PRADIP C. DOSHI, MUMBAI V. ITO 4(2)(1), MUMBAI

ITA 1902/MUM/2012

• Counselvise Citation: [2013] 140 COUNSELVISE.COM (IT) 71231 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 24-09-2013
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Next Hearing Date: 24-09-2013
• Assessment Year: 2007-2008
• Appeal Filed On: 20-03-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: T ROUMAN PAITE A
• Assessee Lawyers: DR P DANIEL; M P MAKHIJA
• Keywords: Capital asset; Gift; Salary income; Cost of acquisition; Assessment record
• Section: 68; 56

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C MUMBAI . . , / !' , # $ % BEFORE SHRI I.P. BANSAL, JUDICIAL MEMBER /AND SHRI N.K.BILLAIYA, ACCOUNTANT MEMBER ITA NO.1902/MUM/2012 (A. Y 2007-08) PRADIP C. DOSHI, BHARAT HOUSE, 3D FLOOR, 04, BOMBAY SAMACHAR MARG, MUMBAI - 23. / VS. THE ITO 4(2)(1), AAYKAR BHAVAN, MK ROAD, MUMBAI. : # ./ ;< ./ PAN/GIR NO. : AABPD 0621K ( := / APPELLANT ) .. ( >?:= / RESPONDENT ) APPELLANT BY DR. P. DANIEL & SHRI M.P.MAKHIJA RESPONDENT BY : SHRI T.ROUMAN PAITE @ A# / DATE OF HEARING : 24/09//2013 BCD @ A# / DATE OF PRONOUNCEMENT : 24/09/2013 E / O R D E R PER I.P.BANSAL, JM: THIS APPEAL IS FILED BY THE ASSESSEE. IT IS DIRE CTED AGAINST THE ORDER PASSED BY LD. CIT(A)-9, MUMBAI DATED 25/1/2012 FOR ASSESSMENT YEAR 2007- 08. GROUNDS OF APPEAL READ AS UNDER: 1) THE LEARNED CIT(A) HAS ERRED IN HOLDING THAT AS SESSEE HAS FAILED TO PROVE THE RECEIPT OF GIFT FROM LATE SHRI JAHANGIR K. TARACHAN D AS GENUINE GIFT OF SHARES OF VARIOUS COMPANIES ON ASSUMPTION, PRESUMPTION, SURMI SES AND ON IRRELEVANT CONSIDERATION WITHOUT PROPERLY APPRECIATING THE FAC TS AND CIRCUMSTANCES OF THE CASE AND EVIDENCES PRODUCED BOTH BEFORE THE ASSESSI NG OFFICER AS WELL LEARNED CIT(A). ITA NO.1902/MUM/2012 (A. Y 2007-08) 2 2) WITHOUT PREJUDICE TO THE ABOVE THE LEARNED CIT(A ) HAS ERRED IN HOLDING THAT THE GIFT RECEIVED BY THE APPELLANT IS NON GENUINE BECAU SE ACCORDING TO HIM ASSESSEE HAS NOT BEEN ABLE TO EXPLAIN THE RELATIONSHIP BETWE EN HIM AND THE DONOR AS ALSO THE OCCASION OF SOME MARRIAGE IN THE FAMILY SHAGUN OR OTHER HAPPY OCCASIONS ON WHICH OCCASIONS ONLY ACCORDING TO THE HIM THE GIFT COULD HAVE BEEN RECEIVED FROM THE RELATIVES AND CLOSE FRIENDS. 3) THE LEARNED CIT(A) HAS ERRED IN COMING TO THE CO NCLUSION THAT THE VALUE OF SHARES OF RS. 1,36,65,079/- IS TAXABLE U/S. 56 OF T HE I.T. ACT 1961 IN APPELLANTS CASE WITHOUT PROPERLY CONSIDERING THE PROVISIONS OF I. . ACT, 1961. 4) THE APPELLANT CRAVES LEAVE TO ADD; AMEND, ALTER AND / OR VARY ANY OF THE GROUNDS AT THE TIME OR BEFORE THE HEARING OF THIS A PPEAL. 5) THE APPELLANT THEREFORE PRAYS THAT ADDITION OF R S.1,36,65,079/- MADE BY THE LEARNED ASSESSING OFFICER AND CONFIRMED BY THE LEAR NED CIT(A) MAY PLEASE BE DELETED. 2. VIDE LETTER DATED 18/9/2013 THE ASSESSEE HAS SOU GHT THE PERMISSION TO RAISE THE FOLLOWING ADDITIONAL GROUND. A COPY WAS ALSO GIVEN TO LD. CIT DR. THE LEARNED CIT(A) ERRED IN CONFIRMING THE TREATIN G OF PROFIT ON SALE OF GIFTED SHARES AS SHORT TERM CAPITAL GAIN WITHOUT CONSIDER ING THE PROVISIONS OF 49 OF THE IT ACT 1961. 