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2014 (3) TMI 22 - ITAT HYDERABADComputation of long term capital gain on sale of shares – Benefit u/s 28(iv) of the Act - Whether the CIT(A) was right in holding that the entire sale consideration received by assessee on sale of shares be treated as capital gains, as against part of the amount treated as benefit under section 28(iv) by A.O – Held that:- The appellant brought on record evidence to show that the foreign company intended to acquire the total share holdings and the appellant was in a position to quote the rate per share - the appellant could get a substantial rate - The appellant also brought on record evidence to show that one Government Wing accepted the rate and permitted the foreign investor to bring in the foreign currency for purchase of the shares - the entire sale consideration received by him is relatable to the transfer of shares and is assessable only as a long term capital gain. There was no reason to differ from the findings of the CIT(A) - Assessee justified the sale of shares at higher price and also explained the circumstances in which the foreign company negotiated and paid that amount - assessee is employed on salary basis and he has no business activity so as to invoke provisions of section 28(iv) - Unless there is a business activity, benefit in the business does not arise - As rightly noticed by the CIT(A), even the transfer of management rights is also transfer of capital asset which again results in capital gain - Looking at it in any way, the gain can only taxed under the head ‘Capital Gain’. Learned Counsel also placed on record the order of the other shareholder wherein A.O. did not disturb the capital gains offered on sale of shares in similar manner – the order of the CIT(A) upheld – Decided against Revenue.
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