Mansi Modi (Poddar), Kolkata V. ITO, Ward - 32(1), Kolkata, Kolkata

ITA 1465/KOL/2010

• Counselvise Citation: [2011] 119 COUNSELVISE.COM (IT) 7260 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 4 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-12-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 12-08-2011
• Assessment Year: 2006-2007
• Appeal Filed On: 16-07-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: M BHATTACHARYA D R
• Assessee Lawyers: RAVI TULSYAN
• Section: 143(3)

Judgement Text

, ' , , IN THE INCOME TAX APPELLATE TRIBUNAL, B BENCH: KOLKATA ( ) , , , . . , , ) [BEFORE SRI MAHAVIR SINGH, J.M. & SRI C.D. RAO, A. M.] / I.T.A NO. 1465/KOL/2010 !' !' !' !' #$ #$ #$ #$ / ASSESSMENT YEAR : 2006-2007 MANSI MODI (PODDAR), KOLKATA -VS.- INCOME TAX OFFICER, WARD-32(1), KOLKATA (PAN : AIJPP 0952 D) ( &' &' &' &' /APPELLANT ) ( ()&' ()&' ()&' ()&' / RESPONDENT ) FOR THE APPELLANT ( &' ) : SHRI RAVI TULSYAN, A.R. FOR THE RESPONDENT ( ()&' ) : SHRI M. BHATTACHARYA, D.R. *! + , *! + , *! + , *! + , /DATE OF HEARING : 12.12.2011 -# , -# , -# , -# , /DATE OF PRONOUNCEMENT : 14.12.2011 . / ORDER PER SHRI MAHAVIR SINGH, JUDICIAL MEMBER/ , :- THIS APPEAL OF THE ASSESSEE IS ARISING OUT OF THE ORDER OF LD. COMMISSIONER OF INCOME- TAX (APPEALS)-XIX, KOLKATA IN APPEAL NO. 313/CIT(A. )-XIX/ITO, WARD-32(1), KOL/08-09 DATED 21.05.2010. THE ASSESSMENT WAS FRAMED BY ITO, WARD-32(1), KOLKATA UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (HEREINAFTER TO BE REFERRED TO AS THE ACT) FOR THE ASSESSMENT YEAR 2006-07 VIDE ORDER DATED 15.12.2008 . 2. THE ONLY ISSUE IN THIS APPEAL OF ASSESSEE IS AGA INST THE ORDER OF LD. CIT(APPEALS) CONFIRMING THE ACTION OF ASSESSING OFFICER IN TREAT ING THE LONG-TERM CAPITAL GAIN ON SALE OF SHARES AS SHORT-TERM CAPITAL GAIN. FOR THIS, ASSESS EE HAS RAISED FOLLOWING THREE GROUNDS :- (1) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) EARED IN CONFI RMING THE ACTION OF THE LD. AO IN TREATING THE CAPITAL GAINS ON SALE OF SHARES OF MAGMA LEASING LIMITED AS SHORT TERM CAPITAL GAIN. (2) THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN CONFI RMING THE ACTION OF ITA NO.1465/KOL./2010 2 THE ASSESSING OFFICER IN TREATING THE CAPITAL GAINS AS SHORT TERM CAPITAL GAINS ON THE BASIS OF PRESUMPTION AND IN COMPLETE D ISREGARD OF THE BOARD CIRCULAR. (3)THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE THE LD. COMMISSIONER OF INCOME-TAX (APPEALS) ERRED IN MAKIN G ASSUMPTIONS AND PRESUMPTIONS WHILE CONFIRMING THE ACTION OF THE ASS ESSING OFFICER IN TREATING THE LONG-TERM CAPITAL GAIN AS SHORT-TERM C APITAL GAIN. 3. