2013 (3) TMI 659 - AT - Income Tax

Sale of shares - LTCG OR INCOME FROM OTHER SOURCES - Held that - Since assessee has furnished copy of the sale bills of the sale of Talent Infoway Ltd, and bank statements including purchase contract notes and other details on the basis of which CIT(A) held the transactions as genuine, we do not see any reason to interfere with the order of the CIT (A). Since AO also relied on the findings in the case of assessee s husband in assessment year 2005-06 and the learned CIT (A) also deleted the addition based on the same, we do not see any reason to interfere with the order of the CIT (A).

Summary

Issues:
1. Deletion of addition of income from other sources in respect of Long Term Capital Gain.
2. Recognition of share transactions as genuine Long Term Capital Gain.

Issue 1: Deletion of addition of income from other sources in respect of Long Term Capital Gain:
The appeal by the Revenue was directed against the orders of the CIT (A) regarding the deletion of an addition made by the AO as income from other sources in relation to Long Term Capital Gain shown by the assessee from the sale of shares of a particular company. The AO treated the sale proceeds as income from other sources, deeming the transactions as bogus. The assessment was reopened based on similar treatment in the case of the assessee's husband. The CIT (A) directed the amount to be treated as LTCG but taxed at the prevailing rate due to non-payment of STT, as section 10(38) provisions were not satisfied. The Revenue challenged this decision.

Issue 2: Recognition of share transactions as genuine Long Term Capital Gain:
The Tribunal examined the case, considering the husband's case from the previous assessment year where similar issues were raised and the addition was deleted by the CIT (A). The Tribunal found that the off-market transactions were not unlawful, citing precedent. It was noted that the AO failed to consider relevant documentary evidence submitted by the assessee, leading to the conclusion that the share transactions were genuine. The Tribunal upheld the CIT (A)'s decision based on the evidence presented and previous judgments on similar facts. Since the facts were analogous to the previous year, and the CIT (A) had already deemed the transactions as genuine based on evidence provided, the Tribunal dismissed the Revenue's appeal.

In conclusion, the Tribunal upheld the CIT (A)'s decision to delete the addition of income from other sources and recognize the share transactions as genuine Long Term Capital Gain, based on the evidence presented and previous judgments on similar cases. The appeal filed by the Revenue was dismissed.