Sandip Bhikhubhai Padsala Vs. ITO & Anr. (Gujarat High Court)
It is submitted that as such the petitioner – assessee did not claim interest under section 40(a)(ia) of the Income Tax Act, and therefore, there was no question of reopening of the assessment on the aforesaid ground.
it is an admitted position that the petitioner – assessee did not claim any interest under section 40(a)(ia) of the Income Tax Act, and therefore, on the aforesaid ground the assessing officer is not justified in reopening the assessment.
No exemption under section 10(38) could be allowed in respect of capital gains arising on sale of shares held for less than 12 months period.
The claim of assessee that shares were purchased on 2-6-2007 was not tenable. It was required to be treated as purchase on 2-12-2010 for 90,000 and on 16-3-2011 for 2,20,000 shares as evident from the d-mat account. As such, period of holding was less than 12 months, the assessee was not entitled of exemption under section 10(38) of the Act and liable to tax under section 111A.
Full Text of the High Court Judgment / Order is as follows:-
Rule. Ms. Mauna Bhatt, learned advocate waives service of notice of rule on behalf of the respondents.
2. In the facts and circumstances of the case and with the consent of the learned advocates appearing on behalf of the respective parties, the present petition is taken up for final hearing today.
3. By way of this petition under Article 226 of the Constitution of India the petitioner – assessee has challenged the impugned notice dated 16-3-2016 issued under section 148 of the Income Tax Act by which for the assessment year 2011-12 the assessment is sought to be reopened for the reasons recorded in the communication dated 27-6-2016.
4. The petitioner – assessee filed the return of income for the assessment year 2011-12. After filing of the return of income, the petitioner – assessee was served with the notice under section 143(2) of the Income Tax Act. In the scrutiny assessment vide notice dated 7-3-2014 the petitioner – assessee was called upon to furnish necessary information/details, more particularly, with respect to the sale transaction of shares of Unitech International Ltd. The petitioner – assessee replied to the same vide reply dated 8-1-2014 as well as 18-3-2014. It was the case on behalf of the petitioner – assessee that the aforesaid shares were acquired by him in the year 2007-08 and were subsequently transferred in his name, which were demated. It was also the case on behalf of the petitioner – assessee that the shares in question were in fact shown in his books of accounts in the earlier assessment years, more particularly, assessment year 2008-09 and 2009- 10. Considering the material on record, the assessing officer accepted the claim of the petitioner – assessee of long term capital gains of Rs. 287,81,495 as exempted under the provisions of the Income Tax Act. Thereafter, the petitioner was served with the notice under section 148 of the Income Tax Act dated 16-3-2016 by which the assessment for the assessment year 2011-12 is sought to be reopened. On the petitioner asking the reasons recorded to reopen the assessment the petitioner vide communication dated 27-6-2016 has been served with the reasons recorded, which reads as under;
“In this case, assessee is same and assessment year is also same i.e., 2011-12. However, both the issues are separate and therefore reasons recorded for reopening of assessment separately are as under;
The case was selected for scrutiny. The assessment was finalized under section 143(3) of the Income Tax Act determining total income of Rs. 69,01,855 vide order dated 28-3-2014.
Issue No. 1 :–
As per section 2(42A) of the Act, in the case of a share held in a company as capital asset for not more than 12 months is required to be treated as short term capital assets. If holding period is more than 12 months, it is considered as long term capital assets. As per section 10(38) of the Act, any income arising from the transfer of a long term capital asset, being an equity share in a company where any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund where the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and such transaction is chargeable to securities transaction tax under that Chapter is exempted from payment of tax. As per section 111A of the Act, any income arising from the transfer of a short-term capital asset, being an equity share in a company where any income arising from the transfer of a short-term capital asset, being an equity share in a company or a unit of an equity oriented fund where the transaction of sale of such equity share or unit is entered into on or after the date on which Chapter VII of the Finance (No. 2) Act, 2004 comes into force; and such transaction is chargeable to securities transaction tax under that Chapter is chargeable to tax @ 15 percent. The assessee is engaged in dealing in shares, income from salary, long term capital gain and short term capital gain. The assessee filed return of income for assessment year 2011-12 on 17-10-2011 declaring income of 49,28,380. Thereafter, assessee had filed revised return of income on 26-12-2011 declaring total income of 68,84,660. The same was assessed under section 143(3) and income was assessed at 69,01,800 vide order dated 28-3-2014. Audit Scrutiny of profit & loss account, balance sheet, computation of income details submitted in respect of exempted income claimed under section 10(38) of the Act revealed that assessee has claimed exempted long term capital gain of Rs. 2,87,81,495 under section 10(38) of the Act on account of sale of 3,10,000 share of United International Ltd as under;–
