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TMI Blog2024 (8) TMI 1117X X X X Extracts X X X X X X X X Extracts X X X X ..... directed to treat the sale of shares as a long term capital asset and, consequentially, the gain arising from such transfer be taxable as long term capital gain. 1.3. The Appellant further prays that the Ld. AO be directed to allow the Appellant "indexed cost of acquisition" as per second proviso to section 48 of the Act. 2.1. On the facts and in the circumstances of the case and in law, the Ld. NFAC erred in confirming the disallowance of deduction under section 54F of the Act made by the Ld. Ld. AO amounting to Rs. 2,16,47,059. 2.2. The Appellant prays that the Ld. AO be directed to allow deduction under section 54F of the Act amounting to Rs. 2,16,47,059. 3.1. On the facts and in the circumstances of the case and in law, the Ld. NFAC erred in confirming the addition made by the Ld. AO under section 69 of the Act amounting to Rs. 2,98,600 of cash deposits as unexplained investment. 3.2. The Appellant prays that the Ld. AO be directed to delete the addition of Rs. 2,98,600 made under section 69 of the Act. 4.1. On the facts and in the circumstances of the case and in law, the Ld. AO erred in charging interest under section 234B and under section 234C of the Act. 4.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ible for exemption u/s 54F of the Act. 4.1. Insofar as the deposit of cash is concerned, it is the say of the ld. Counsel that the returned income of the assessee is more than Rs. 50 Lakhs and the sale consideration of shares is more than Rs. 2 Crores and, therefore, the cash deposit of Rs. 3,08,600/- should not be questioned. The ld. D/R strongly supported the findings of the AO and the ld. CIT(A) and read the operative part of the assessment order. 5. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that the holding period of the impugned shares is around 31 months. It is true that provisions of Section 2(42A) of the Act has been amended to exclude the holding period of unlisted shares being held for 12 months to be treated as long term capital gain but the said amendment has come from AY 2015-16 and applicable therefrom and since the impugned AY is 2013-14, therefore, the amended provisions is not applicable. 5.1. A similar dispute was considered by the Hon'ble High Court of Madras in the case of CIT vs. Exim Rajathi India (P) Ltd. [2021] 438 ITR 19 (Mad.). The relevant findings read as under:- "9. The definition of "sh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce of thirty six months. 12. The argument of Mr.M.Swaminathan, learned Senior Standing Counsel is that the definition of "securities" as defined under section 2(h) of the Securities Contracts Act should be taken note of. This aspect has also been dealt with by the Tribunal and it was held that although under the Securities Contracts Act, the term "securities" includes shares, but in section 2(42A) of the Act, shares have been mentioned separately. As pointed out earlier, the use of the word "or" in between each of the categories of holding is very important and such distinction needs to be borne in mind. It may be true that "securities" as defined under section 2(h) of the Securities Contracts Act includes shares, scripts, stocks, bonds etc., that by itself cannot have an impact to give a different interpretation to the distinction of "short-term capital asset" as defined in section 2(42A) of the Act. 13. In Mohan Virwani v. Dy. CIT [2014] 51 taxmann.com 43/227 Taxman 131 (Mag.) (Kar.), the question which fell for consideration was whether the shares held by the assessee is a short term capital asset or a long term capital asset. The assessee in the said case, acquired shares i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... od of 12 months to qualify as "long term capital asset" was only applicable to unlisted shares sold during the period 1-4-2014 to 10-7-2014, in terms of second proviso to section 2(42A), which was inserted by the Finance (No.2) Act, 2014, with effect from 1-4-2015. 15. We find from paragraphs 85 to 87 of the order, which have crystallized the arguments of the learned counsel appearing for the assessee and the Revenue and we find those arguments to be substantially similarly to the arguments, which were advanced before us. The ultimate conclusion arrived at by the ITAT was that so far as the term used 'shares held in a company' is concerned, there is no category mentioned as listed or unlisted shares, albeit the condition for being listed in recognized stock exchange in India is for 'any other security'. The expression listed in a recognized stock exchange in India is only used for category of 'any other security' and not for the category of 'share held in a company'. Further after taking into consideration that the condition for the period of holding was curtailed from 36 months to 12 months by the Finance Act, 1987, it was only for 'share held ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is answered against the Revenue and in favour of the assessee. No costs. 6. Respectfully following the decision of the Hon'ble Madras High Court (supra), we set aside the findings of the ld. CIT(A) and direct the AO to treat the gains arising from sale of shares as long term capital gains. Since we have held that the capital gains to the assessee are long term capital gain, therefore, we direct the AO to re-consider the claim of exemption u/s 54F of the Act and decide the issue afresh as per the provisions of law, after affording reasonable and adequate opportunity of being heard to the assessee. Thus, these grounds are accordingly allowed. 7. Insofar as the cash deposit of Rs. 3,08,600/- is concerned, the explanation of the assessee that the same has been received out of the petty loans given to friends and relatives, cannot be brushed aside lightly, considering the returned income of assessee being more than Rs. 50 Lakhs and sale consideration being more than Rs. 2 Crores. The returned income and the capital gain go on to show the status of the assessee and, therefore, deposit of petty sum of Rs. 3,08,600/- on different dates should not be looked upon adversely. 7.1. Consider ..... X X X X Extracts X X X X X X X X Extracts X X X X
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