3. WITH RESPECT TO ADDITIONAL GROUND IT WAS SUBMITT ED THAT ADDITIONAL GROUND RELATES TO AN ISSUE WHICH WAS ALREADY RAISED BY THE ASSESSEE BEFORE LD. CIT(A). NO NEW FACTS ARE REQUIRED TO BE BROUGHT ON RECORD FOR ADJUDICATION OF THE ADDITIONAL GROUND. LD. CIT(A) HAS DECIDED THE SAID GROUND MERELY BY STATING THAT AS GROUND NO.2 IS DECIDED AGAINST THE ASSESSEE THIS GROUND IS ALSO DISMISSED. IT IS SUBMITTED THAT IT IS A PURE QUEST ION OF LAW AND DESERVES TO BE ADMITTED. RELIANCE HAS BEEN PLACED ON THE FOLLOWI NG DECISIONS. (I) NATIONAL THERMAL POWER CORPORATION V. CIT, (22 9 ITR 383) (SC) (II) JUTE CORPORATION OF INIDA V. CIT (187 ITR 688 ) (SC) (III) AHMEDABAD ELECTRICITY CO. LTD. V. CIT (199 I TR 351) (BOM) (FB) 4. WE HAVE HEARD BOTH THE PARTIES ON THIS ISSUE. T HIS GROUND WAS TAKEN BY THE ASSESSEE AS GROUND NO.3 BEFORE LD. CIT(A) WHICH READ AS UNDER: ITA NO.1902/MUM/2012 (A. Y 2007-08) 3 ERRED IN TREATING PROFIT ON SALE OF GIFTED SHARES AS SHORT TERM CAPITAL GAIN WITHOUT CONSIDERING THE PROVISION SECTION 49 OF I.T. ACT, 1961. THE RELIANCE IS PLACE UPON:- DY. CIT VS. MANJULA J SHAH (2009) 30 DTR 601 (MUM) THIS ISSUE RELATES TO THE MAIN ISSUE. IF THE FIRS T GROUND IS DECIDED IN FAVOUR OF THE ASSESSEE THEN ADDITIONAL GROUND WILL BECOME CON SEQUENTIAL. NO FRESH FACTS ARE REQUIRED, THEREFORE, RELYING UPON THE DECISION REFERRED TO BY LD. AR WE ADMIT THIS GROUND AND PROCEED TO DECIDE THE PRESENT APPEAL. 5. THE ASSESSEE IS AN INDIVIDUAL. HE EARNED INCOME FROM SALARY AND INVESTMENT. DURING THE COURSE OF ASSESSMENT PROCEE DINGS IT WAS OBSERVED BY AO THAT ASSESSEE HAD RECEIVED GIFT IN THE SHAPE OF SHARES FROM MR. JEHANGIR K. TARACHAND, WHICH WAS VALUED AT RS.1,29,01,866/-. T O SUPPORT THE ASSESSEE FILED A COPY OF GIFT DECLARATION, STATEMENT OF SHAR ES OF GIFT RECEIVED AND COPY OF RETURN FIELD BY MR. JEHANGIR K. TARACHAND FOR ASSES SMENT YEAR 2006-07. ALL THESE DOCUMENTS HAVE BEEN STATED TO HAVE BEEN CAREF ULLY VERIFIED BY THE AO. ON VERIFICATION HE NOTICED THAT THE GENUINENESS OF THE GIFT WAS DOUBTFUL. THEREFORE, HE REQUIRED THE ASSESSEE TO EXPLAIN THE SAME. HE ISSUED SEVERAL REQUIREMENTS AND RECEIVED THE REPLIES OF THE ASSES SEE WHICH ARE QUOTED IN THE ASSESSMENT ORDER. AFTER SUCH EXERCISE THE AOS FI NDING AS RECORDED IN THE ASSESSMENT ORDER TO RAISE DOUBT ABOUT THE TRANSACTI ONS ARE AS UNDER: I. IN THE RETURN OF INCOME FILED BY THE ASSESSEE T HE COPY OF CAPITAL ACCOUNT WAS NOT ATTACHED. THE ASSESSEE HAS SUBMITTED IT WHEN IT WAS ASKED TO SUBMIT DURING THE COURSE OF ASSESSMENT PROCEEDING. II. BEFORE FILING THE DETAILS DURING THE COURSE OF ASSESSMENT PROCEEDING, THERE WAS NO ANY INDICATION REGARDING THE GIFT RECEIVED OF RS . 