Case Law Details
PCIT Vs Ziauddin A Siddique (Bombay High Court)
In a recent judgment, the Bombay High Court upheld the decision of the Income Tax Appellate Tribunal (ITAT) regarding the treatment of Long-Term Capital Gains (LTCG) arising from penny stock transactions. The case, PCIT Vs Ziauddin A Siddique, involved a dispute over the addition of LTCG amounting to Rs. 1,03,33,925/- by the Assessing Officer under section 68 of the Income Tax Act, 1961. The HC’s affirmation of the ITAT’s decision sheds light on the legality and interpretation of tax laws concerning penny stock transactions.
Analysis: The crux of the matter revolved around the genuineness of the transactions and the source of funds involved in the purchase of shares. The appellant argued that the shares were acquired from off-market sources and questioned the legitimacy of the increase in share price of Ramkrishna Fincap Ltd. (RFL), terming the LTCG as unaccounted income. However, both the ITAT and the HC found in favor of the respondent, highlighting several key points:
- Transaction Transparency: The Tribunal observed that the purchase and sale of shares were executed through stock exchanges and registered stockbrokers. Payments were made via banking channels, and Security Transaction Tax (STT) was duly paid, indicating transparency and legality in the transactions.
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