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2017 (4) TMI 964 - ITAT BANGALORE

2017 (4) TMI 964 - ITAT BANGALORE - TMI - Claim of long term capital gain from sale of shares and treating the same as income from other sources - Held that:- It is not in dispute that these shares were finally dematerialized and shown in the demat account of the assessee however, the actual date of dematerialization entry in the demat account is not proved by the assessee. The request for dematerialization dated 08.12.2005 itself is not a conclusive proof of converting the shares into the demat .....

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on the date of dematerialization would be considered as purchase consideration of the shares and consequently the sale on 27.02.2007 may result short term capital gain or long term capital gain as case may be depending upon the date of dematerialization of the shares. Further the quantum of capital gain is also depending on the purchase price which is the prevailing price on the date of dematerialization. Accordingly, this issue of computation of capital gain whether it is short term or long te .....

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Appeals of the assessee allowed for statistical purposes. - ITA No. 2193/Bang/2016, ITA No. 2194/Bang/2016, ITA No. 2195/Bang/2016 - Dated:- 18-4-2017 - SHRI VIJAY PAL RAO, JUDICIAL MEMBER For The Appellant : Shri H.N. Khincha, CA For The Respondent : Shri AR.V. Sreenivasan, JCIT(DR) ORDER Per Vijay Pal Rao, Judicial Member These three appeals by three individual assesses are directed against the three separate orders of CIT(A) dated 14.10.2016 and 06.10.2016 for the assessment year 2007-08. Si .....

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red in passing the order in the manner passed by him and the learned Commissioner of Income tax (Appeals) has erred in confirming the same. The impugned orders being bad in law, void ab-initio are required to be quashed. 2. In any case, the conditions precedent for the issue of notice u/s. 148 of the Act being absent, the re-opening of assessment becomes bad in law and consequently the order as passed/confirmed being also bad in law is required to be quashed. 3.1 In any case the order passed in .....

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nd circumstances of the case, arguments of the appellant and the law applicable. 3.3 In any case and without prejudice, the orders passed by the authorities below being contrary to binding dictum of the jurisdictional High Court are bad in law and are liable to be quashed. 4. The assessing officer had in any case erred in treating a sum of ₹ 7,52,505/- being sale consideration received on sale of shares as 'Income from other sources' and the learned Commissioner of Income tax (Appe .....

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s exempt U/s. 10(38) of the I.T. Act.. c) Holding without basis that the transaction in shares are fraudulent d) Alleging without any basis that the appellant has obtained accommodation entries and appellant's own money come back in the guise of capital gains. The conclusions / observations of authorities below being totally erroneous and without basis both on facts and law is to be disregarded. 5.2 The several observations made and various conclusions drawn by the lower authorities in the c .....

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the above and other grounds to be adduced at the time of hearing it is requested that the impugned order be quashed or atleast the income from Long Term Capital Gain as claimed exempt U/s. 10(38) of the I.T. Act, 1961, be accepted, the assessment of sale consideration received on sale of shares as Income from Other Sources be deleted and the interest levied be also deleted. 2. Ground no. 1 is general in nature and does not require any specific adjudication. 3. Ground no. 2 is regarding validity .....

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ssessee is an individual and filed the return of income declaring inter alia the long term capital gain of ₹ 7,40,586/- on sale of shares of M/s. Talent Infoway Limited and claimed exempt u/s. 10(38) of the Act. There was a search and seizure action u/s. 132 of the IT Act in case of M/s. Mahasagar Securities and Mukesh Choksi Group on 25.11.2009, wherein Shri Mukesh Choksi the key person of the said group admitted in the statement recorded by the investigation wing that his group companies .....

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ares through the broker M/s. Goldstar Finvest Pvt. Ltd. The assessment was reopened by the AO by issuing notice u/s. 148 of IT Act. The AO completed the reassessment by making an addition u/s. 68 towards the sale consideration received on account of sale of M/s. Talent Infoway Limited. Thus the AO made an addition on account of share transactions treating them as income from other sources on the ground that Shri Mukesh Choksi has stated in the statement that the entries are accommodative in natu .....

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ee has submitted that the assessee purchases the shares of M/s. Talent Infoway Limited on 15.04.2004 for a consideration of ₹ 11,914/- which were dematerialized in the month of December 2005 and thereafter the shares were sold on 27.02.2007. Thus the ld. AR has submitted that the sale of shares were not in dispute as the assessee sold the shares from its demat account and the entire transaction of sale was through banking channel. Thus, the profit on sale of shares of M/s. Talent Infoway L .....

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e has referred to the demat account details of the assessee and submitted that a transaction has been reflected in the demat account and therefore it cannot be doubted as held by the AO and confirmed by the CIT(A) treating it as a bogus transaction in the nature of accommodation entries taken from a group concern of Shri Mukesh Choksi. In support of his contention he has relied upon decision dated 23.03.2011 of the coordinate bench of the Tribunal in case of Smt. Vimala Devi Chhajer at page 25 o .....

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The ld. AR has also referred to the provisions of section 10(38) and submitted that if a transaction of sale of shares is subjected to Security Transaction Tax (STT) then the long term capital gain arising of such transactions is exempt. He has then referred to the contract note and submitted that the transaction of sale was duly subjected to STT and therefore the benefit of section 10(38) cannot be denied. 6. On the other hand, the ld. DR has submitted that the sale in question is not through .....

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authorized to trade in the stock exchange and in the shares. Therefore, the contract note produced by the assessee does not prove the transaction of purchase. Further, the assessee has also failed to prove the payment of consideration as the assessee has claimed the payment through cash. He has relied upon the orders of the authorities below. 7. I have considered the rival submissions as well as relevant material on record. The assessee claimed to have purchased 7,900 shares of M/s. Talent Info .....

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shares were sold for a consideration of ₹ 7,51,816.31/- and thereby claim to have earned long term capital gain of ₹ 7,39,902.31/- against the investment of ₹ 11,914/-. The nature of transaction itself is not free from the doubt of manipulation in the purchases and sale transaction and therefore the AO was required to conduct a proper enquiry. The AO has rejected the claim of the assessee on the ground that in the case of search and seizure action u/s. 132 of the IT Act Shri M .....

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disputed. Therefore even if the assessee has not produced a conclusive evidence to prove the transaction of purchase on 15.04.2004 however the holding of shares by the assessee as on the date of dematerialization cannot be doubted. The assessee has claimed that the shares were dematerialized in the month of December 2005. In support of claim the assessee has referred the dematerialization request form dated 08.12.2005, and the details of demat account wherein the transaction of sale of shares of .....

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