1,29,01,866/- BY THE ASSESSEE. IT WAS FIND OUT WHEN THE ASSESSEE WAS ASK ED ABOUT HUGE PAYMENT OF ADVANCE TAX OF RS. 32,50,000/- MADE ON 15.03.2007. III. WHILE REPLYING THE QUERY ABOUT ADVANCE TAX, TH E ASSESSEE VIDE LETTER DATED 10.08.2009 STATED THAT, THE ASSESSEE HAS RECEIVED T HE GIFT AND CONSIDERED TAXABLE, HENCE ADVANCE TAX WAS PAID, AND SUBSEQUENT TOOK THE OPINION FROM COUNCIL AND REALIZED THAT NO TAX IS PAYABLE ON RECE IPT OF GIFT OF SHARES. IV. ANOTHER FACT, WHICH HAS TO SPECIFICALLY MENTION HERE, THAT MR. JAHANGIR K. TARACHAND, FROM WHOM THE GIFT OF SHARE SAID TO BE R ECEIVED, WAS EXPIRED ON 16.05.2007. THEREFORE THE GENUINENESS OF GIFT CANNO T BE CROSS-VERIFIED WITH HIM. ITA NO.1902/MUM/2012 (A. Y 2007-08) 4 FOR THE PURPOSE OF DECIDING THE GIFT, WE HAVE TO RE LY ON THE DOCUMENTARY EVIDENCES AVAILABLE ON RECORD. 5.1 THE AO HAS ALSO RECORDED THE CONTENTIONS OF THE ASSESSEE REGARDING GIFT RECEIVED AND DOCUMENTS RELIED UPON AS UNDER: I. THE SHARE WERE LYING IN THE POOL DEMAT ACCOUNT OF M/S. PRADEEP C. DOSHI STOCK BROKERS PVT. LTD. RELIED DOCUMENTS ARE COPY O F POOL ACCOUNT SHOWING THE HOLDING AS ON 3 1.03.2006. (CLIENT ID-10050275, CAT EGORY - NON HOUSE BENEFICIARY, ACCOUNT DESCRIPTION -BENEFICIARY). THE ASSESSEE SUBSEQUENTLY CHANGED HIS STAND AND STATED THE SHARES SAID TO BE GIFTED BY MR. JEHANGIR K. TARACHAND WERE DIRECTLY TRANSFERRED TO THE BROKERS BENEFICIARY ACCOUNT, II. DECLARATION WAS MADE ON 0.02.2006. RELIED DOCUM ENT IS COPY OF DECLARATION DATED 10.02.2006. III. INSTRUCTION WAS GIVEN TO M/S. PRADEEP C. DOSHI STOCK BROKERS ON 14.06.2006 TO TRANSFER THE .GIFTED SHARES TO THE PERSONAL DEMA T ACCOUNT OF MR. PRADEEP C. DOSHI RELIED DOCUMENT IS THE LETTER ISSUED BY MR. J AHANGIR K. TARACHAND TO M/S. PRADIP C. DOSHI STOCK BROKERS PVT. LTD. IV. THE ASSESSEE HAS TREATED THE GIFT IN THIS YEAR AS DONOR INSTRUCTED BROKER TO TRANSFER THE SHARE FROM POOL ACCOUNT TO ASSESSEES DEMAT ACCOUNT ON 14.06.2006. V. DONOR EXPIRED ON 16.05.2007, HENCE MUST NOT HAVE FILED THE RETURN, RELIED DOCUMENT IS DEATH CERTIFICATE OF MR. JAHANGIR K. TA RACHAND. VI. TRANSFER OF GIFTED SHARES ARE REFLECTED IN THE ASSESSEES DEMAT ACCOUNT, RELIED DOCUMENT IS COPY OF DEMAT ACCOUNT OF THE ASSESSEE F OR THE PERIOD FROM 01.04.2006 TO 31.03.2007. VII. MR. JEHANGIR K TARACHAND WAS HOLDING NUMBER OF SHARES WHICH ARE APPROXIMATELY VALUE OF RS. 9 TO 10 CRORE & MORE, RE LIED DOCUMENT IS COPY OF DEMAT ACCOUNT OF MR. JAHANGIR K. TARACHAND . 5.2 HE HAS FURTHER ANALYSED ALL THESE DOCUMENTS. THE AO EXPRESSED DOUBT ABOUT THE DEMAT BENEFICIARY ACCOUNT AS ACCORDING T O AO IT CANNOT BE CONCLUSIVELY ESTABLISHED THAT SHARES TRANSFERRED T O THE ASSESSEE WERE THE SAME SHARES AS WERE LYING IN DEMAT BENEFICIARY ACCOUNT O F M/S. PRADIP C. DOSHI STOCK BROKER PVT. LTD. ACCORDING TO AO DECLARATION OF GIFT DATED 10/2/2006 HAS NO EVIDENTIARY VALUE AS THE SAME IS NOT REGISTE RED. THE SHARES WERE TRANSFERRED ON 18/9/2006 AND THERE WERE SOME MORE P URCHASES OF TCS SHARES AFTER THE DATE OF DECLARATION OF THE GIFT. THUS AC CORDING TO AO SHARES DONATED ON 10/2/2006 WERE NOT EVEN OWNED BY THE DONOR AND I T HAS NOT BEEN ITA