TMI Blog2015 (8) TMI 323X X X X Extracts X X X X X X X X Extracts X X X X ..... s to be regarded as short term capital gain and exemption u/s.10(38) of the Act was not to be allowed. The assessee had carried the matter to the Hon’ble High Court of Karnataka. The Hon’ble High Court of Karnataka was pleased to set aside the order of the Tribunal and held that the transaction of sale of shares were real, genuine and for valuable consideration and were within the framework of law. Consequently, exemption u/s. 10(38) of the Act had to be allowed. It is not in dispute that the facts in the case of assessee are identical with that of the case of Bhoruka Engineering Industries Ltd., (supra) and therefore the decision of the Hon’ble High Court of Karnataka will squarely apply to the facts of the present case. We are therefor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... had sold shares under facts and circumstances similar to that of the Assessee in the present appeal and in whose assessment also the revenue refused to accept the claim of exemption of capital gain u/s.10(38) of the Act and had proceeded to treated the capital gain in question as Short term capital gain on identical reasons as are given in the case of the Assessee in the present appeal. According to the Revenue the decision of the Hon ble Karnataka High Court has not been accepted by the Revenue and an SLP has been preferred before the Hon ble Supreme Court against the said decision. Incidentally, the assessee has also filed Cross Objection in which he has challenged the validity of initiation of reassessment proceedings u/s. 147 of the Ac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... exempt on the ground that the share in BFSL were held for a period of more than one year and that Security Transaction Tax, (for short STT ), was paid as provided u/s. 10(38) of the Act during the sale through Magadh Stock Exchange, Patna (MSE). The assessee claimed that the long term capital gains earned on sale of BFSL shares as exempt from taxation under section 10(38) of the Act since the shares transferred were quoted shares having suffered Securities Transaction Tax and further the shares having been held for more than 12 months. 6. In the reassessment proceedings, the AO found that BFSL belongs to Bhoruka Group of Companies and most of the shares in this company are held by Shri. S.N. Agarwal and his family members, either in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ores from Bhoruka Steel Ltd. During August 2005, M/s DLFCDL purchased the shares of BFSL at a negotiated rate of ₹ 4,490/- per share for a total consideration of ₹ 89.08 crores. By virtue of this deal the promoters of BFSL have sold their stakes to DLFCDL. 9. According to the AO, the directors and promoters of BFSL disposed off all the other assets held by BFSL except land before the shares were sold to DLFCDL. The intention of the directors and promoters of BFSL is to transfer the underlying asset, being land to the buyer company DLFCDL. If the intention of the directors and promoters of BFSL was to transfer BFSL along with all its assets and liabilities, then all assets and liabilities belonging to BFSL would have remained ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... promoters had also applied to SEBI seeking exemption from making public offer for sale of these transactions. These unusual attempts of the assessee company finally culminated in selling a non-competitive stock for ₹ 4,490/- per share by stripping out all the assets and investments of BFSL, except the land it was reduced to a shell company. This shell company was used to transfer a red asset and promoters took the fruits of the transaction. BFSL and its promoters made deliberate attempt to structure deal to avoid tax implication. 11. For all the above reasons, the AO held that the assessee was not eligible for claim of exemption u/s. 10(38) of the Act and that the transaction in question in substance attracts tax invoking the ruli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e has preferred the present appeal before the Tribunal. 14. We have considered the grounds of appeal of the revenue and find that the issue raised by the AO in the order of assessment has already been decided by the Hon ble Karnataka High Court by judgment dated 09.04.2013 in ITA No.120/2011, in the case of Bhoruka Engineering Industries Ltd. (supra). The Hon ble ITAT in the case of Bhoruka Engineering Industries Ltd. in ITA No.1139/Bang/2010 , had upheld the order of the AO holding that the sale of shares by the various entities of Bhoruka group was a colorable device to evade tax and the capital gain on sale of shares was to be regarded as short term capital gain and exemption u/s.10(38) of the Act was not to be allowed. The assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
