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2015 (9) TMI 648

Short term capital gains in view of the SEBIís disgorging order - CIT(A)ís action challenged upholding assessment as short term capital gains on account of profits derived from sale of shares despite the fact that the same stood appropriated in SEBIís favour - Held that:- From the findings of the SEBI, it is implicit clear that both the assessees have indulged in violation of SEBI regulations, while making investments in IPOs. Whatever amounts they have illegally earned, which could be assessed .....

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UDICIAL MEMBER:- This Revenue s appeal for A.Y. 2007-08, arises from order of the CIT(A)-VI, Ahmedabad dated 15-04-2011 in appeal no. CIT(A)- VI/Cir.7/59/09-10, in proceedings under section 143(3) of the Income Tax Act, 1961; in short the Act. 2. The assessee s sole substantive ground challenges the CIT(A) s action in upholding assessment of ₹ 37,72,996/- as short term capital gains on account of profits derived from sale of shares despite the fact that the same stood appropriated in SEBI .....

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ssment order and appellant's submission. Appellant disclosed capital gain on sale of shares of Nissan copper Ltd. The shares were purchased and sold during the year through share broker from stock exchange. Broker has issued contract notes and bills for such transactions. In view of these evidences, it is clear that capital asset in the form of shares were purchased and sold during the year and accordingly the difference is liable for capital gain tax. Appellant has rightly disclosed the cap .....

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m transferred the capital gain to Sebi towards settlement charges. By agreeing to transfer capital gain, appellant cannot claim that it had not earned capital gain. The moment sale transaction is complete, capital gains is liable to tax. Payment or receipt of sale consideration is not required for charging capital gain. Undoubtedly sale transaction was complete during the year. Payment was not received but the same is not required to tax capital gain. Sebi has not passed any order by which the a .....

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n of the appellant is not of any help. Accordingly this ground of the appellant is rejected. In the final result appeal is dismissed. 4. We have heard both the parties and gone through case file. The assessees strongly argues against taxation of her short term capital gains in view of the SEBI s disgorging order. The Revenue s case in the light of Commissioner of Income Tax(A) s order is that the same arose in succeeding assessment years only which is not relevant for the relevant previous year. .....

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e CIT(A) contended that the activity of the assessee in the purchase and sale of shares is of investment in the shares, and it cannot be assessed under the head "business income". Alternatively, on the strength of SEBI order, he contended that no income ultimately resulted to both the assessee, therefore, the amount of Rs. ₹ 30,98,785/- and ₹ 29,17,331/- is to be excluded from the assessments, of both these assessees, respectively in the Asstt.Year 2006-07. He further conte .....

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s passed after the end of the accounting period, and therefore, before the SEBI order, the income had resulted to both the assessees. Assessees have made investment of ₹ 4 crores and ₹ 2.8 crores by financing benami investors. This shows their modus operandi and how they have undertaken the activity in an organized manner. It is to be assessed as business income. She further contended that as far as settlement charges are concerned, these are paid by the assessee in violation of SEBI .....

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eedings. Before the CIT(A), the assessee have already taken additional grounds of appeal on the strength of the SEBI order. Therefore, we find force in the contentions of the Id. Counsel for the assessee that ultimately no income has resulted to the assessees, out of these share transactions. The income of ₹ 30,98,785/- and ₹ 29,17,331/- is to be excluded from the hands of Smt.Reetaben R. Thakkar and Shri Monal Y. Thakkar respectively in the Asstt.Year 2006-07. The Revenue fails to p .....

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