NO.1902/MUM/2012 (A. Y 2007-08) 5 CONCLUSIVELY ESTABLISHED. THE AO HAS FURTHER OBSER VED THAT THE INSTRUCTION LETTER ISSUED TO BROKER ON 14/6/2006 WAS NOT REQUIR ED AS DECLARATION OF GIFT WAS ALREADY MADE ON 10/2/2006 AND, THEREFORE, THE SAID INSTRUCTION LETTER IS DOUBTFUL. EVEN NO TRANSFER WAS MADE ON 14/6/2006 A ND WAS MADE ONLY ON 18/9/2006. THE DONOR HAS EXPIRED ON 16/5/2007 AND IN ABSENCE OF DONOR THERE SHOULD BE SOME MATERIAL EVIDENCE IN THE ASSES SMENT RECORD OF THE DONOR WHICH SHOW THAT DONOR HAS MADE GIFT OF SHARES AND IT SHOULD BE REFLECTED IN THE ASSESSMENT RECORD OF DONOR AND NO SUCH GIFT IS REFLECTED IN THE RETURN FILED BY HIM. THE AO HAS ALSO REJECTED THE COPY OF DEMA T ACCOUNT OF THE ASSESSEE AS ACCORDING TO AO THIS ACCOUNTS SHOWS ONLY TRANSF ER OF SHARES BUT NO GIFT OF SHARES FROM MR. JEHANGIR K. TARACHAND. REFERRING T O DEMAT ACCOUNT OF THE DONOR HE FOUND THAT THERE WERE SO MANY HOLDINGS REF LECTED IN THAT ACCOUNT. THE AO OBSERVED THAT THE SHARES TRANSFERRED TO ASSE SSEE WERE WHY NOT TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE IMMEDIAT ELY DESPITE SEBIS GUIDELINES VIDE CIRCULAR NO.MRD/DOP/SE/DEP/CIR.30/2 04 DATED 24/08/2009, WHICH REQUIRED TO REGISTER SUCH TRANSFE R WITHIN ONE DAY. THUS AO HAS REJECTED THE SUBMISSIONS OF THE ASSESSEE AND TREATED THE AMOUNT OF RS.1,36,65,079/- BEING MARKET PRICE OF THE SHARES A S ON THE DATE OF TRANSFER UNDER THE PROVISIONS OF SECTION 56 OF THE INCOME TA X ACT, 1961(THE ACT). IT WILL BE RELEVANT TO REPRODUCE THE FINAL CONCLUSION OF AO IN PARA 4.10 WHICH READ AS UNDER: 4.10.IN THE LIGHT OF THE ABOVE DISCUSSION IT IS CO NCLUDED THAT THE ASSESSEE HAS FAILED TO SUBMIT THE EVIDENCES WHICH CLEARLY SHOWS THAT HE HAS RECEIVED THE GIFT OF SHARES FROM MR. JAHANGIR K TARACHAND IN THE YEAR UN DER CONSIDERATION. ONLY ONE FACT IS CLEARLY ESTABLISHED THAT M/S PRADIP C. DOSH I STOCK BROKER PVT. LTD. HAS TRANSFERRED THE SHARES IN QUESTION TO THE ASSESSEE FROM ITS DEMAT BENEFICIARY ACCOUNT ON 18.09.2009 (SIC). IN VIEW OF THE ABOVE IT IS HELD THAT THE ASSESSEE HAS RECEIVED THE SHARES ON TRANSFER FROM M/S PRADIP C D OSHI STOCK BROKER PVT. LTD. WITHOUT CONSIDERATION, THEREFORE IT IS TREATED AS A SESSEES INCOME U/S 56 OF IT ACT. HENCE, THE MARKET PRICE AS ON THE DATE OF TRANSFER I.E. RS.1,36,65,079/-( AS PER ANNEXURE A TO THIS ORDER ) IS ADDED TO THE TOTAL INCOME OF THE ASSESSEE. SINCE THE ASSESSEE HAS CONCEALED THE PARTICULAR OF INCOME TO AVOID TAX LIABILITY, PENALTY PROCEEDING U/S 271 (1) (C) IS INITIATED. (THE YEAR HAS WRONGLY BEEN WRITTEN, IT SHOULD BE 2006) ITA NO.1902/MUM/2012 (A. Y 2007-08) 6 6. THE ADDITION WAS CHALLENGED IN AN APPEAL FILED B EFORE LD. CIT(A). IT WAS SUBMITTED THAT AO HAS WRONGLY APPRECIATED THE FACTS . IT WAS SUBMITTED THAT THE DONOR IN HIS PERSONAL DEMAT ACCOUNT WITH ORIENT AL BANK OF COMMERCIAL WAS HAVING SUFFICIENT QUANTITY OF SHARES OF TCS WHI CH WAS GIFTED TO THE ASSESSEE. ON THESE SUBMISSIONS OF THE ASSESSEE LD. CIT(A) VIDE HIS LETTER DATED 1/6/2011 HAS SOUGHT COMMENTS FROM AO AND DIRECTED T HE AO TO MAKE VERIFICATION WITH REGARD TO VARIOUS DOCUMENTS. CO PY OF THE SAID LETTER ISSUED BY LD. CIT(A) TO AO IS FILED AT PAGE 360 OF THE PAP ER BOOK AND THE CONTENTS ARE AS UNDER: SUB: APPEAL PROCEEDING IN THE CASE OF MR. PRADIP C. DOSHI LTD. - A Y 2007-08 (APPEAL NO.CIT(A)-8/ CIR-4/304/09-10) - REG. PLEASE REFER TO THE ABOVE. 