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. THE BRIEF FACTS ARE THAT THE ASSESSEE CLAIMED LONG-TERM CAPITAL GAIN OF RS.16,92,511/- AS EXEMPT UNDER SECTION 10(38) OF THE ACT. ASSESSING O FFICER DURING THE COURSE OF ASSESSMENT PROCEEDINGS ON VERIFICATION OF BANK ACCOUNT AND LON G-TERM CAPITAL GAINS DETAILS REQUIRED THE ASSESSEE TO FILE DETAILS IN RESPECT TO CLAIM OF LON G-TERM CAPITAL GAIN OF RS.16,92,511/-, WHICH INCLUDES LONG-TERM CAPITAL GAINS OF RS.16,85,058/- FROM SALE OF EQUITY SHARES OF MAGMA LEASING LIMITED. AS PER DETAILS FILED, THE ASSESSEE CLAIMED TO HAVE PURCHASED THESE SHARES OF 15,300 OF MAGMA LEASING LIMITED FROM CELICA DEVELOP ERS PVT. LTD. ON 11.06.2004 AND SOLD 10,300 SHARES ON 21.03.2006 AND 5,000 SHARES ON 20. 03.2006. THE ASSESSING OFFICER NOTED FOLLOWING FOUR FACTS :- (I) THE ASSESSEE CLAIMED TO HAVE PURCHASED 15,300 S HARES FROM CELICA DEVELOPERS PVT. LTD. ON 11.06.04, FOR WHICH THE A/R HAS SUBMITTED A COPY OF PURCHASE BILL. IT IS APPARENT THAT IT WAS AN OFF -MARKET TRANSACTION. THE COST PRICE OF 15,300 SHARES WAS CLAIMED AT RS.4,20, 750/-. (II) AS FAR AS PAYMENT IS CONCERNED THE ASSESSEE CL AIMED THAT SHE HAD MADE AN ADVANCE OF RS.8,30,000/- ON 11.06.04 AND RS .4,20,750/- WAS APPROPRIATED OUT OF THE SAID ADVANCE. THE BALANCE S UM OF RS.4,09,250/- LYING WITH CELICA DEVELOPERS WAS SUBSEQUENTLY REFU NDED/ ADJUSTED. (III) FROM THE DEMAT TRANSACTIONS STATEMENT OF CELI CA DEVELOPERS PVT. LTD. FOR THE FINANCIAL YEAR 2004-05 IT IS EVIDENT THAT T HE CELICA DEVELOPERS PVT. LTD. RECEIVED 2,24,800 SHARES OF MAGMA LEASING LTD. (MAGMA FINCORP LTD.) ONLY ON 29.03.05. IT IS ALSO CRYSTAL CLEAR TH AT ON 11.06.04 CELICA DEVELOPERS PVT. LTD. DID NOT HAVE SHARE HOLDING OF MAGMA FINCORP LTD. (IV) FROM THE DEMAT TRANSACTIONS STATEMENT OF THE A SSESSEE AND THAT OF CELICA DEVELOPERS PVT. LTD. IT IS SEEN THAT THE ASS ESSEE RECEIVED 15,300 SHARES OF MAGMA FINCORP LTD. ONLY ON 31.03.05, WHIC H SHE HAD SOLD ON 20.03.06 AND 21.03.06. ITA NO.1465/KOL./2010 3 3.1. IN VIEW OF THE ABOVE NARRATED FACTS, ASSESSING OFFICER NOTED THAT THE ASSESSEE COULD NOT ESTABLISH THE PURCHASE OF SHARES OF MAGMA LEASING L TD. ON 11.06.2004 AND THEREBY HE OPINED THAT THE ACTUAL PURCHASE OF SHARES WAS ONLY ON 29.0 3.2005 WHEN IT RECEIVED THE SHARES IN HIS DEMAT ACCOUNT. ACCORDING TO THE ASSESSING OFFICER, SINCE THE DATE OF PURCHASE CAN BE CONSIDERED AS ON 29.03.2005, AND ASSESSEE SOLD SHAR ES ON 20 & 21/03/2006, THE CAPITAL GAIN CANNOT BE TREATED AS LONG-TERM RATER IT IS SHORT-TE RM CAPITAL GAIN. HE ASSESSED ACCORDINGLY. BEING AGGRIEVED, THE ASSEESESE PREFERRED APPEAL BEF ORE LD. CIT(APPEALS). LD. CIT(APPEALS) EXACTLY ON SIMILAR FINDING CONFIRMED THE ACTION OF ASSESSING OFFICER. 