GST Helpdesk   Subscription   Demo   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Extracts
Home List
← Previous Next →

2015 (9) TMI 1235 - ITAT HYDERABAD

2015 (9) TMI 1235 - ITAT HYDERABAD - TMI - Penalty U/s. 271(1)(c) - furnishing of inaccurate particulars - concealment of income - claim of exemption u/s 10(38) whereas sale of shares was not through stock exchange - company adopted LIFO method where as AO adopted FIFO method for valuation of shares - Long Term Capital Gains claimed as ‘Short Term Capital Gain’ and setting off to the business loss claimed - Held that:- The principles laid down by the Hon'ble Supreme Court in the case of Price Wa .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of income cannot amount to furnishing inaccurate particulars of income.

As already stated, assessee had admitted the mistake it committed in claiming exemption, by filing revised computation and setting off to business loss, on the very first date of hearing itself before the same was noticed by the AO. Therefore, assessee has neither furnished inaccurate particulars nor concealed income. In fact it is not the case of Revenue that assessee has concealed any income. this is not a fit .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

sessee is aggrieved on levying penalty. 2. Briefly stated, assessee is an investment company and filed its return of income for the assessment year under consideration on 22-02- 2010 admitting a loss of ₹ 10,90,691/-. Along with that, assessee claimed exemption of dividend income of ₹ 2,91,625/- U/s. 10(34) and Long Term Capital Gains of ₹ 6,04,090/- U/s. 10(38). Loss under business was claimed to be carried forward. AO selected the case for scrutiny and in the scrutiny proceed .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

n the demat accounts maintained with M/s. North East Broking Services Ltd. These were sold on 02-05-2008 (again wrongly shown as 02-05-2011). Assessee also had another demat account in which 1,000 shares were with M/s. Networth Stock Broking Ltd., and these were sold on 10-07- 2008. Since shares were demat-ed on 20-03-2008 and 25-01-2008, assessee adopted the market price as on the date of demat as cost of acquisition while computing the capital gains. AO noted that assesseecompany adopted cost .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

377; 14,50,808/- whereas, the sale price being the same, the capital gains were re-worked out to ₹ 31,68,275/-. He also gave a finding that since the above shares were not sold through a recognized Stock Exchange and were not subjected to Securities Transaction Tax, Short Term Capital Gain of ₹ 31,68,275/- was proposed to be brought to tax for which assessee s AR agreed . Thus, AO completed the assessment by re-working out the capital gains on sale of investments and allowed it to be .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

impression that capital gains were exempt U/s. 10(38) and this was claimed purely by mistake. Further, it was submitted that calculation of capital gains was on the basis of method adopted FIFO/LIFO, which can only be a difference of opinion. The company adopted LIFO method where as AO adopted FIFO method. In order to co-operate with the department and not to have continued/ protracted litigation, assessee has accepted the method adopted by the AO and paid the taxes thereon. It was submitted th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

method considered to be mandatory for determination of period of holding and consequently for determination of cost of acquisition, he was of the opinion that it is not open for assessee to choose between FIFO and LIFO methods. It was further felt that assessee has not even adopted LIFO method in its computation and the price adopted was stated to be average price of scrip as on date of de-materialization. AO has come to the conclusion that assessee being furnished wrong particulars of its inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

₹ 9,79,000/-. 4. Before the Ld. CIT(A), assessee submitted that assessee was not aware of the provisions of Section 45(2A) to adopt FIFO and admitted that it was an inadvertent mistake. Assessee relied on the decision of Hon'ble Supreme Court in the case of Price Waterhouse Coopers Pvt. Ltd., Vs. CIT [348 ITR 306 (SC)], wherein, the Hon'ble Supreme Court has held that inadvertent mistake cannot be held to be concealment and submitted that while the decision of the Supreme Court was .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

her concealed the fact that the capital gains were short term in nature and not long term. Lastly, it adopted incorrect cost of acquisition of the shares. None of these actions are capable of occurring through oversight . Opining thus, Ld. CIT(A) confirmed the penalty and dismissed the appeal. 6. Assessee is aggrieved on the impugned order of the CIT(A) and raised two grounds holding that there is neither concealment of income nor furnishing of inaccurate particulars and CIT(A) erred in confirmi .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