2. THE ADDITION OF RS.1,36,65,079/- HAD BEEN MADE O N ACCOUNT OF GIFT OF SHARES CLAIMED TO HAVE BEEN RECEIVED FROM MR. JAHANGIR K. TARACHAND FOR THE REASON, AMONGST OTHERS THAT THE DONOR WAS SAID TO HAVE MADE A GIFT OF SHARES OF TCS WHICH WERE NOT OWNED BY HIM ON THE DATE OF GIVING T HE SHARES. THE APPELLANT DURING THE APPELLATE PROCEEDINGS HAS DISPUTED THE F INDING OF THE A.O. AS PER PARA VIII ON PAGE NO.15 OF THE WRITTEN SUBMISSION DATED 17.06.2010 (COPY ENCLOSED). YOU ARE REQUESTED TO EXAMINE THE SAME AND FURNISH Y OUR COMMENTS WHETHER THE APPELLANTS CONTENTION IN THIS REGARD IS CORRECT OR NOT. 3. FURTHER, THE APPELLANT HAD RELIED UPON THE DECLA RATION DEED DATED 10.02.2006 ALONG WITH A LIST OF SHARES BEARING PURPORTEDLY THE SIGNATURE OF LATE MR. JAHANGIR K. TARACHAND. YOU ARE REQUESTED TO CONDUCT ENQUIRI ES FROM THE BANK WITH WHICH LATE MR. JAHANGIR K. TARACHAND WAS MAINTAINING HIS ACCOUNTS TO VERIFY THE SIGNATURE APPENDED ON THE DECLARATION DATED 10.02.2 006 AND THE LIST ENCLOSED THEREWITH AS CLAIMED BY THE ASSESSEE THE ORIGINAL C OPY OF THE DECLARATION ALONG WITH THE ENCLOSED LIST MAY BE OBTAINED FROM THE ASS ESSEE FOR THE PURPOSE OF CONDUCTING VERIFICATION. 4. YOU ARE FURTHER DIRECTED TO CONDUCT ENQUIRY TO A SCERTAIN THE DETAILS OF PAYMENTS MADE BY LATE MR. JAHANGIR K. TARACHAND TO THE ASSES SEE FOR THE PURPOSE OF PURCHASING THE SHARES CLAIMED TO HAVE BEEN GIFTED TO THE ASSESSEE. 5. YOU ARE REQUESTED TO FURNISH COMMENTS/REPORT BY 01.07.2011 6.1 THE REMAND REPORT RECEIVED BY LD. CIT(A) FROM THE AO IS REPRODUCED IN THE ORDER OF LD. CIT(A) AND THIS REPORT WAS SUBMITT ED VIDE LETTER DATED 13/1/2012 AND IS ALSO REPRODUCED BELOW: ITA NO.1902/MUM/2012 (A. Y 2007-08) 7 THE ASSESSEE WAS ASKED TO PRODUCE COPY OF DEMAT AC COUNT STATEMENT. THE ASSESSEES REPRESENTATIVE SUBMITTED COPY OF DEMAT A CCOUNT STATEMENT OF M/S PRADIP C DOSHI STOCK BROKERS PVT. LTD IN WHICH 2073 SHARES OF TCS IS REFLECTED. AS PER DONORS LETTER DATED 14.06.2006 ADDRESSED TO M/S PRADIP C DOSHI STOCK BROKERS PVT. LTD., AND THE LIST OF SHARES ENCLOSED WITH THE DECLARATION, THE DONOR SHRI JEHANGIR K TARACHAND HAD 1750 SHARES AS ON 14. 