Brief of the case:
In case of Shri Rajendra Pathak Vs. ACIT Jaipur Bench of ITAT have held that sale proceeds cannot be clubbed in the hands of the assessee as capital asset/capital gain arises/accrued outside India. Assessee got shares on the basis of work performance by his employe in London. Which were registered in the name of wife of assessee. Assessee sold shares listed in London Stock Exchange by HSBC securities In London, remuneration of which was received in the joint bank account of assessee and his wife. AO held that the sale proceeds are to be taxed in the hands of assessee. After going through the facts of the case ITAT held that Capital gain arises/accrued outside India can’t be clubbed in hands of NRI assessee.
Facts of the case:
- Assesee is a non-resident and filed his income tax return for the year under consideration on 09.01.2009 declaring income of Rs. 6,88,582/-.
- The case was picked up for scrutiny and notice u/s 143 (2) was issued by ACIT, Circle-2, Udaipur.
- Subsequently the case was transferred to ACIT (International Transaction), Jaipur and fresh notice u/s 143 (2) was issued.
- Assessee challenged the jurisdiction of subsequent AO.
- During the assessment proceedings AO observed that the assessee had claimed exemption in respect of capital gain income arising out of sale proceeds of Rs.41,98,615/- on account of sale of shares of Vedanta Resources Plc in lieu of his non-resident status.
- AO further observed that through a letter dated 16.04.2004 of Vedanta Resources Plc the assessee was allotted 3500 shares of Vedanta Resources Plc under the Long Term Incentive Plan. However, from the copy of share certificate issued on 27.03.2007 by the company, it was observed that the registered holder of the shares was Mrs. Sunita Pathak.
- On record there is a sale instruction form dated 21.05.2007 signed by Smt. Sunita Pathak. The sale proceeds were credited in a joint account with first name of Smt. Sunita Pathak and second name Shri Rajendra Pathak.
- AO had choose to compute the entire proceeds of Rs. 41,98,615/- in the hands of the wife as short term capital gain which by virtue of section 64 of the Act is being clubbed in the taxable income of the assessee.
Contention of the revenue:
