Case Law Details
From the proviso, it is evident that where the tax payable in respect of the transfer of a long term capital asset in the case of a listed company exceeds 10% of the amount of the capital gain before giving effect to the provisions of second proviso to Section 48, then such excess shall be ignored for the purpose of computing the tax payable by the assessee. In the case under appeal before us, admittedly, the assessee is a non-resident and JIL is a listed company. Therefore, proviso to section 112(1) was squarely applicable and learned CIT(A) rightly directed to Assessing Officer to give benefit of proviso to Section 112(1).
Relevant Extract of the Judgment
3. We have heard the arguments of both the sides and perused the material placed before us. The facts of the case are that during the year under consideration, the assessee has sold the shares of M/s Jagatjit Industries Ltd. (hereinafter referred to as “JIL”). The assessee is admittedly a non-resident. JIL is admittedly a listed company. The Assessing Officer, while computing the capital gain from the sale of shares of JIL, computed the capital gain without allowing the benefit of indexation while considering the cost of acquisition and charged capital gains tax at the rate of 20%. On appeal, learned CIT(A) issued following directions :-
“16.2 I find force in contention of the appellant that in respect of long term capital gains arising from transfer of shares acquired by utilizing INR, of Jagatjit Industries Ltd., a company listed on Bombay Stock Exchange, taxation shall be as per proviso to section 112(1) which says that if tax exceeds 10% of capital gains before giving benefit of indexation under 2nd proviso to section 48, then such excess shall be ignored. However, at the same time, the appellant has also sought benefit of indexation vide ground of appeal no.3(b) supra which has been partly allowed as per para 10.2 supra. The AO is directed to work out tax payable as per proviso to section 112(1) before allowing indexation and if it comes out to be lower than tax payable 20% after allowing indexation, then lower tax shall apply. In that situation, ground of appeal no. 3(b) shall become infructuous. The ground no.5(a) is disposed off accordingly.”
4. After considering the facts of the case and material placed before us, we do not find any infirmity in the above direction of learned CIT(A). Section 112 and proviso thereof read as under :-
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