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2016 (4) TMI 586 - ITAT AHMEDABAD

2016 (4) TMI 586 - ITAT AHMEDABAD - TMI - Treatment of shares purchased - LTCG - holding period - claim exemption under section 10 (38) - Held that:- Date of allotment is the date of acquisition of the shares in question and not date on which the same were credited to demat account. It has come on record that assessee’s holding period in question is of more than one year.

Acquisition of Equity shares can be from public issue, purchase from the market or preferential allotment as per .....

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onfused 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 Revenue is unable to draw a distinction on facts or law. We accordingly decide the issue .....

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-05-2012, in proceedings under section 263 and 143(3) r.w.s. 263 of the Income Tax Act, 1961; in short the Act respectively. 2. It emerges from a perusal of the case file that the assessee challenges the CIT s order passed in section 263 proceedings directing the Assessing Officer to complete a de-novo assessment after examining the issue of her long term capital gains of ₹ 1,53,10,736/- in the former appeal. The Revenue s case in its appeal pleads that the CIT(A) has erred in treating abo .....

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venue 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 s .....

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osal. She explained relevant facts pertaining to her acquisition of shares as under:- Your Goodself has observed that shares in Nagarjuna Construction Co. were allotted on preferential basis on 01/12/2004 and were sold on 08/12/2005, however, they were subject matter of lock-in-period of one year and the Id. AO has not inquired into whether the impugned shares were kept in lock-in-period and whether lock-inperiod of one year was expired on the date of sale of such shares or not. In this connecti .....

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; 238094 on 08/12/2005 and 27,000 Equity Share at ₹ 239 on 08/12/2005, which resulted into long term capital gain 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 we .....

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l gain. It transpires that she further highlighted that an identical assessee namely Aditi J. Vyas had succeeded before the CIT(A) on the very issue of treatment of long term capital gains vis-à-vis equity shares, lock in period and their allotment as preference shares qua the very entity M/s. Nagarjuna Construction Company (supra). The CIT has passed his dated 03-02-2011 reiterating contents of his show cause notice by treating it as a case of no enquiry being made in the course of frami .....

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te order as follows:- 2.3 I have considered the facts of the case; assessment order and appellant's written submission. CIT directed the AO by order under section 263 to examine the nature of shares allotted to her by Nagarjuna construction Ltd and to see whether sale of such shares are eligible for deduction under section 10(38). From the facts and documents submitted by the appellant before AO during assessment proceedings and before the undersigned during appeal proceedings, it is clear t .....

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same after holding the shares for more than one year. Accordingly appellant was entitled to exemption under section 10(38). Acquisition of Equity shares can be from public issue, purchase from the market or preferential allotment as per Sebl guidelines. Mature of acquisition of shares will not change the characters of Equity shares. Since assessing officer denied appellant the said exemption only on the ground that assessing officer did not sale Equity shares, such denial of exemption is based .....

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at was sold was Equity shares of Nagarjuna construction Ltd. Accordingly the addition made by the assessing officer is deleted. This leaves the Revenue aggrieved. 7. We have heard rival contentions. The sole issue between the parties in these two appeals is about assessee s treatment of shares purchased in M/s Nagarjuna Construction Company and the aspect of holding period thereof. It eminates from the case file that a coordinate bench in ITA No. 3115/Ahd/2009 DCIT vs. Aditi J. Vyas (supra) has .....

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. 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 holding, assessee has sold on 08/12/2005 41750 shares at ₹ 99,78,254/- and earned capital gain of ₹ 76,56,954/-. As per the definition of short-te .....

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s of his right to subscribe to such shares, the period shall be reckoned from the date of allotment of shares. It has further been clarified by a Circular of CBDT No.704 dated 28/04/1995, when a question was raised as regards to the date of transfer and about the day from which the holding period of the securities should reckoned. The Board has given the instruction as follows, only relevant portion; reproduced. ….. 2. When the securities are transacted through stock exchanges; it is the .....

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ollowed 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 .....

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