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2015 (10) TMI 2367 - ITAT HYDERABAD

2015 (10) TMI 2367 - ITAT HYDERABAD - TMI - Revision u/s 263 - listed securities of which sales was made by Assessee has suffered security transaction tax and therefore, the provisions of section 10(38) of the IT Act is squarely applicable and the income generated from sale and purchase of securities being long term capital asset is exempted - Held that:- The application of section 10(38) will warrant, only when the transaction had suffered STT. In the present case, the contention of assessee ha .....

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favour of the assessee. The assessee has decided to deal directly with the counter part and closed the deal. We do not see anything contrary to any statute and the revenue has not doubted the genuineness of the transaction. Hence, the transaction is complete even without transacting through stock exchange.

On perusal of the ratio laid down in case of Spectra Shares & Scrips (P) Ltd. (2013 (6) TMI 173 - ANDHRA PRADESH HIGH COURT), it is clear that the impugned order should be erroneou .....

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vailable and considered by the AO before passing of the assessment order. It was observed that all the relevant papers were available as part of the assessment file.

Hence, we conclude that ld. CIT has not enquired properly into the issue before coming to the conclusion that the assessment order was erroneous and prejudicial to the interests of revenue. Therefore, we quash the order of ld. CIT passed u/s 263 and restore the order of the AO - Decided in favour of assessee. - ITA No. 74 .....

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well as on merits. 3. Briefly the facts are, assessee a company is engaged in the business of trading in steel products. For the year under consideration, assessee filed its return of income on 30/09/2009 declaring total loss of ₹ 5,82,41,485. Assessee s case was selected for scrutiny and AO after verifying the books of account as well as other details and making necessary enquiry completed the assessment u/s 143(3) of the Act vide order dated 20/10/2011, accepting the loss returned by ass .....

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further observed that section 10(38) has been inserted with a particular object to grant exemption to such incomes as tax has already been levied. The long term capital loss of similar nature is also to be considered as exempt and the loss whatsoever derived is also to be taken as Nil. In view of the above observations, ld. CIT was of the view that assessment order passed is erroneous and prejudicial to the interests of revenue. Accordingly, he issued a notice to assessee on 17/12/13 requiring t .....

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ingly. 5. Aggrieved by the order of ld. CIT(A), assessee is in appeal before us. 6. Ld. AR contended before us that the ld. CIT erred in directing the AO to modify the assessment by disallowing the long term capital loss claimed by assessee. Ld. AR submitted that ld. CIT ought to have appreciated the fact that transfer of equity shares are not from the recognized stock exchange, but, the assessee made agreement with the other company to sell the shares. As per the terms of agreement, it had sold .....

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the assessment. Ld. AR relied upon the following cases in support of assessee s case: 1. Spectra Shares & Scrips (P) Ltd., [2013] 36 taxmann.com 348 (AP) 2. Malabar Industrial Co. Ltd. Vs. CIT, 243 ITR 0083. 7. Ld. DR, on the other hand, relied upon the order of ld. CIT and also submitted that listed shares should be transacted through stock exchange and be subjected to STT. 8. We have considered the submissions of the parties and perused the materials on record as well as the orders of rev .....

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ame shown by assessee of ₹ 2,60,07,607. In this connection, we refer to section 10(38), which reads as under: (38) any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund 72[or a unit of a business trust] where- (a) the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and (b) such transaction is charg .....

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rposes of this clause, "equity oriented fund" means a fund- (i) where the investible funds are invested by way of equity shares in domestic companies to the extent of more than sixty-five per cent of the total proceeds of such fund; and (ii) which has been set up under a scheme of a Mutual Fund specified under clause (23D) : Provided that the percentage of equity shareholding of the fund shall be computed with reference to the annual average of the monthly averages of the opening and c .....

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has resulted in loss of revenue; or where two views are possible and the ITO has taken one view with which the Commissioner does not agree, it cannot be treated as an erroneous order prejudicial to the interests of the revenue unless the view taken by the ITO is unsustainable in law. It has been held by this Court that where a sum not earned by a person is assessed as income in his hands on his so offering, the order passed by the Assessing Officer accepting the same as such will be erroneous a .....

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er: "31. From the above decisions, the following principles as to exercise of jurisdiction by the Commissioner u/s.263 of the Act can be culled out: (a) The Commissioner has to be satisfied of twin conditions, namely, (i) the order of the Assessing Officer sought to be revised is erroneous; and (ii) it is prejudicial to the interests of the Revenue. If one of them is absent - if the order of the Income Tax Officer is erroneous but is not prejudicial to the Revenue or if it is not erroneous .....

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eated as an erroneous order prejudicial to the interests of the Revenue, unless the view taken by the Income Tax Officer is unsustainable in law. (c) To invoke suo motu revisional powers to reopen a concluded assessment under Sec.263, the Commissioner must give reasons; that a bare reiteration by him that the order of the Income Tax Officer is erroneous insofar as it is prejudicial to the interests of the Revenue, will not suffice; that the reasons must be such as to show that the enhancement or .....

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to exercise his suo motu revisional powers unless supported by adequate reasons for doing so; that if a query is raised during the course of the scrutiny by the Assessing Officer, which was answered to the satisfaction of the Assessing Officer, but neither the query nor the answer were reflected in the assessment order, this would not by itself lead to the conclusion that the order of the Assessing Officer called for interference and revision. (e) The Commissioner cannot initiate proceedings wit .....

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d before allowing the expenditure in question has to be seen; that if there was an inquiry, even inadequate that would not by itself give occasion to the Commissioner to pass orders under Sec.263 merely because he has a different opinion in the matter; that it is only in cases of lack of inquiry that such a course of action would be open; that an assessment order made by the Income Tax Officer cannot be branded as erroneous by the Commissioner simply because, according to him, the order should h .....

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ommissioner is entitled to examine any other records which are available at the time of examination by him and to take into consideration even those events which arose subsequent to the order of assessment". 8.3. Thus, while applying the ratio of the above jurisdictional High Court and the provisions of section 10(38) to the facts of the case on hand, we observe the below facts: i) The application of section 10(38) will warrant, only when the transaction had suffered STT. In the present cas .....

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