TMI Blog2012 (8) TMI 1064X X X X Extracts X X X X X X X X Extracts X X X X ..... ee's claim of long term capital gain is correct. In this view of the matter we set aside the order of the Id. CIT(A) and direct the A.O. to accept the long term capital gain declared by the assessee. - ITA No.5069/Mum/2009 - - - Dated:- 1-8-2012 - SHRI B.R. MITTAL, JUDICIAL MEMBER AND SHRI RAJENDRA, ACCOUNTANT MEMBER Assessee by : Shri Sashi Tulsiyan Revenue by : Shri Goli Sriniwas Rao ORDER PER RAJENDRA, A.M. Following Grounds of Appeal were filed by the Appellant against the order dated 19-06-2009 of the CIT(A) Central-II, Mumbai: On the facts and circumstances of the case and in law: 1. The learned CIT (Appeals), erred in confirming the finding of the Assessing Officer in not considering the gains on the sale of shares of ₹ 4,89,18,734/- as long term capital gains and thereby also confirming the consequent denial of exemption u/s 10(38) of the Income- tax Act, 1961. 2. The learned CIT (A) erred in confirming the finding of the Assessing Officer that the purchase of the shares can be considered only on the date of dematerialization and therefore the holding period becoming less than 12 months hence, the capital gains of ₹ 7,115, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the impugned shares were out of the balance held in her demat account, that the shares were transferred on the floor of the exchange, that the relevant bills and the contract notes for effecting transfer of shares were in her possession, that sale consideration of the shares was credited in her books of accounts through banking channels. Before the AO, she produced purchase contract notes, contact notes for sale, distinctive numbers of the shares purchased and sold copies of share certificates and the quotation of shares on the dates of purchase and sale. After considering the material available with him the AO held that the purchase of shares through an MSPL was not genuine, that the impugned shares were dematerialised only on date of sale or 2 to 3 days before the date of sale. Invoking the provisions of section 68 of the Act AO held that the entire transaction of sale and purchase of the shares was manipulated and the entire sale proceeds of shares was unaccounted income of the appellant for the assessment year under consideration. 4. Assessee preferred an appeal before the First Appellate Authority (FAA). After considering the submissions of the assessee and the assessm ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... price on the date of dematerialisation comes to ₹ 44110775/- which becomes unexplained investment in shares. After deducting the investment in shares from sale price the short term capital gain comes to ₹ 80,03,027/-. However, since he considered the entire receipt on the sale of shares as un- accounted income and added the same to the total income of the assessee u/s 68 of the I.T. Act he did not make any separate addition under' the head unexplained investment and short term capital gain. 9.1 We find the 1d CIT(A) deleted the addition u/s 68 on the ground that the sale of shares has not been doubted by the A.O. in the assessment proceedings as well as during remand proceedings and the assessee has proved the genuineness of the sale of shares, therefore, no addition can be made u/s.68 of the Act. The Revenue is not in appeal before us against the ld.CIT(A). However, the ld. CIT(A) upheld the alternate proposition of the A.O. that the purchase price on the date of dematerialisation of shares become unexplained investment in the hands of the assessee and the difference between in sale and purchase of shares has to be treated as short term capital gain since the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he ledger have been carried out through us. Mahasagar Securities have no relations with the J.K. Rattonsey and Smt. Hamida J. Rattonsey. 9.3.On the basis of the above statement of Mr. Mukesh Choksi the ld. CIT(A)upheld the alternate proposition of the A.O. that total purchase price date of dematerialisation of shares amounting to ₹ 4,41,10,775/- unexplained investment since the Purchases are not recorded in of the assessee on that date and the difference between the sale and the purchase price amounting to ₹ 80,03,027/ become short term capital gain, since the holding period of the shares is less than 12 months. 9.4.However we find during the Course of cross examination by the assesee before the A.O. on 29.12.2008 Mr. Mukesh Choksi confirmeded to have received the cheques from the assessee The relevant 'Question No. 2 and answer thereof is as under: Q.2.Question put up by Shri Digant Bhatt -We have issued a Cheque from Jaferalli K. Rattonsey Hamida Rattonsey for ₹ 12,40,565/ and ₹ 11,91,378/- respectively, which you have received, kindly confirm. Ans. I confirm the above cheques have been received by me. Similarly reply given by Shrj Mukes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upon by him. The CIT (A) also noted that Mr.Mukesh Choksi has been vacillating right through and has given different at different stages of the proceedings and therefore his evidence was unreliable. 9.6 In view of the above judicial decisions the statement of Mr. Mukesh Choksj cannot be a deciding factor for rejecting the genuineness of the purchase of shares by the assessee especially when all other supporting evidences filed by the assesee were neither proved to be false or untrue. We further find merit in the submission of the ld. Counsel for the assesse that the dematerializatjon of shares from physical holding is a lengthy process and takes considerable time. Therefore, when there is no dispute to the demateralization of shares before the date of sale, therefore, the shares were purchased much prior to the date of sale. 9.7 The CBDT Circular No. 704 dtd. 28.4.1995 states 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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