06.2006. AGAIN, AS DIRECTED, ENQUIRIES WERE MADE WITH ORIENT AL BANK OF COMMERCE WHO HAD CERTIFIED THE SIGNATURE TO BE THAT OF THE DONOR SHRI JEHARIGIR K TARACHAND. XEROX COPIES OF THE DOCUMENTS CERTIFIED BY THE BANK ARE ENCLOSED FOR YOUR READY REFERENCE AND RECORDS. REGARDING PAYMENTS MADE BY THE DONOR LATE SHRI JEHA NGIR K TARACHAND TO THE ASSESSEE FOR THE PURPOSE OF PURCHASING THE SHARES C LAIMED TO HAVE BEEN GIFTED TO THE ASSESSEE, THE ASSESSEES REPRESENTATIVE HAS SUB MITTED LEDGER ACCOUNT OF THE DONOR WITH M/S PRADIP C DOSHI STOCK BROKERS PUT LTD WHICH IS A RUNNING ACCOUNT. THE BROKERS HAVE CREDITED/DEBITED THE ASSESSEES AC COUNT FOR SALE/PURCHASE ETC FOR THE NET AMOUNTS. COPIES OF RELEVANT BROKERS NO TES ALSOFILED ON RECORD. COPIES OF THE BROKERS NOTES AND LEDGER ACCOUNT ETC. ARE E NCLOSED FOR YOUR READY REFERENCE AND RECORDS 6.2 ON THESE FACTS LD. CIT(A) RECORDED HIS FINDINGS IN PARA 5.2.1. LD. CIT(A) HAS UPHELD THE ACTION OF AO SIMPLY ON THE GROUND T HAT ASSESSEE HAS FAILED TO PROVE THE EXISTENCE THE LOVE AND AFFECTION OF THE DONOR WITH THE ASSESSEE. THE ASSESSEE HAS FAILED TO EXPLAIN HIS RELATIONSHIP WIT H THE DONOR. THERE WAS NO OCCASION OF MARRIAGE IN THE FAMILY ON WHICH THIS CO ULD BE GIVEN. THESE TYPE OF GIFTS HAVE NEVER BEEN ACCEPTED OR RETURNED IN THE PAST OR FUTURE. THE ASSESSEE HAS FAILED TO PRODUCE CONFIRMATION OF THE ALLEGED GIFT FROM THE DONOR DESPITE SUFFICIENT OPPORTUNITY PROVIDED TO HIM. THE AO WAS RIGHT IN MAKING THE ADDITION AS DETAILED IN THE ASSESSMENT ORDER THAT T HE GIFT RECEIVED BY THE ASSESSEE IS NOT GENUINE AND THE SAME BEING WITHOUT CONSIDERATION IS TAXABLE UNDER SECTION 56 OF THE ACT. LD. CIT(A) HAS ALSO R EFERRED TO CERTAIN DECISIONS, ACCORDING TO WHICH NON-GENUINE GIFT COULD BE ADDED TO THE INCOME OF THE ASSESSEE. ACCORDINGLY, THE ADDITION HAS BEEN CONFI RMED BY LD. CIT(A). 7. LD. AR AFTER NARRATING THE FACTS SUBMITTED THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS IT WAS VERIFIED BY THE AO TH AT WHEN THE DECLARATION OF THE GIFT WAS MADE BY THE DONOR, HE WAS HAVING 1750 SHARES OF TCS. IT HAS ALSO BEEN CONFIRMED BY THE BANK THAT SIGNATURES ARE OF D ONOR, MR. JEHANGIR K. ITA NO.1902/MUM/2012 (A. Y 2007-08) 8 TARACHAND. THE ACCOUNTS WERE ALSO DULY VERIFIED BY THE AO AND HE COULD NOT POINT OUT ANY DISCREPANCY IN THIS ACCOUNT. HE SUBM ITTED THAT ADDITION HAS BEEN MADE BY THE AO UNDER SECTION 56 OF THE ACT AND LD. CIT(A) HAS ALSO UPHELD THE APPLICABILITY OF SECTION 56. HE SUBMITT ED THAT THE SUBSTANCE OF GIFT IS IN THE SHAPE OF SHARES AND SECTION 56(1)(V) INSE RTED BY THE FINANCE (NO.2) ACT 2004 W.E.F. 1/4/2005, WHICH SPEAKS OF ANY SUM OF MO NEY EXCEEDING RS. 25,000/- WITHOUT CONSIDERATION BY AN INDIVIDUAL OR HUF ON OR AFTER 1/9/2004 BUT BEFORE 1/4/2006 WILL BE CONSIDERED AS INCOME OF THE RECIPIENT AS INCOME FROM OTHER SOURCES. HE SUBMITTED THAT THIS PROVISI ON WAS NOT APPLICABLE WITH REGARD TO SHARES. HE SUBMITTED THAT CLAUSE (VI) TO SECTION 56(1) IS APPLICABLE ON THE SIMILAR AMOUNT IN EXCESS OF RS.50,000/- IS TAXA BLE IF IT IS RECEIVED ON OR AFTER 1/4/2006 AND SUCH PROVISION IS BROUGHT ON THE STATUTE BY THE TAXATION LAWS (AMENDMENT) ACT 2006 W.E.F. 1/4/2007. THEREAF TER, AS PER CLAUSE (VII) WHICH HAS BEEN BROUGHT ON THE STATUTE BY FINANCE (N O.2) ACT 2009 W.E.F. 1/10/2009 BY VIRTUE OF SUB-CLAUSE (C) WHICH REGULAT ES THE ASSETS RECEIVED APART FROM MONEY AND IMMOVABLE PROPERTY. THE