DCIT Vs Krishan Kumar (ITAT Delhi)
ITAT Delhi held that there is no case for making any addition u/s 68 of the Act in the hands of the assessee by denying the exemption under section 10(38) of the Act for the LTCG on sale of shares of Unno Industries Limited. Accordingly, appeal allowed.
Facts- The assessee is an individual and running a proprietary concern namely M/s Aggarwal Marble House engaged in the business of trading of marbles. During the year under consideration, the assessee had claimed exemption u/s. 10(38) of the Act on sale of shares of M/s Unno Industries Ltd. The scrip of M/s Unno Industries Ltd was considered as a penny stock by the revenue.
AO proceeded to deny the claim of exemption u/s. 10(38) of the Act claimed by the assessee in the sum of Rs 63,06,402/- representing the LTCG and brought the same to tax as unexplained cash credit in the hands of the assessee. Since the said sum was treated as accommodation entry, corresponding commission expenditure was also added as unexplained cash credit u/s. 68 of the Act by AO.
CIT(A) deleted the addition. Being aggrieved, revenue has preferred the present appeal.
Conclusion- Held that no malice or malafide could be attributed on the purpose of assessee venturing into investment in shares of Unno Industries Limited. Moreover, the payment for purchase of those shares, though allotted to him on preferential allotment basis, had been made by account payee cheque and share certificates to that effect were physically received and duly dematted with the registered depository participant. Further, the shares were purchased in assessment year 13-14 after obtaining the approval of the Hon’ble Bombay High Court approving the merger. No action whatsoever or adverse inference drawn on the assessee in the year of purchase of shares. When those shares are kept in demat account which were sold by the assessee in the open market after duly suffering STT, the same cannot be doubted by the revenue.
