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ACIT, Circle-3, Surat Versus Rajendrakumar R. Jariwala, Reshmaben R. Jariwala

2016 (3) TMI 177 - ITAT AHMEDABAD

Profit on sale of shares - short term capital gains subject to tax @ 10% as per provisions of sec. 111A OR addition(s) made by Assessing Officer on account of unexplained credits u/s 68 - non-genuine purchases/sales of transactions of shares - Held that:- The sale consideration received from sale of equity shares at ₹ 49,66,501/- cannot be treated as unexplained cash credit u/s 68 of the Act because assessee has offered complete explanation about the nature and source of the credit which h .....

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be taken care of by Chapter VII of the Finance No.2 Act of 2004 which provides for assessment, collection recovery of STT. Recognized stock exchange had been empowered to collect the STT, the A.O. is empowered to make assessment of such STT as per Section 102 of STT Act as per Chapter VII of the Finance Act No.2 of 2004. There is no contrary material to hold that is not in fact STT but some other charges except the apprehension of the A.O. which is not found substantiated. We, accordingly uphol .....

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against two separate orders of CIT(A)-II, Surat dated 29.05.2012. Assessments were framed u/s 143(3) r.w.s. 254 of the Income-tax Act, 1961 (in short the Act) for Asst. Year 2005-06 on 30.12.2001. The only common issue in both these appeals of Revenue is as regards to the order of ld. CIT(A) -I, in directing the Assessing Officer to treat the profit on sale of shares as short term capital gains subject to tax @ 10% as per provisions of sec. 111A of the Act, instead of addition(s) made by Assessi .....

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and in law, the Ld. CIT(A)- I, Surat has erred in deleting the addition of ₹ 49,66,501/-, without appreciating the fact that the assessee failed to prove that this is not an off market deal and submissions have not been made by the assessee in support of the claim u/slllA. [2] On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the Assessing Officer. [3] It is, therefore, prayed that the order of the CIT(A) may be set-side and that of Assessi .....

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6 declaring total income at ₹ 42,59,790/- including short term capital gain of ₹ 39,54,628/-. Original assessment u/s 143(3) of the Act was finalized on 17.12.2007 determining total income at ₹ 62,71,661/-. Revenue lost in appeal before CIT(A) vide his order dated 16.10.2008. Revenue filed appeal before the Tribunal and the Tribunal vide its order in ITA No.3323/Ahd/2008 restored the matter back to the file of Assessing Officer for fresh adjudication. Thereafter notice u/s 142( .....

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demat a/c and bank statement figuring out sale and purchase and equity shares, and amount paid/received towards purchase and sale. However, the Assessing Officer was not satisfied with the reply of assessee and went ahead to make addition again u/s 68 for ₹ 49,66,501/- being sale consideration received from sale of shares by observing following in his assessment order u/s 143(3) r.w.s. 254 of the Act- 10. In the instant case, the following facts come light on a detailed analysis of the sha .....

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Looking to the substantial profit on a penny scrip within a very short time, the said transaction should be taxed as adventure in the nature of trade and therefore cannot be considered as an investment under the head capital gains. Even if it is considered as short term capital gain, since the transaction is not through stock exchange with payment of STT and hence, the benefit of concessional rate of income-tax cannot be allowed. 11 In view of the above findings, the assessee's claim is reje .....

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.2008 has already discussed the relevant facts and issues involved in detail and allowed the appeal also. There are no new facts brought on record by AO during assessment proceedings to counter the documents / evidence filed by appellant as directed by Hon'ble ITAT. The AO failed to establish that the appel ant has not been able to fulfill all the conditions as set by Hon'ble ITAT. Moreover, the jurisdictional ITAT in the case of Smt. Ritaben Panwala and Smt. Mitaben Panwala vide order d .....

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of above, respectfully following the decisions of my predecessor as well as jurisdictional ITAT, addition made by AO is deleted. 5. Aggrieved, Revenue is now in appeal before the Tribunal. 6. The ld. DR relied on the order of Assessing Officer and did not bring any new material evidence on record. 7. The ld. AR submitted that in order to prove the genuineness of the transaction giving rise to short term capital gain as well as furnishing of supporting evidence for purchase and sale of shares, t .....