PROVISIONS OF SECTION 56 CAN BE APPLIED AND SUCH PROVISION IS APPLICABLE ONLY FROM 1/10/2009. THUS LD. AR PLEADED THAT ON THE GIFT OF SHARES INCOME CANNOT BE ASSESSED UNDER SECTION 56 AS NO SUCH PROVISION WAS APPLICABLE ON THE DATE WHE N GIFTED SHARES WERE RECEIVED BY THE ASSESSEE. THEREFORE, HE PLEADED TH AT ADDITIONS HAS WRONGLY BEEN MADE BY AO AND WRONGLY SUSTAINED BY LD. CIT(A) AS PER PROVISIONS OF SECTION 56 COULD NOT BE APPLIED IN RESPECT OF IMPUG NED TRANSACTION. 7.1 HE FURTHER SUBMITTED THAT THE OTHER OBJECTION O F AO ARE ALSO NOT VALID . HE SUBMITTED THAT ACCORDING TO SECTION 17 OF REGIST RATION ACT 1908 THE REGISTRATION OF TRANSFER OF SHARES IS NOT REQUIRED AS PER SUB-SECTION (2) WHICH SPECIFIES THAT REGISTRATION PROVISION WILL NOT BE APPLICABLE IN RELATION TO ANY INSTRUMENT RELATING TO SHARES IN JOINT STOCK COMPA NY, NOTWITHSTANDING THAT THE ASSETS OF SUCH COMPANY CONSISTS IN WHOLLY OR IN PAR T OF IMMOVABLE PROPERTY. HE FURTHER SUBMITTED THAT SEBIS GUIDELINES WHICH H AVE BEEN REFERRED BY THE AO WERE ISSUED ON 24/8/2009 AND THEY WERE NOT APPLI CABLE WHEN THE GIFTED ITA NO.1902/MUM/2012 (A. Y 2007-08) 9 SHARES WERE TRANSFERRED BY THE DONOR TO THE ASSESSE E. THEREFORE, THE AO WAS WRONG IN DRAWING ADVERSE INFERENCE ON THE BASIS OF CIRCULAR OF SEBI. HE FURTHER SUBMITTED THAT THE IDENTITY OF THE DONOR WA S ESTABLISHED AS IT WAS VERIFIED BY THE AO FROM THE DOCUMENTS SUBMITTED BY THE ASSESSEE WHICH WAS VERIFIED FROM THE BANKER AND IT WAS CERTIFIED THAT SIGNATURE ON TRANSFER DEED WAS OF THE DONOR. HE SUBMITTED THAT THE GIFT OF TH E DONOR ALSO COULD NOT BE DOUBTED AS THE DONOR WAS HOLDING NUMBER OF SHARES O F APPROXIMATE VALUE OF RS. 9.00 TO RS.10.00 CRORES AND MORE AND THIS FACT IS RECORDED BY THE AO IN THE ASSESSMENT ORDER IN PARA 4.7 WHILE RECORDING THE CO NTENTIONS OF THE ASSESSEE AS UNDER: VII. MR. JEHANGIR K TARACHAND WAS HOLDING NUMBER OF SHARES WHICH ARE APPROXIMATELY VALUE OF RS. 9 TO 10 CRORE & MORE, RE LIED DOCUMENT IS COPY OF DEMAT ACCOUNT OF MR. JAHANGIR K. TARACHAND. 7.2 LD. AR FURTHER SUBMITTED THAT THE DECLARATION O F GIFT WAS DULY FILED BEFORE THE AO, COPY OF WHICH WAS SUBMITTED AT PAGE 362, WH EREIN HE HAS CLEARLY STATED THAT HE WAS KNOWING THE ASSESSEE FOR THE LAS T 30 YEARS AND HE HAS BEEN HANDLING ALL HIS FAMILY INVESTMENTS AND OUT OF NATU RAL LOVE AND AFFECTION THE GIFT IS BEING MADE OF THE SHARES, THE LIST OF WHICH WAS FILED ALONGWITH DECLARATION AND THE ASSESSEE WAS MADE ABSOLUTE OW NER THEREOF. THE LIST OF SHARES IS ENCLOSED AT PAGE 363 OF THE PAPER BOOK. HE FURTHER SUBMITTED THAT BANK HAS ALSO CERTIFIED THAT ON TRANSFER DEED THE SIGNATURES ARE OF THE DONOR, COPY OF WHICH IS PLACED AT PAGES 181 OF THE PAPER BOOK TO CONTEND THAT THE DONOR WAS MAN OF MEANS HE FURTHER SUBMITTED THAT AS PER CLAUSE- 9 OF THE WILL EXECUTED BY THE DONOR FURTHER GIFT WAS MADE T O THE ASSESSEE OF 25% OF THE AMOUNT REALIZED ON SALE OF SHARE HOLDING AND THAT H AS BEEN ACCEPTED BY THE DEPARTMENT. CLAUSE-9 OF