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2018 (8) TMI 2096 - AT - Income TaxAddition u/s 68 - bogus LTCG on Shares - denying the exemption of long term capital gain U/s 10(38) - HELD THAT:- Holding of the shares by the assessee cannot be doubted and the finding of the AO is based merely on the suspicion and surmises without any cogent material to show that the assessee has introduced his unaccounted income in the shape of long term capital gain. We find that the CIT(A) has also referred to SEBI enquiry against M/s Girriraj Stock Broking (P) Ltd and has stated that current status is that M/s Girriraj Stock Broking (P) Ltd is under investigation. Therefore, in absence of specific findings which can be known only on completion of enquiry and in absence of any material on record that the subject matter of the enquiry has any connection with the transaction of bogus long term capital gain, the same cannot be relied upon by the Revenue. CIT(A) has stated that period of holding is less than 12 months. In this regard, reference can be drawn to the provisions of section 2(42A)(c) which provides that “in the case of a capital asset being a share or shares in an Indian company, which becomes the property of the assessee in consideration of a transfer referred to in clause (vii) of section 47, there shall be included the period for which the share or shares in the amalgamating company were held by the assessee.” In the present case, the original shares in M/s Drishti Suppliers Ltd were bought by the assessee in 2010 against which shares of Quest Financial Services Ltd were allotted to the assessee pursuant to amalgamation between the companies. Thus, the holding period has to be reckoned from the date when shares in M/s Drishti Suppliers Ltd were originally purchased by the assessee. Hence, in view of the facts and circumstances when we hold that the order of the Assessing Officer treating the long term capital gain as bogus and consequential addition made to the total income of the assessee is not sustainable. Hence, we delete the addition made by the AO on this account. Addition made on account of notional commission u/s 69C as consequential to the issue of treatment of long term capital gain as bogus - HELD THAT:- Once, we have reversed the finding of the AO on the issue of treatment of long term capital gain as bogus then, the consequent addition made by the AO on notional commission is not sustainable. Accordingly, the same is deleted. Assessee appeal allowed.
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