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2020 (4) TMI 403 - AT - Income TaxProfit from sale of shares - Benefit of Indexation - special tax rate or exemption of long term capital gains - Whether genuineness of transactions and antecedents of that company was not established in course of assessment proceedings or before the Ld. CIT(A) to be genuine transactions? - M/s. TUIHL is very much an Indian company or foreign company - HELD THAT:- AO had proceeded to make the addition on the basis that the assessee had sold the shares of M/s. TUIHL which was a foreign company. However, during the appellate proceedings the assessee was able to produce documents to substantiate that it (M/s. TUIHL) was indeed is an Indian company which was duly registered with ROC, Kolkata since year 1981 and, therefore, is an Indian Company. We note that the remand report of the AO called for by the Ld. CIT(A) does not controvert this fact - basic premise on which the AO has made the addition fails and the Ld. CIT(A) is right in his conclusion that M/s. TUIHL is an Indian Company and its equity shares were in fact sold by the assessee. CIT(A) has noted the submission of the assessee that M/s. TUIHL is an Indian company and since the equity shares of the company’s share was held for more than twelve months it has to be treated as a capital asset and the indexation benefit was available on the said asset. For that Ld. CIT(A) relied on section 2(29A), 2(42A) and 2(48A) of the Act and the Ld. CIT(A) noted that the STT is to be paid only if the shares were sold in the stock exchange and since the assessee has not sold the shares on the stock exchange, according to him, the question of payment of STT does not arise. CIT(A) has taken note that the assessee had held the shares of M/s. TUIHL for more than twelve months and hence, the gain on sale of shares is to be treated as long term capital gain and in view of the provision of sec. 48 of the Act he was of the opinion that the assessee had correctly deducted the index cost of acquisition from the sale proceeds of the shares. The Ld. CIT(A) has noted that the assessee was holding the shares of M/s. TUIHL as investment and, therefore, the gain on its sale is to be taxed under the head long term capital gain. It is also noted that in the instant case assessee has not claimed special tax rate or exemption of long term capital gains - Decided against revenue
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