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2024 (4) TMI 581 - AT - Income TaxCapital gain on sale of equity shares - period of holding of shares - LTCG OR STCG - short term capital gain (STCG) as held by the AO - date of transfer of shares - as argued said shares were held by the assessee for more than 12 months preceding the date of transfer - assessee company incorporated under the laws of the state of Delaware, USA is a tax resident of the Unites States of America - assessee’s preposition before us is that the period of holding of equity shares to be taken from original allotment of CCPS, through which it was converted into equity shares that were sold by assessee. HELD THAT:- As observed that there exists a clause for condition precedent to the sale which has to be fulfilled by both the vendor and the purchaser as specified in clause (4) of the said agreement. It is also evident that clause 4.3.7 of the said agreement either the purchaser or the vendor can rescind the said agreement within 120 days from the date of the agreement where either of the parties have failed to fulfill the conditions precedent to the satisfaction of either of the parties. It is also evident that sub clause 1 specified in clause 5 for delivery of shares to the purchaser is also fixed by the parties to be after the satisfaction of all the condition precedent but in any event has to be after 03.07.2006 and not later within 120 days from the date of execution of the said agreement. These clauses have categorically specified the date of contract of sale as declared by the parties which has been mandated by the board in Circular No. 704 which has been heavily relied upon by the lower authorities. The above position has justified the fact that the date of the agreement by no stretch of imagination could be the date of sale of the shares by the assessee to the purchaser. As per the decision of Bharti Gupta Ramola [2012 (4) TMI 438 - DELHI HIGH COURT] the date of transfer is 30.06.2006 for computing the holding period of assets from both the date, i.e., of acquisition and sale are not to be excluded. We would also like to draw our support from the decisions relied upon by the ld. AR where in case of Mrs. Hami Aspi Balsara [2009 (5) TMI 920 - ITAT MUMBAI] the co-ordinate bench on identical facts have decided that the date of contract of sale would be the date of fulfillment of the conditions specified in the share purchase agreement and only upon the fulfillment of the said conditions, the date of contract of sale is said to have crystallized. Thus we hold that there is merit in the submission of the assessee and, therefore, we deem it fit to hold that the sale of shares by the assessee would attract LONG TERM CAPITAL GAIN (LTCG) and, hence, allow the grounds raised by the assessee.
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