TMI Blog2015 (10) TMI 317X X X X Extracts X X X X X X X X Extracts X X X X ..... /s Alliance Intermediateries & Network Pvt. Ltd. issued confirmation certificates acknowledging the fact that shares were held in its pool account on behalf of assessee till it is transferred to assessee’s D-mat account. When assessee has produced all documentary evidences and has also submitted its explanation before AO as well as ld. CIT(A), there is no reason to disbelieve the same unless strong and positive evidence is brought on record to disprove the same. As it appears, AO only on extraneous considerations and presumptions & surmises has concluded that assessee has purchased the shares only on 15 & 17/05/07 while treating the gain derived from sale of shares as short term capital gain. See Jafferali K. Rattonsey Versus Deputy Commissioner of Income-tax, Central Circle 5 [2012 (7) TMI 577 - ITAT MUMBAI ] In the present case, the contract note of purchase of shares clearly indicate the date of purchase as 04/04/2006. In the aforesaid view of the matter, finding no infirmity in the order of ld. CIT(A), we are inclined to uphold the same and dismiss the grounds raised by the department. - Decided against revenue - ITA No. 153/Hyd/2015, C.O. No. 16/Hyd/2015 - - - Dated:- 4-9- ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance Intermediateries Network Pvt. Ltd. were held in its pool account till it was transferred to assessee s D-mat account on 15/05/07. As observed by AO, enquiries made with Bombay Stock Exchange revealed that M/s Alliance Intermediateries Network Pvt. Ltd. in whose pool account shares of M/s Jai Corporation Ltd. were held from 03/04/06 to 16/05/07 was neither registered as a trading per of exchange nor registered as a subbroker affiliated to any trading member of exchange. Further, enquiries made on National Stock Exchange also reveal that M/s Alliance Intermediateries Network Pvt. Ltd. was a registered subbroker affiliated to M/s ISE Securities and Services Ltd. and was registered in the capital market segment on 12/10/2000 and registration was cancelled on 19/02/04. AO accordingly issued a show cause notice to assessee proposing to treat capital gain derived on sale of shares of M/s Jai Corporation Ltd as assessee s income. In response to the show cause notice, submitted as under: a) The company Mis Alliance Intermediateries Net Work Pvt. ttd., is in existence and is filing its annual returns with the Registrar of Companies. In support of his argument, the assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urchase and sale contract notes for shares of M/s Jai Corporation Ltd., but, AO was not convinced with the same. AO observed that assessee could not produce evidence to show that purchase price of shares was paid to M/s Alliance Intermediateries Network Pvt. Ltd. Though, assessee submitted a receipt from M/s Alliance Intermediateries Network Pvt. Ltd. acknowledging receipt of ₹ 1,58,294 in cash towards purchase price of shares of M/s Jai Corporation Ltd., but, AO did not accept the same on the ground that how could assessee sitting at Hyderabad can pay cash to the company, which is in Mumbai. He also observed that amount of ₹ 1,58,294 does not match with purchase price quoted by assessee in the capital gain computation statement. AO further observed, to verify the genuineness of assessee s claim letters were addressed to Bombay Stock Exchange and National Stock Exchange calling for information regarding M/s Alliance Intermediateries Network Pvt. Ltd. and in response to the said letters, National Stock Exchange vide its letter dated 08/01/04 informed that, though, M/s Alliance Intermediateries Network Pvt. Ltd. was a registered sub-broker, but, the registration w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that shares were not held by M/s Alliance Intermediateries Network Pvt. Ltd. on assessee s behalf in its pool account when there are documentary evidences to prove such fact. Assessee submitted, since assessee was holding the shares of M/s Jai Corporation Ltd. for more than 12 months, gain derived from sale of shares can be treated as long term capital gain, which is exempt u/s 10(38) of the Act. As far as addition made u/s 69A is concerned, it was submitted by Assessee, when assessee has purchased the shares in 2006, AO was not justified in making the addition u/s 69A by considering the market price of the share as on 15th and 17/05/07 when the shares were transferred to assessee s D-mat account. 7. Ld. CIT(A) after considering the submissions of assessee in the light of facts and materials brought on record observed that purchase of shares are supported by receipt executed by broker on 05/04/06 as well as from the fact that the amount was paid out of cash withdrawn from firm s account. He further noted, investments in shares of M/s Jai Corporation Ltd. were reflected in the balance sheet of assessee for AY 2007-08, which were carried over to the next year and this fact was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eries Network Pvt. Ltd. Further, notice issued to M/s Alliance Intermediateries Network Pvt. Ltd.. by AO calling for information was not responded to. In these circumstances, claim of assessee that shares were purchased in FY 2006-07 and was held by broker in its pool account on behalf of assessee cannot be believed. Ld. DR submitted, onus is on assessee to establish with proper fact and evidence that shares were actually purchased and held by him for a period exceeding 12 months for claiming it as long term capital gain. It was submitted, when assessee has failed to establish such fact with proper evidence, AO was justified in treating the gain derived from sale of shares as short term capital gain considering the fact that as per the D-mat account shares were purchased by assessee on 15 and 17/05/07 and were sold on 16 and 18/05/07 respectively. 9. Ld. AR, on the other hand, supporting the finding of ld. CIT(A) submitted before us, assessee not only in the course of assessment proceeding, but during the proceeding before ld. CIT(A) has brought all documentary evidence to establish the fact that 1250 shares of M/s Jai Corporation Ltd were purchased by assessee in April 06 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the gain from sale of share transaction as capital gain, though he treated it as short term capital gain as against long term capital gain claimed by assessee. The only dispute AO is having is with the period of holding of shares of M/s Jai Corporation Ltd. It is the view of AO that since the shares of M/s Jai Corporation Ltd. were transferred to assessee s D-mat account on 15th and 17/5/07 and assessee has sold shares on 16th 18/05/07 respectively, gain derived from sale of such shares has to be treated as short term capital gain. In the process, AO has disbelieved assessee s claim that shares of M/s Jai Corporation Ltd were purchased in April 06 and were held on behalf of assessee in the pool account of M/s Alliance Intermediateries Network Pvt. Ltd. In this context, it is to be observed that on perusal of the balance sheet of assessee filed along with the return of income for AY 2007-08, copies of which are at page 62 of assesse s paper book, it is observed that assessee has shown investments in shares under the head current assets for an amount of ₹ 32,68,789.45. The details of investment as furnished in page 63 of the paper book shows investment in shares of M/s Ja ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ears, AO only on extraneous considerations and presumptions surmises has concluded that assessee has purchased the shares only on 15 17/05/07 while treating the gain derived from sale of shares as short term capital gain. ITAT, Mumbai Bench in case of Jafferali K. Rattonsey Vs. DCIT, [2012] 23 Taxmann.com 21 (Mum) while dealing with identical nature of dispute held as under: 9.7 The CBDT Circular No. 704 dtd. 28.4.1995 states that it is the date of broker s note that should be treated as the date of transfer in cases of sale transactions of securities provided such transactions are followed up by delivery of shares and also the transfer deeds. Similarly, in respect of the purchasers of the securities, the holding period shall be reckoned from the date of the broker s note for purchase on behalf of the investors. The CBDT Circular No. 768 dtd. 24.6.1998 was issued to clarify the determination of date of transfer and the period of holding of securities held in demat form. It has been stated there in that earlier Circular No. 704 issued by the CBDT relating to the date of transfer and period of holding does not change even when securities are held in the dematerializ ..... X X X X Extracts X X X X X X X X Extracts X X X X
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