curate particulars of such income. As seen from the assessment order and also the penalty order, AO initiated penalty proceedings for furnishing inaccurate particulars of such income. Therefore, it is not a case where assessee has concealed particulars of income. 8. Now, coming to the issue whether assessee has furnished inaccurate particulars of income, it is necessary to observe, what constitutes furnishing of inaccurate particulars . Hon'ble Supreme Court in the case of CIT Vs Reliance Pe .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ct, not according to truth or erroneous. In the absence of a finding by the AO that any details supplied by the assessee in its Return were found to be incorrect or erroneous or false, there would be no question of inviting penalty u/s 271(1)(c). (ii) The argument of the revenue that submitting an incorrect claim for expenditure would amount to giving inaccurate particulars of such income is not correct. By no stretch of imagination can the making of an incorrect claim in law tantamount to furni .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

hod for computation of capital gains, which is not sustainable in law by itself, will not amount to furnishing of inaccurate particulars of income. Keeping the principles laid down by the Hon'ble Supreme Court in the above said case, one has to examine whether, assessee s case falls under the principles laid down therein. 10. As briefly stated, assessee did in fact purchased shares from June, 2007 onwards. Not only that as seen from the earlier year computation of income, assessee has purcha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ent company and purchase and sale of shares was shown as business in earlier years. As seen from the Balance Sheet in the impugned assessment year, assessee had opening shares of Sagar Cements Ltd alone at ₹ 30,50,443/- and (with an aggregate market value of ₹ 12.71 Crores) and a further acquisition of shares to an extent of ₹ 11,08,51,434/- (at a market value of ₹ 4,69,85,670/-). Assessee has sold 12,000 shares during the year and claimed Long Term Capital Gain under the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

very first date of hearing, assessee has noticed the mistake in its own computation and filed revised computation before the AO. To that extent, even though assessee made a wrong claim at the time of filing the return, the same was deemed to have been rectified before the AO noticed it. 11. Now, that leaves with the issue of computation. AO in the assessment order neither relied on the provisions of Section 45(2A) nor relied on the Board Circular, but examining the demat account noticed that sha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ction 45(2A) and Circular 768 for the purpose of adopting a method, one has to examine whether that will apply to the shares which are purchased in physical form earlier. As far as stock of acquisition of physical shares is concerned, in view of the clear identity of the share numbers the shares can be identified and date of purchase can be identified with the shares which are submitted for transfer. Therefore, in the physical format, whether it is FIFO or LIFO, method is not a criteria as the p .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

3-2008 and 25-01-2008. As per the details mentioned in the assessment order, entire share holding in the demat account was sold. The shares of 11,000 were sold on 02-05-2008 and 1,000shares de-materialized on 25-01-2008 were sold on 10-07- 2008. Since the entire block of shares as available in the demat account were sold, question of invoking Section 45(2A) provisions does not arise. For the sake of clarity, provisions of Section 45(2A) are extracted as under: Sec. 45(2A) Where any person has ha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Depositories Act, 1996, and for the purposes of- (i) section 48; and (ii) proviso to clause (42A) of section 2, the cost of acquisition and the period of holding of any securities shall be determined on the basis of the first-in-first-out method. Explanation.-For the purposes of this sub-section, the expressions "beneficial owner", "depository" and "security" shall have the meanings respectively assigned to them in clauses (a), (e) and (l) of sub-section (1) of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of adoption on the basis of Board Circular is concerned, this does not apply to the single transfer of shares enblock. If assessee has de-materialized all the shares which it was holding (3,30,885 as per Balance Sheet as on 31-03-2009) then, if assessee was selling the shares in various phases or tranches, then adoption of FIFO method would become mandatory. In fact Board Circular vide para 5A has this clarification. FIFO method will be applied only in respect of the dematerialized holdings beca .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ialization. Since assessee has more number of shares than sold that too in physical format, it could have adopted average cost method. This is one way of arriving at the average cost of shares sold. There is no dispute by the AO that the price adopted by assessee as cost of acquisition is average price of shares it held on the date of dematerialization. This could be an incorrect method of arriving at the cost of acquisition where as, AO on examination of the purchase of shares as listed out by .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 



|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version