Smt. Sharmistha S.Shah, Ahmedabad V. The Income tax Officer,Ward-11(2), Ahmedabad

ITA 1355/AHD/2013

• Counselvise Citation: [2015] 121 COUNSELVISE.COM (IT) 1189 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 3 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-08-2015
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 09-05-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Assessee Lawyers: S N DIVETIA

Judgement Text

, C IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI ANIL CHATURVEDI, ACCOUNTANT MEMBER ./ ITA NO.1355/AHD/2013 /BLOCK ASSTT. YEAR: 2009-2010 SMT. SHARMISTHA S. SHAH C/O. B.S. SHAH & SONS G/6, SILVER OK BUILDING NR. MAHALAXMI CROSS ROAD PALDI, AHMEDABAD. PAN : ACIPS 6465 R VS ITO, WARD - 11(2) AHMEDABAD. %& / (APPELLANT) '( %& / (RESPONDENT) ASSESSEE BY : SHRI S.N. DIVETIA REVENUE BY : SHRI D.V. SINGH, SR.DR / DATE OF HEARING : 13/08/2015 / DATE OF PRONOUNCEMENT: 21/08/2015 )*/ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE ASSESSEE IS IN APPEAL BEFORE US AGAINST THE OR DER OF THE LD.CIT(A)-XVI, AHMEDABAD DATED 14.2.2013 PASSED FOR ASSTT.YEAR 2009- 10. 2. SOLITARY GRIEVANCE OF THE ASSESSEE IS THAT THE L D.CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF SET-OFF OF LONG TE RM CAPITAL LOSS OF 2,55,598/- AGAINST THE LONG TERM CAPITAL GAIN EARNE D BY THE ASSESSEE. 3. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTI NY ASSESSMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERV ED UPON THE ASSESSEE. IT REVEALED TO THE AO THAT THE ASSESSEE HAD 50% SHARE IN A ITA NO.1355/AHD/2013 2 PROPERTY VALUED AT RS.46,50,000/-. THIS PROPERTY W AS SOLD DURING THIS YEAR, AND THE ASSESSEE RECEIVED RS.23,25,000/-. SH E HAD EARNED LONG TERM CAPITAL GAIN OF RS.4,41,732/-. THE ASSESSEE H AD PURCHASED SHARES OF DIFFERENT COMPANIES FOR CUMULATIVE PRICE OF RS.4 ,85,147/- IN THE F.Y.2006-07 AND 2007-08. THESE SHARES WERE SOLD BY HER ON 23.12.2008 TO THE HUSBAND OF THE ASSESSEE FOR AN AM OUNT AGGREGATING TO RS.2,81,165/-. IN THESE TRANSACTIONS, THE ASSES SEE HAS SUFFERED A LOSS OF RS.2,03,982/-. THE SHARES WERE SOLD OFF-M ARKET WITHOUT PAYMENT OF STT. THE RATES WERE ADOPTED EQUIVALENT TO THE RATES SHOWN FOR THESE SHARES IN THE NEWSPAPER VIZ. ECONOMIC TIM ES DATED 23.12.2008. THE ASSESSEE HAS CLAIMED SET OFF OF TH E LOSS SUFFERED BY HER AGAINST THE LONG TERM CAPITAL GAIN EARNED BY HE R. THE LEARNED AO DISALLOWED THE CLAIM OF THE ASSESSEE ON THE GROUND THAT SINCE SHE HAD SOLD THE SHARES OFF-MARKET ON WHICH THE STT WAS N OT PAID, THEREFORE, THE ASSESSEE WOULD NOT GET EXEMPTION UNDER SECTION 10(38) OF THE INCOME TAX ACT. THE LEARNED AO DISALLOWED THE CLAI M OF THE ASSESSEE FOR SETTING-OFF OF THE LONG TERM CAPITAL LOSS ACCRU ED TO THE ASSESSEE ON SALE OF SHARES AGAINST THE LONG TERM CAPITAL GAIN E ARNED BY THE ASSESSEE ON SALE OF PROPERTY. 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSESSEE. 