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Sanju Verma Versus DCIT 25 (3) , Mumbai

Long Term Capital Gains - sale of mutual fund units of HSBC Fixed Term Series 59 - options to pay tax on LTCG @20% or 10% with or without indexation - Held that:- The taxes are to be collected by the authority of law as per the mandate of the Act. Merely because the assessee has not filed the details of long term capital gain in the return of income filed with the Revenue , the assessee cannot be denied the benefit of provisions of Section 112(1)(a) of the Act read with the first proviso to Sect .....

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with second proviso to Section 48 of the Act , to compute indexed cost of acquisition or indexed cost of improvement of the capital asset , or to be chargeable to tax @ 10% without adjusting the cost of acquisition or improvement with cost inflation index as per provisions of Section 112(1)(a) of the Act read with first proviso to Section 112(1) of the Act in the case of long term capital gain arising on transfer of listed securities or units or zero coupon bonds as applicable for the instant as .....

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IT DEY, JUDICIAL MEMBER AND SHRI RAMIT KOCHAR, ACCOUNTANT MEMBER For The Assessee : Shri Jitendra Jain For The Revenue : Shri Sunil Kumar Agarwal-DR ORDER PER RAMIT KOCHAR, Accountant Member This appeal, filed by the assessee, being ITA No. 5977/Mum/2013, is directed against the order dated 23.07.2013 passed by learned Commissioner of Income Tax (Appeals)- 35, Mumbai (hereinafter called the CIT(A) ), for the assessment year 2010-11, the appellate proceedings before the CIT(A) arising from the as .....

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al Gains accruing on sale of mutual fund units of HSBC Fixed Term Series 59. 2. The learned C.I.T. has failed to appreciate that the option of exercising indexed cost and paying tax on long term capital gains @ 20% or not exercising the option of indexed cost and paying tax @ 10% is the prerogative of the assessee and that this right cannot be denied by the revenue authorities. 3. The appellant prays that the benefit of indexation should be allowed while computing Long Term Capital gains. 3. The .....

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nt of ₹ 1,44,84,120/- was received from M/s HSBC, M.F. , D.N. Road, Fort, Mumbai . The A.O. called information from HSBC, Mutual Fund whereby the HSBC, M.F. intimated that the amount of ₹ 1,44,84,120/- represented redemption of HSBC Global Asset Management in which the assessee invested ₹ 1,29,00,000/- on 15.7.2008. The assessee submitted that it did not dispute that the said income of ₹ 15,84,120/- arose out of the redemption of the HSBC M.F. , whereby investment made by .....

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sed by the A.O. u/s 143(3) of the Act, the assesssee filed an first appeal before the CIT(A). 6. Before the CIT(A), the assessee submitted that benefit of cost inflation indexation should be granted to the assessee and submitted the working as under:- The capital gains working post indexation is as under: Capital gains on redemption of HSBC MF funds Units: Full value of sale consideration - 16.07.2009 ₹ 1,44,84,120/- Less indexed cost of acquisition purchase date- 15.07.2008 (12,900,000*63 .....

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t availed of the option of choosing of the method of calculation of the capital gains tax, the A.O. is free to adopt either method with or without applying cost inflation index. Thus, the CIT(A) directed the A.O. to calculate tax on the long term capital gain tax rate at 10% without indexation or 20% with indexation whichever is favorable to the Revenue, vide orders dated 23.07.2013. 7. Aggrieved by the orders dated 23.07.2013 of the CIT(A), the assesse filed second appeal with the Tribunal. 8. .....

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capital gains are not declared in the return of income filed by the assessee with the Revenue. The ld. Counsel for the assessee submitted that as per Section 112 of the Act read with the first proviso to Section 112(1) of the Act, the afore-stated benefit of option of paying tax on long term capital gains @20% after indexation or 10% without availing the benefit of indexation has to be granted to the assessee and merely because the gains are not declared in return of income filed with the Revenu .....

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the assessee, whichever is beneficial to the assessee. 9. The ld. D.R., on the other hand, submitted that to avail option u/s 112 of the Act, the assessee has to opt that option in the return of income filed with the Revenue. The assessee has not taken/availed the said option as the long term capital gains arising from transfer of HSBC MF were not declared in the return of income filed with the Revenue and the same cannot be now allowed to the assessee. 10. We have considered the rival contentio .....

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r of long term capital asset which is chargeable to tax under the head capital gain is chargeable to tax @ 20% after allowing the benefit of the cost inflation indexation as provided in the second proviso to Section 48 of the Act. However, with respect to the income arising from the transfer of long term capital asset being listed securities or units or zero coupon bonds for the instant assessment year under appeal shall be chargeable to tax @ 10% of the amount of capital gain before giving effe .....

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s contemplated by the wordings used by the legislature in the aforestated relevant provisions of the Act The relevant provisions of the Act as are applicable for the instant assessment year under appeal are reproduced hereunder : [Tax on long-term capital gains. 112. (1) Where the total income of an assessee includes any income, arising from the transfer of a long-term capital asset, which is chargeable under the head Capital gains , the tax payable by the assessee on the total income shall be t .....

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is not chargeable to income-tax, then, such long-term capital gains shall be reduced by the amount by which the total income as so reduced falls short of the maximum amount which is not chargeable to income-tax and the tax on the balance of such long-term capital gains shall be computed at the rate of twenty per cent ; ******* ******* 9[Provided that where the tax payable in respect of any income arising from the transfer of a long-term capital asset, being listed securities 10[or unit] 11[or ze .....

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n India; (b) unit shall have the meaning assigned to it in clause (b) of Explanation to section 115AB.]] ****** ****** The taxes are to be collected by the authority of law as per the mandate of the Act. Merely because the assessee has not filed the details of long term capital gain in the return of income filed with the Revenue , the assessee cannot be denied the benefit of provisions of Section 112(1)(a) of the Act read with the first proviso to Section 112(1) of the Act. The assessee being an .....

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