4. WE HAVE HEARD RIVAL CONTENTIONS AND GONE THROUGH THE FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSEE HAS PURCHASED SHARE S OF MAGMA LEASING LIMITED FROM CELICA DEVELOPERS PVT. LTD. ON 11.06.2004 AT A TOTAL CONSI DERATION OF RS.4,20,750/- AND THIS PAYMENT IS MADE BY CHEQUE OF RS.8,30,000/- DRAWN ON INDUSLA ND BANK, PARK STREET BRANCH, KOLKATA DATED 11.06.2004. THIS AMOUNT WAS ADJUSTED OUT OF T HE ABOVE PAYMENT OF RS.8,30,000/-. THE ASSESSEE PRODUCED EVIDENCE FOR PURCHASE OF SHARES I N THE SHAPE OF COPY OF BILL RAISED BY CELICA DEVELOPERS PVT. LTD. FOR SALE OF 15,300 SHARES @ RS .27.50 EACH. THE COPY OF BANK STATEMENT ALSO ESTABLISHED THAT THE AMOUNT OF RS.8,30,000/- W AS DRAWN IN FAVOUR OF CELICA DEVELOPERS PVT. LTD. OUT OF WHICH THIS AMOUNT WAS ADJUSTED. IT IS A FACT THAT THE DEMAT ACCOUNT OF ASSESSEE REFLECTS RECEIPT OF 15,300 SHARES OF MAGMA LEASING LIMITED FROM CELICA DEVELOPERS PVT. LTD. ONLY ON 31.03.2005, BUT THE ASSESSEE HAS ALREADY MA DE CORRESPONDENCE WITH CELICA DEVELOPERS PVT. LTD. FOR RELEASING OF HIS SHARES VIDE LETTER D ATED 14.06.2004 AND SUBSEQUENTLY 16.06.2004. BUT WHEN THE SHARES WERE NOT SENT BY CELICA DEVELOP ERS PVT. LTD. THE ASSESSEE FURTHER WROTE A LETTER DATED 08.12.2004 FOR RELEASING OF 15,300 NUM BER OF SHARES IN FAVOUR OF ASSESSEE AND TO THIS, CELICA DEVELOPERS PVT. LTD. VIDE LETTER DATED 10.12.2004 REPLIED THAT THESE SHARES ARE BEING TRANSFERRED TO YOUR DEMAT ACCOUNT AND FINALLY VIDE LETTER DATED 01.04.2005 IT HAS DELIVERED 15,300 NUMBER OF EQUITY SHARES OF MAGMA LEASING LIM ITED IN FAVOUR OF ASSESSEE. WE ARE OF THE VIEW THAT THE 15,300 SHARES OF MAGMA LEASING LI MITED WAS DULY ACCEPTED AND ACCORDINGLY PAYMENT OF RS.4,20,750/- WAS MADE ON 11.06.2004 (OU T OF ADJUSTED AMOUNT OF RS.8,30,000/- PAID VIDE CHEQUE) DRAWN ON INDUSLAND BANK, PARK STR EET BRANCH, KOLKATA. THE SELLER CELICA DEVELOPERS PVT. LTD. CONFIRMED THE PURCHASE TRANSAC TION AND PURCHASE BILL COUPLED WITH CONFIRMATION LETTER WAS ALSO ISSUED TO THE ASSESSEE . IN THIS REGARD, AS RELIED ON BY LD. COUNSEL FOR THE ASSESSEE, WE HAVE GONE THROUGH THE CBDT CIRCULA R NO. 704 DATED 28.04.1995, WHEREIN IT IS ITA NO.1465/KOL./2010 