Smt. Geeta Khare vs. ACIT and Shri Shashikant B. Mhatre (HUF) vs. Income Tax Officer (ITAT Mumbai)
The Income Tax Appellate Tribunal (ITAT), Mumbai, disposed of two appeals together as they involved identical issues relating to Assessment Year 2014-15. With the consent of both parties, the appeal of Smt. Geeta Khare was treated as the lead case, and the decision was made applicable to the connected appeal of Shashikant B. Mhatre, subject to differences in figures and the name of the scrip.
The common issue before the Tribunal was whether the Commissioner of Income Tax (Appeals) was justified in upholding the Assessing Officer’s action of treating the assessee’s long-term capital gain (LTCG) of ₹2,26,36,372 arising from the sale of shares of SRK Industries Ltd. as bogus, denying exemption under Section 10(38) of the Income-tax Act, 1961, and taxing the amount under Section 68.
The assessee had filed her return declaring total income of ₹19,04,740 and claimed exemption under Section 10(38) on LTCG earned from the sale of shares. She explained that she had purchased 30,000 shares of Transcend Commerce Ltd. through an off-market transaction, paid the purchase consideration through RTGS, and the shares were credited to her demat account. Pursuant to a scheme of arrangement approved by the Bombay High Court and the Madras High Court, Transcend Commerce Ltd. merged with SRK Industries Ltd., resulting in allotment of SRK Industries Ltd. shares to the assessee. Following subdivision of the face value of the shares, the assessee ultimately held 1,33,200 shares, which she sold on the stock exchange through the registered broker Sharekhan Limited between 29.11.2013 and 15.01.2014. The sale proceeds, after deduction of Securities Transaction Tax (STT), brokerage and other charges, were credited through banking channels. The assessee produced purchase documents, demat statements, contract notes and bank records in support of the transactions.
