Case Law Details
Kiran Kumar Vs ACIT (ITAT Chennai)
The AO disallowed the exemption claimed u/s.10(38) solely based on the investigation report by SEBI pertaining to certain cases based from Kolkatta wherein share prices rigged substantially over a period of time. Merely on suspicion and surmises, this disallowance was made without any corroborative evidence. The AO failed to bring on record any evidence indicating bogus transactions. The essential requirements for a claim u/s. 10(38) are that; the income should arise from a sale of LTC Asset; that LTCA is an equity share in the company or unit of an equity oriented fund or unit of business trust; The transaction of sale entered comes on or after FA 2004 came into force; Such transaction is subject to Securities Transaction Tax. In this case, the genuineness of the transaction is not disputed by the lower authorities at all. All these transactions are through proper banking channels, Dematted and subjected to securities transaction tax. When the pre-requisite conditions imposed by the legislature stands complied in toto, the AO cannot proceed to treat the same as bogus and disallow the same solely based on the fact that the shares prices went up substantially. More importantly, said company Mahavir Remedies haven’t been termed as SHELL Company which involved in unlawful trading of scripts.
In this view of the matter and considering facts and circumstances of this case and also by following the judicial precedents of number of cases, we are of the considered view that the AO as well as the ld.CIT(A) were erred in holding that long term capital gain derived from transfer of equity shares of M/s. Mahavir Advanced Remedies Ltd., is bogus in nature, which is assessable as unexplained credit under the head ‘income from other sources’. Hence, we direct the AO to delete additions made towards long term capital gain derived from transfer of shares.
FULL TEXT OF THE ORDER OF ITAT CHENNAI
This appeal filed by the assessee is directed against order of the Commissioner of Income Tax (Appeals) 18, Chennai dated 14.11.2019 and pertains to assessment year 2015-16.
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