the instant case is less than 12 months, we therefore hold that the capital gain is "Short Term Capital Gain" liable to be taxed u/s. 111A of the Act.
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