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Assistant Commissioner of Income Tax Versus M/s. Jyoti Vardhan Sonthalia

2015 (6) TMI 895 - ITAT KOLKATA

Period of holding for determining whether the assessee has derived long-term capital gain or short-term capital gain - shares were duly held by the assessee - Held that:- The assessee has taken the loans after pledging the shares to the loan creditors. The assessee has transferred the shares from his demat account to the loan creditors merely as a security as the assessee has taken loans on pledge of the shares. Whenever the loan is taken by pledging a immovable property, the property has to rem .....

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od of holding of shares by the assessee.

Ld. D.R. even though vehemently relied on the order of the Assessing Officer but could not adduce any decision in its favour which has taken a contrary view. It is not a case where the shares were sold by the assessee to the parties from whom the assessee has taken the loan. In view of this fact, we do not find any illegality or infirmity in the order of the ld. CIT(Appeals). We accordingly confirm the order of the ld. CIT(Appeals) directing th .....

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%. It was also noted that in case of 19 loan creditors, the interest was paid at the rate exceeding 12%. In view of this fact, ld. CIT(Appeal's) took correct view that interest paid to the ‘Karta’ at the rate of 10% cannot be held to be excessive or unreasonable. - Decided against revenue.

Disallowance under Rule 8D read with section 14A - Held that:- Rule 8D read with section 14A has been inserted by the Income Tax (5th Amendment) Rules, 2008 w.e.f. 24.03.2008. Hon’ble Mumbai High Co .....

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L/ 2010, C.O. No. 159/Kol/2010, I.T.A. No. 42/KOL/ 2011, C.O. No. 08/Kol/2011, - Dated:- 13-4-2015 - Shri P.K. Bansal And Shri Mahavir Singh JJ. For the Appellant : Shri K.L. Kanak, JCIT, Sr. D.R. Fore the Respondent : Shri A.K. Tibrewal, FCA ORDER Per P.K. Bansal: Both these appeals and the Cross Objec tions arise out of the order of the ld. Commissioner of Income Tax (Appeal s)-XX, Kolkata in Appeal No. 482/CIT(A)-XX/Ci r.-35/07-08/Kol. & No. 89/CIT(A)-XX/Cir.-35/09- 10/Kol. dated 02.06.20 .....

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loan. (2) The ld. CIT(A) erred in allowing the assessee of including the period of pledge of the shares of Aftak Infosys for the purpose of loan thereby treating the capital gain as long term capital gain. (3) The ld. CIT(A) erred in allowing the interest paid to Karta of the assessee (HUF) which was disallowed under section 40A(2)(b) as the interest corresponds to the excess paid above the lowest rate the assessee could obtain from other third party. 3. The assessee has also taken in its Cross .....

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4. From Form No. 36 filed by the Revenue in both the appeals, it is apparent that both the appeals have been filed against the same order of the ld. CIT(Appeals) but taken the same grounds of appeal. ITA 1713/Kol/2010 has been filed by the Revenue wi thin time limit while ITA No. 42/Kol/2011 is barred by limitation by 128 days for which no condonation petition was filed. Since the ITA No. 42/Kol/2011 and Cross Objection arising thereon being No. 08/Kol/2011 arise out of the same order of the ld .....

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rounds are that the assessee has shown long-term capital gain at ₹ 1,83,71,459/- on sale of 2,53,000 shares of Aftek Infosys Ltd. and also claimed exemption under section 10(38) amounting to ₹ 1,53,73,666/-. The Assessing Officer noted that the assessee has pledged 2,75,000 shares of the said company with certain parties, and obtained loans against them. The shares were also transferred from the demat account of the assessee to those of the loan creditors during the period of pledge. .....

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al gain. The assessee went in appeal before the ld. CIT(Appeals). Ld. CIT(Appeals) took the view that since the shares were t ransferred from the demat account of the assessee to those of the loan creditors only in the form of security and once the loans were repaid, the shares were transferred back to the demat account of the assessee. Therefore, the ownership of the shares always remained with the assessee. The assessee has duly shown the shares in its balance-sheet. Merely transfer of shares .....

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sessee. The assessee has taken the loans after pledging the shares to the loan creditors. The assessee has transferred the shares from his demat account to the loan creditors merely as a security as the assessee has taken loans on pledge of the shares. Whenever the loan is taken by pledging a immovable property, the property has to remain in the possession of the persons, who advanced the loans. Giving possession of the movable property as security does not mean the ownership of the assets will .....

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vour which has taken a contrary view. It is not a case where the shares were sold by the assessee to the parties from whom the assessee has taken the loan. In view of this fact, we do not find any illegality or infirmity in the order of the ld. CIT(Appeals). We accordingly confirm the order of the ld. CIT(Appeals) directing the Assessing officer to take the capital gain earned by the assessee on sale of shares as long-term capital gain as the period of holding will be more than 12 months. We acc .....

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refore took the view that the interest paid to the Karta of the HUF at the rate of 10% is higher and therefore, disallowed ₹ 22,788/- by applying the provisions of section 40A(2)(b). When the matter went before the ld. CIT(Appeals), ld. CIT(Appeals) noted that the assessee had taken loans from 23 creditors out of which interest has been paid to two loan c reditors @ 9%. In the case of remaining 21 loan creditors, interest has been paid at the rates varying from 10% to 13%. It was also note .....

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held to be excessive or unreasonable. We, therefore, dismiss this ground. 12. C.O. No. 159/Kol/2010 (in ITA No. 1713/Kol/2010) In the Cross Objection filed by the assessee, Ground No. 1 relates to the claim of assessee under section 10(36) of the Act. 13. After hearing the rival submissions, we noted that this ground does not arise out of the order of the ld. CIT(Appeal s) passed against the order by the ld. CIT(Appeal s) under section 263/143(3) of the Income Tax Act. No appeal has been filed b .....

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