TMI Blog2019 (7) TMI 364X X X X Extracts X X X X X X X X Extracts X X X X ..... as declared by the parties shall be treated as the date of transfer - purchase of share made directly between the parties and not through stock exchange - HELD THAT:- According to the documents filed before us since the actual delivery of shares took place along with transfer deeds/contract bills, so that date should be considered the date of transfer. Thus, we note that assessee held the shares of M/s. Panchshul on 30.03.2012 (page 8 9 of paper book) which was later merged with M/s. KAFL and scrips of M/s KAFL was sold on 16.08.2013 28.08.2013, so the assessee was holding the shares in question for more than 12 months. Therefore, the claim of assessee for LTCG is valid in the eyes of law. - Decided in favour of assessee. - I.T.A. No. 70/Kol/2019 - - - Dated:- 3-7-2019 - Shri A. T. Varkey, JM And Dr. A. L. Saini, AM For the Appellant : Shri Subash Agarwal, Advocate For the Respondent : Shri Satyajit Mondal, Addl. CIT, Sr. DR ORDER PER SHRI A.T.VARKEY, JM This is appeal preferred by the assessee against the order of Ld. CIT(A) 10, Kolkata dated 26.12.2018 for Assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for the F.Y. 2013-14, Savings Account 00181000092536. 1. Transaction statement of depository account for F.Y. 2013-14 HDFC Bank Ltd. IN301549 client id 15999677. 2. Details of ledger of the share broker for the F.Y. 2013-14 of Baljit Securities Pvt. Ltd. 3. Transaction statement of depository account at share broker for F.Y. 2013-14 CDSL client id 120430000002820. 4. All the contract notes relating to the F.Y. 2013-14 of the share broker Baljit Securities Pvt. Ltd. 5. Profit Loss Account Balance Sheet for the F.Y. 2013-14. 6. A detailed scrip wise profit and loss for F.Y. 2013-14 both short term long term capital gain is provided. 4. Thereafter, the AO took note of the facts that the assessee had purchased 40000 shares of M/s. Panchshul Marketing Ltd. for ₹ 40,000/- as on 07.06.2012 and thereafter the shares of M/s. Kailash Auto Finance Ltd. was demerged with M/s. Panchshul Marketing Ltd. According to the AO after coming into effect the scheme of arrangement, the assessee received 40000 shares of the demerged company were converted to 40000 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... te the addition based on notional commission paid purportedly to the brokers. The ld. DR vehemently supported the order of the Ld. CIT(A) and drew our attention to the investigation report of the department and the fact that the SEBI has suspended the transaction of M/s. Kailash Auto Finance Ltd. and according to him the claim was bogus and the AO rightly held to be bogus transaction and denied the claim and added the commission given to the broker and he does not want us to interfere with the orders of the authorities below. 6. We have heard both the parties and also perused the records. The fact narrated above is not reported for the sake of brevity. However, we note that the assessee in order to claim the LTCG on sale of shares of M/s. Kailash Auto Finance Ltd. has produced the following documents from which we find the following facts: i. From a perusal of the purchase bill issued by M/s. Sanskrit Vincom Pvt. Ltd. dated 30.03.2012 to assessee in respect of sale of 40000 shares of M/s. Punchshul Marketing Pvt. Ltd. @ ₹ 1 per share which is found placed at page 8 of the Paper Book, we note that assessee purchased this scrips on 30.03.2012 a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al submissions and perused the materials available on record. We find lot of force in the arguments of the ld AR that the ld AO was not justified in rejecting the claim of the assessee on the basis of theory of surrounding circumstances, human conduct, and preponderance of probability without bringing on record any legal evidence against the assessee. We rely on the judgement of Special Bench of Mumbai Tribunal in the case of GTC Industries Ltd. (supra) for this proposition. The various facets of the arguments of the ld AR supra, with regard to impleading the assessee for drawing adverse inferences which remain unproved based on the evidences available on record, are not reiterated for the sake of brevity. The principles laid down in various case laws relied upon by the ld AR are also not reiterated for the sake of brevity. We find that the amalgamation of CPAL with KAFL has been approved by the order of Hon ble High Court. The ld AO ought not to have questioned the validity of the amalgamation scheme approved by the Hon ble High Court in May 2013 merely based on a statement given by a third party which has not been subject to cross examination. Moroever, it is also pertinent to n ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Investigation Wing in connection with the alleged bogus transactions in the shares of KAFL also did not implicate the assessee and/or his broker. It is also a matter of record that the assessee furnished all evidences in the form of bills, contract notes, demat statements and the bank accounts to prove the genuineness of the transactions relating to purchase and sale of shares resulting in LTCG. These evidences were neither found by the ld AO to be false or fabricated. The facts of the case and the evidences in support of the assessee s case clearly support the claim of the assessee that the transactions of the assessee were bonafide and genuine and therefore the ld AO was not justified in rejecting the assessee s claim of exemption under section 10(38) of the Act. We also find that the various case laws of Hon ble Jurisdictional High Court relied upon by the ld AR and findings given thereon would apply to the facts of the instant case. The ld DR was not able to furnish any contrary cases to this effect. Hence we hold that the ld AO was not justified in assessing the sale proceeds of shares of KAFL as undisclosed income of the assessee u/s 68 of the Act. We accordingly hold that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time and which are taken delivery of in one lot, are subsequently sold in parts and no correlation of the dates of purchase and sale is available. 2. When the securities are transacted through stock exchanges, it is the established procedure that the brokers first enter into contracts for purchase/sale of securities and thereafter, follow it up with delivery of shares, accompanies by transfer deeds duly signed by the registered holders. The seller is entitled to receive the consideration agreed to as on the date of contract. The Board are of the opinion 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. 9. We note in the present case the transaction of purchase of shares of M/s. Panchshul Marketing Ltd. took place directly between the parties and not through stock exchange. Therefore, the ..... 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