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TMI Blog2022 (5) TMI 948X X X X Extracts X X X X X X X X Extracts X X X X ..... on moved by the Revenue that it is covered by amended exceptions referred to in the CBDT Circular No.03/2018 dated 11.07.2018 and later amended on 20.08.2018. Therefore, this appeal was recalled for hearing on merits. Hence, the Revenue is in the present appeal before us. 3. The Revenue raised the following grounds of appeal :- "1. On facts and in Law, the Ld. CIT(A) has erred in allowing the claim of exemption u/s 10(38) of the Income Tax Act, 1961 when shares held as investment are converted into stock in trade is chargeable to tax u/s 45(2) of the Income Tax Act, 1961. 2. On facts, the Ld. CIT-A has erred in not appreciating the fact that the exemption u/s 10(38) is available to the assessee only when the investment is sold in the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erroneous and prejudicial to the interests of the Revenue as the exemption under the provisions of section 10(38) in respect of long term capital gains on sale of shares was allowed by the Assessing Officer without due enquiry. Accordingly, the Commissioner of Income Tax-II, Nashik in exercise the power of revision vested under the provisions of section 263 of the Act with him, had set-aside the assessment order passed u/s 143(3) and directed the Assessing Officer to pass afresh assessment order after examination of the documentary evidence in support of the exemption claimed u/s 10(38) vide order dated 26.03.2013 passed u/s 263 of the Act. 5. Consequent to the order passed u/s 263, the Assessing Officer after considering the details file ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... He further submitted that the assessee had shares value of Rs.95,29,192/- as on 01.04.2007. Out of which, shares costing to Rs.60,12,515/- were sold for Rs.1,06,78,267/- before 30.11.2007 on which there is long term capital gains of Rs.46,65,552/- which clearly indicates that the assessee is eligible for exemption u/s 10(38) of the Act. This fact is accepted by the ld. CIT as well in the revision proceedings. As regards to the balance of shares, the same were valued at Rs.1,86,84,272/- as on date of conversion i.e. 30.11.2007 as against the cost of investments of Rs.66,49,658/-. Thus, the long term capital gains of Rs.1,20,34,614/- which are taxable in the year of sale of shares by virtue of provisions of section 45(2) of the Act. Thus, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... part of the stock-in-trade. There is no dispute with regard to the computation of capital gains under the provisions of section 45(2) of the Act. The dispute is only with regard to the characterization of the securities sold i.e. investments converted into stock-in-trade. The fact that the securities are held as investments prior to conversion as on 30.11.2007 subsequent to the conversion of such investments into stock-in-trade as on 30.11.2007 is also undisputed. From reading of the assessment order, it appears that the Assessing Officer was under-impression that the Commissioner of Income Tax-II, Nashik in the order of revision held that the assessee was not eligible for exemption u/s 10(38), as mere reading of the order of revision, it w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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