Case Law Details
Mrs. Neelu Analjit Singh Vs Addl. CIT (ITAT Delhi)
The issue under consideration is Unlisted shares sold after holding for 23 months considered as Long Term Capital Gains or Short Term Capital Gains?
In the present case, assessee purchased unlisted company’s shares in financial year 2012-13 and sold in the assessment year 2014-15, she computed the indexed cost of acquisition of those shares. AO reached at the conclusion that assessee had shown above shares as ‘long-term capital asset’ whereas they were held for less than 36 months and therefore they are ‘short-term capital assets’. Therefore, according to the provisions of section 2(42A) AO held that sale of shares of an unlisted company, if held for less than 36 months, the asset is not a ‘long-term capital asset’ but a ‘short-term capital asset’.
ITAT states that the CBDT circular clearly clinches the issue and clarifies that, firstly, the benefit of shorter period of holding of 12 months to qualify as long term capital asset to unlisted shares has been removed prospectively from A.Y. 2015-16 and not for the earlier years; and secondly, the benefit of short period for holding of unlisted shares would be available only when such shares are transferred during the period beginning on 01.04.2014 and ending on 10.07.2014. Post 11.07.2014 the benefits of shorter period of unlisted shares could not be applicable. In the present case, the shares have been transferred prior to 31.03.2014, therefore, the newly amended Act would not be applicable at all and the assessee will get the benefit of shorter period, i.e., period of less than 36 months as given in section 2(42A) read with proviso thereto as per the relevant provision existed for the A.Y. 2014-15. Thus, ITAT hold that the AO as well as Ld.CIT (A) are not justified in law in re-characterizing/re-classifying the ‘long term capital gain’ to ‘short term capital gain’ shown by the asessee. Accordingly, the gain on transfer of SBPL’s share would be taxable as ‘long term capital gains’ and not short term capital gains and resultantly, the appeal filed by assessee is allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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