Case Law Details
PCIT Vs Parasben Kasturchand Kochar (Gujarat High Court)
Introduction: In a significant judgment that reverberated through the corridors of tax law and policy, the Gujarat High Court delivered a decisive verdict in the case of PCIT -1 Vs Parasben Kasturchand Kochar. This case centered around the contentious issue of the legitimacy of long-term capital gains (LTCG) claimed as exempt under Section 10(38) of the Income Tax Act, 1961. The Revenue’s appeal challenged the Income Tax Appellate Tribunal, Ahmedabad Bench’s decision dated February 20, 2020, which had deleted the addition of Rs.9,70,468 made on account of LTCG.
Detailed Analysis
The crux of the dispute was whether the transactions through which the assessee claimed to have earned long-term capital gains were genuine or were merely sham transactions carried out through “penny scripts companies/paper companies.” The Revenue contended that these transactions were pre-arranged and not genuine, thereby questioning the exemption claimed under Section 10(38) of the Act.
The Income Tax Appellate Tribunal (ITAT), after a thorough examination of the facts and evidence presented, found in favor of the assessee. Key points leading to the ITAT’s decision included the assessee’s ability to furnish all relevant details regarding the transactions, including bank statements and Demat account records maintained with ICICI Securities Ltd. Notably, the Tribunal acknowledged that some shares remained in the appellant’s account after the gain, further substantiating the genuineness of the transactions.
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