4 CLARIFIED THAT WHENEVER CAPITAL GAIN ARISES OUT OF SALE OF SHARES THROUGH PRIVATE SALE, THE DATE OF CONTRACT IS REQUIRED TO BE TREATED AS THE DATE OF T RANSFER. THE RELEVANT TEXT OF CIRCULAR READS AS UNDER :- 2. WHEN THE SECURITIES ARE TRANSACTED THROUGH STOC K EXCHANGES, IT IS THE ESTABLISHED PROCEDURE THAT THE BROKERS FIRST ENTER INTO CONTRACTS FOR PURCHASE/SALE OF SECURITIES AND THEREAFTER, FOL LOW IT UP WITH DELIVERY OF SHARES, ACCOMPANIED BY TRANSFER DEEDS D ULY SIGNED BY THE REGISTERED HOLDERS. THE SELLER IS ENTITLED TO RECEI VE THE CONSIDERATION AGREED TO AS ON THE DATE OF CONTRACT. THE BOARD ARE OF THE OPINION THAT IT IS THE DATE OF BROKERS NOTE THAT SHOULD BE TREA TED AS THE DATE OF TRANSFER IN CASES OF SALE TRANSACTIONS OF SECURITIE S PROVIDED SUCH TRANSACTIONS ARE FOLLOWED UP BY DELIVERY OF SHARES AND ALSO THE TRANSFER DEEDS. SIMILARLY, IN RESPECT OF THE PURCHA SERS OF THE SECURITIES, THE HOLDING PERIOD SHALL BE RECKONED FROM THE DATE OF THE BROKERS NOTE FOR PURCHASE ON BEHALF OF THE INVESTORS. IN CASE TH E TRANSACTIONS TAKE PLACE DIRECTLY BETWEEN THE PARTIES AND NOT THROUGH STOCK EXCHANGES, THE DATE OF CONTRACT OF SALE AS DECLARED BY THE PAR TIES SHALL BE TREATED AS THE DATE OF TRANSFER PROVIDED IT IS FOLLOWED UP BY ACTUAL DELIVERY OF SHARES AND THE TRANSFER DEEDS. 4.1. FROM THE ABOVE FACTS AND CIRCUMSTANCES AND THE CBDT CIRCULAR NO. 704 DATED 28.04.1995, WE ARE OF THE VIEW THAT IN THE PRESENT CASE, THE INTENTION OF THE PARTIES IS VERY CLEAR THAT THE DATE OF CONTRACT OF SALE, I.E. 11.06.2004 IS THE DATE OF TRANSACTION AND THIS DATE REQUIRES TO BE TREATED AS DATE OF TRANSFER. IN VIEW OF THE A BOVE FACTS, WE ARE OF THE VIEW THAT THE ASSESSEE HAS EARNED LONG-TERM CAPITAL GAIN OUT OF THE SALE T RANSACTION AND NOT SHORT-TERM CAPITAL GAIN AS ASSESSED BY LOWER AUTHORITIES. THIS ISSUE OF THE AS SESSEES APPEAL IS ALLOWED. 5. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. / 0 / 0 / 0 / 0 ! 1/ ! 1/ ! 1/ ! 1/ 23 23 23 23 4 4 4 4 2 2 2 2 56 5656 56 ORDER PRONOUNCED IN THE OPEN COURT ON 14/ 12 /2011. * 7 8 . 14/12/2011. SD/- SD/- [C.D. RAO/ ( . . ] [MAHAVIR SINGH / ( )] ACCOUNTANT MEMBER/ JUDICIAL MEMBER/ DATED : 14/ 12/ 2011 ITA NO.1465/KOL./2010 5 COPY OF THE ORDER FORWARDED TO: 1. MANSI MODI (PODDAR), 24, PARK STREET, KOLKATA-16 2 ITO, WARD-32(1), KOLKATA 3. COMMISSIONER OF INCOME-TAX (APPEALS)- , KOLKATA 4. CIT- , KOLKATA 5. DR, KOLKATA BENCHES, KOLKATA (TRUE COPY) BY ORDER ASSISTANT REGISTRAR, I.T.A.T., KOLKATA LAHA, SR. P.S.