5. THE LEARNED COUNSEL FOR THE ASSESSEE, WHILE IMPU GNING THE ORDERS OF THE REVENUE AUTHORITIES, SUBMITTED THAT THE ASSE SSEE HAD RECEIVED PAYMENT THROUGH ACCOUNT PAYEE CHEQUES. HE PLACED C OPY OF THE BANK STATEMENT ON PAGE NO.8 AND 9 EXHIBITING THE PAYMENT RECEIVED FOR SALE OF SHARES. HE ALSO PLACED ON RECORD A COPY OF THE NEWSPAPER IN SUPPORT OF THE RATES ADOPTED BY THE ASSESSEE. THE ASSESSEE ALSO PRODUCED COPY OF THE BANK STATEMENT OF HER HUSBAND SHOWING PAYMEN T BY HIM TO THE ASSESSEE. THE ASSESSEE HAS SHOWN TRANSACTIONS STAT EMENTS EXHIBITING THE PURCHASE OF THESE SHARES IN HER DEMAT ACCOUNT. ALSO PLACED ON RECORD INVOICES AND DEMAT ACCOUNT OF THE PARTIES FR OM WHERE THE ITA NO.1355/AHD/2013 3 SHARES WERE PURCHASED BY HER. ON THE STRENGTH OF TH ESE DETAILS, HE CONTENDED THAT THE ASSESSEE HAS SUFFERED LOSS IN TH E TRANSACTION, WHICH OUGHT TO BE ALLOWED TO HER. 6. THE LEARNED DR, ON THE OTHER HAND, CONTENDED THA T THE ASSESSEE HAS NOT PAID STT AND THESE WERE SOLD TO HER HUSBAND , THEREFORE, SHE DOES NOT QUALIFY FOR ANY SET-OFF. 7. WE HAVE CAREFULLY CONSIDERED RIVAL CONTENTIONS A ND GONE THROUGH THE RECORD CAREFULLY. IN OUR OPINION, THE LEARNED REVENUE AUTHORITIES HAVE FAILED TO APPRECIATE THE TRANSACTION. THE ASS ESSEE HAS NOT CLAIMED THE EXEMPTION FROM TAXATION ON THE OUTCOME OF ALLEG ED SHARE TRANSACTION UNDER SECTION 10(38) OF THE INCOME TAX ACT. AS FAR AS PURCHASE OF SHARES AND THEIR SALE TO HER HUSBAND IS CONCERNED, THAT HAS NOT BEEN DOUBTED BY THE AO. THE ASSESSEE HAS PLACE D ON RECORD DETAILS OF PURCHASE AS WELL AS SALES, AND HOW SUCH SALE HAS TAKEN PLACE THROUGH BANKING CHANNEL. THE ASSESSEE AS WELL AS HER HUSBA ND ARE INDEPENDENT TAXABLE INDIVIDUALS. THERE IS NO PROHIBITION TO SE LL THESE SHARES TO HER HUSBAND. WE COULD APPRECIATE THE CONTENTIONS OF TH E LEARNED DR, IF THESE SHARES WERE NOT SOLD AT MARKET RATE. THE SHA RES WERE SOLD AT THE RATES APPEARED IN THE NEWSPAPER AND THAT ASPECT HAS NOT BEEN DOUBTED BY THE AO. ONCE THE GENUINE TRANSACTION HAS RESULT ED LONG TERM LOSS TO THE ASSESSEE, THEN, THAT CANNOT BE DENIED TO THE AS SESSEE FOR SETTING OFF AGAINST ANY LONG TERM CAPITAL GAIN. THE QUESTION O F NON-PAYMENT OF STT DOES NOT ARISE IN THIS SITUATION. IT COULD BE EXPLAINED IN OTHER WAY ALSO. SUPPOSE THE ASSESSEE HAD LONG TERM CAPITAL GA IN ON THESE SHARES, THEN, THAT WILL BE TAXED IN HER HAND, BECAUSE SHE H AS NOT PAID STT. BUT SIMULTANEOUSLY, SHE HAD LONG TERM LOSS ON SALE OF H OUSE PROPERTY. CAN IN THAT SITUATION, THAT LOSS WOULD NOT BE SET OFF A GAINST THE TAXABLE LONG TERM GAIN RESULTED TO THE ASSESSEE ON SALE OF SHARE S ? IN THE PRESENT CASE, CONVERSE SITUATION IS AVAILABLE. THEREFORE, IN OUR VIEW, THE ORDERS OF THE LD. REVENUE AUTHORITIES ARE NOT SUSTAINABLE. WE SET ASIDE BOTH ITA NO.1355/AHD/2013 4 THE ORDERS, AND DIRECT THE AO TO ALLOW SET OFF OF L OSS SUFFERED BY THE ASSESSEE ON SALE OF SHARES AGAINST THE LONG TERM CA PITAL GAIN EARNED BY IT. THE LEARNED AO SHALL CARRY OUT THESE EXERCISE AFTER PROVIDING DUE OPPORTUNITY OF HEARING TO THE ASSESSEE. 8. IN THE RESULT OF THE APPEAL OF THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE COURT ON 21 ST AUGUST, 2015 AT AHMEDABAD. SD/- SD/- (ANIL CHATURVEDI) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER AHMEDABAD; DATED 21/08/2015