TMI Blog2016 (4) TMI 586X X X X Extracts X X X X X X X X Extracts X X X X ..... he ground that assessing officer did not sale Equity shares, such denial of exemption is based on wrong interpretation of facts and accordingly not sustainable. Equity shares allotted on preferential basis will not become preference shares. Preference shares are separate class of shares as per company's act and the same cannot be confused with preferential allotment of Equity shares. Accordingly the very basis of assessing officer's action of denying exemption to the assesse is wrong, therefore it is held that appellant is entitled to claim exemption under section 10 (38) since what was sold was Equity shares. Accordingly the addition made by the assessing officer is deleted. See Aditi J. Vyas [2011 (7) TMI 1201 - ITAT AHMEDABAD]. The Reven ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 263 jurisdiction by terming the above stated regular assessment erroneous causing prejudiced to the interest of the Revenue on the ground that the assessee had shown share investments of ₹ 0.88 crores including investments made in shares of M/s. Nagarjuna Construction company of ₹ 69.5 lacs stated to have been sold for ₹ 1,99,53,336/- resulting in the impugned long term capital gains indicated hereinabove. There is no dispute that the assessee had purchased the same on 01-12-2004. Their date of sale is 08-12- 2005. The CIT observed in the show cause notice that these shares revealed that the same in the nature of equity shares have been allotted on preferential basis subject to locking period as per SEBI guidelines. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of ₹ 1,53,10,736/-. Alongwith this letter, the assessee had also submitted Intimation given by Nagarjuna Construction Co. regarding allotment of Equity Shares on Preferential basis and the DEMAT statement. In respect thereto, the assessee submitted and explained to the Id. AO that the Equity Shares have been allotted to the Appellant on 01/12/2004 and subsequently they were credited to the DEMAT account of the Appellant on 05/02/2005 and therefore the period of holding as well as lock-in-period should be reckoned from the date of allotment i.e 01/12/2004. Having regards to the facts submitted and explained to the Id. AO, the Id. AO took a conscious view that the lock-in-period was reckoned from 01/12/2,004 and as the shares were sol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cuments submitted by the appellant before AO during assessment proceedings and before the undersigned during appeal proceedings, it is clear that appellant was allotted Equity shares on preferential allotment as per the scheme of SEBI. Assessing officer considered preferential allotment of Equity shares as preferential shares completely ignoring the fact that in allotment letter and all the documents the shares allotted were clearly Equity shares and not preference shares. Preference shares are separate category of shares not equivalent to Equity shares. Appellant also sold Equity shares only through stock exchange and paid STT on the same after holding the shares for more than one year. Accordingly appellant was entitled to exemption under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e carefully perused the orders of the authorities below. Undisputed fact is that the assessee had made an investment of ₹ 69,50,000/- in the equity shares of NCL on 01/12/2004. The assessee was allotted 25000 equity shares of ₹ 10/- each at a premium of ₹ 6,268/-. The assessee has therefore explained the cost of acquisition, i.e. 25000 x ₹ 278/- which comes to ₹ 69,50,000/-. Facts have further revealed that on 29/10/2005, there was split of the equity shares in the ratio of 1:5, accordingly, on every equity share of ₹ 10/- assessee got 5 equity shares of ₹ 2/- each. Therefore, due to the said split the holding of 25000 equity shares had gone up and converted into it 125000 shares. Out of the said ho ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. In case the transactions take place directly between the parties and not through stock exchanges the date of contract of sale as declared by the parties shall be treated as the date of transfer provided it is followed up by actual delivery of shares and the transfer deeds. 7.1 From the above, it is thus clear that date of contract is the date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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