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i is enclosed herewith. 5. Zerox copies of share sold bills of M/s. Grishma Securities Pvt. Ltd. are enclosed herewith. 6. Confirmation account of M/s. Grishma Securities Pvt. Ltd. is enclosed herewith. 7. Certificate given by M/s. Grishma Securities Pvt. Ltd. regarding Security Transaction Tax deducted from sale transactions is enclosed herewith. 8. Zerox copy of form No.lODB showing payment of STT made is enclosed herewith. 9. Zerox copy of Demat account with Khandwala Intergrated Financial Se .....

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by account payee cheque, transferred the purchased shares in the demat account and thereafter sold the shares through M/s Grishma Securities P. Ltd., a Member of Bombay Stock Exchange (BSE)registered by SEBI, received sale consideration through bank account and also placed on record the proof that SSL was listed with BSE. Ld. AR further submitted that in all aspects the assessee has fulfilled the conditions laid down in the provisions of section 111A of the Act and therefore, the short term capi .....

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T vs. Ritabn Bhupendra Panwala vide order dated 31.5.2011 and appeal of Revenue was dismissed and the order of ld. CIT(A) was restored and transaction of short term capital gain was accepted to be covered u/s 111A of the Act. 9. We have heard the rival contentions and perused the material on record. The issue before us is to examine as to whether the transactions of purchase/sale of shares of SSL entered into by the assessee has resulted in short term capital gain taxable @ 105 as per provisions .....

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ee has offered complete explanation about the nature and source of the credit which has happened in the year under appeal through bank transaction and complete details of M/s Grishma Securities P. Ltd. (from whom the sale consideration of ₹ 49,66,501/- is received) in the form of its membership No., contract note, SEBI registration No., PAN and bank details were made available to the Assessing Officer. 11. As regards income of short term capital gain is concerned as to whether it comes wit .....

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te of taxation u/s 111A of the Income tax Act, 1961 on Capital Gain ₹ 38,51,861/- on the transactions of shares on which no security transaction tax has been paid by the assessee. 2) On the facts and in the circumstances of the case, the Ld. CIT(A) ought to have upheld the order of the A.O. on this issue." The above ground has been decided by the co-ordinate bench by observing as under :- 7. We have heard the rival submission and perused the material on record. In our considered view, .....

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n equity oriented fund and- (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 chargeable to securities transaction tax under that chapter; The tax payable by the assessee on the total income shall be the aggregate ofITA (i) the amount of income-tax calculated on such short term capital gains at the rate of [fifteen] per cent; and (ii) the amount of income .....

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vide SO 1058(E), dated 28.09.2004. Since the sale of shares have taken place in December 2004, the 1st condition as per Section 111A(1)(a) is satisfied. There is no dispute to the effect that such transaction i.e. sale of shares in Seagull Leafin are chargeable to STT as department has nowhere argued that they are not so chargeable. The only case made out by the revenues is that such ST was not paid. In other words, the contention of the revenue is that these sale of shares are chargeable to STT .....

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Chapter VII of the Finance Act No.2 of 2004. The claim of the assessee is that such STT has been deducted by the broker M/s. Garishma Securities Pvt. Ltd. as per certificate issued by them is not found incorrect. The only confusion remained was about the word used in the bill issued by Garishma Securities Pvt. Ltd. The said broker had mentioned the word "T/O.DE.CHG" for the sum of ₹ 3654.79 deducted by it and not treated by the revenue as STT whereas the broker had clarified by .....

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s that these shares transactions are not genuine. The CIT(A) has rejected these contentions. Further, there is no ground raised by the revenue about the alleged genuineness accepted by the Ld. CIT(A). The revenue has only challenged that no STT has been paid on sale of shares by Garishma Securities Pvt. Ltd. which we have held against the revenue as above. We, accordingly do not find any reason to take a different view. As a result, appeal filed by the revenue is dismissed. 12. From going throug .....

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