THE WILL READ AS UNDER: 9. IT IS MY DESIRE THAT AS AND WHEN MY SHARE HOLD ING IS LIQUIDATED AND AMOUNT THEREOF IS RECEIVED IN CASH THEN OUT OF THAT SALE P ROCEEDS MY EXECUTIVE SHALL HAND OVER 25% OF THE NET SALE AMOUNT I.E. AFTER DED UCTION OF ALL COSTS CHARGES AND EXPENSES THEREOF TO PRADIP C. DOSHI STOCK BROKER PV T. LTD. HAVING HIS OFFICE AT 6/6 P.J. TOWERS, DALAL STREET, FORT, MUMBAI 400001. ITA NO.1902/MUM/2012 (A. Y 2007-08) 10 7.3 HE FURTHER INVITED OUR ATTENTION TOWARDS AFFIDA VIT GIVEN BY THE SOLE HEIR AND EXECUTOR OF THE WILL OF THE DONOR, COPY OF WHIC H IS PLACED AT PAGE 132 OF THE PAPER BOOK NAMELY MS. VEROLYNE AMIT TOLAT IN WHIC H THE CONTENTS ARE AS UNDER: I DR. VEROLYNE AMIT TOLAT, PRESENTLY IN MUMBAI AND RESIDING AT OAK TREE HOUSE, 9, BARNAD WAY, SOUTH BRETTON, PETERBOROUGH PE39YZ, UK HEREBY CONFIRM THAT MY LATE UNCLE SHRI J.K. TRARACHAND HAD GIFTED THE FOL LOWING SHARES, WHICH WERE LISTED IN THE ATTACHMENT OF ENCLOSED COPIES OF GIFT DECLARATION AND RELEVANT PAPERS TO MR. PRADIP C.DOSHI. AS PER MR. J.K.TARACHANDS DECLARATION, THESE SHARE S WERE LYING IN HIS BROKERS (PRADIP C. DOSHI STOCK BROKERS PVT. LTD.) BENEFICIA RY DEMAT ACCOUNT. ALSO, HE HAD INSTRUCTED HIS BROKER TO TRANSFER THESE SHARES TO MR. PRADIP C.DOSHIS PERSONAL DEMAT ACCOUNT. MR. PRADIP C. DOSHI HAS BEEN ASSOCIATED WITH OUR FA MILY FOR MORE THAN 35 YEARS AND FOR THREE GENERATIONS, WE (MY GREAT AUNT, MY FA THER, UNCLE AND I) HAVE BEEN INVESTING IN SHARES & STOCKS THROUGH HIM. IN ADDITION TO THE ABOVE MENTIONED GIFT, MR. PRADI P C. DOSHI WAS ALSO MADE A PART BENEFICIARY OF THE SHARES INVESTMENT OF MY LAS T UNCLE MR.J.K.TARACHAND IN HIS WILL. SHRI TARACHAND EXPIRED ON 16/05/2007 AS PER WILL SHARES ARE DISTRIBUTED. DATED THIS 6 TH DAY OF JAN. 2010 AT MUMBAI. 7.4 REFERRING TO THE AFOREMENTIONED AFFIDAVIT HE SU BMITTED THAT THE DONOR WAS UNMARRIED AND HE APPOINTED HIS NIECE MS. VERO LYNE AMIT TOLAT AS EXECUTOR AND SHE HAS ALSO CONFIRMED THAT THE DONOR HAD MADE THE GIFT OF SHARES TO THE DONEE. THUS HE SUBMITTED THAT THE ASSESSE E HAD DISCHARGED THE PRIMARY ONUS LAID DOWN UPON HIM TO PROVE THE RECEIP T OF GIFT EVEN AS PER PROVISIONS OF SECTION 68 OF THE ACT THOUGH THE SAME HAS NOT BEEN APPLIED EITHER BY THE AO OR BY LD. CIT(A). THEREFORE, HE S UBMITTED THAT THE GIFT RECEIVED BY THE ASSESSEE, ACCORDING THE FACTS AND EVIDENCE PLACED ON RECORD, SHOULD BE TREATED AS GENUINE. IN THIS MANNER LD. AR HAD CO MPLETED HIS ARGUMENTS. 8. ON THE OTHER HAND, LD. DR RELIED UPON THE ORDE R PASSED BY AO AND LD. CIT(A). ITA NO.1902/MUM/2012 (A. Y 2007-08) 11 9. WE HAVE HEARD BOTH THE PARTIES AND THEIR CONTENT IONS HAVE CAREFULLY BEEN CONSIDERED. WE HAVE ALSO CAREFULLY GONE THROUGH TH E ASSESSMENT ORDER AND ORDER PASSED BY LD. CIT(A). WE HAVE ALSO CAREFULLY GONE THROUGH THE LETTER VIDE WHICH LD. CIT(A) HAS SOUGHT REMAND REPORT FROM THE AO AND ALSO THE REMAND REPORT SUBMITTED BY AO. THE COPIES OF BOTH THESE D OCUMENTS HAVE ALSO BEEN FILED IN THE PAPER BOOK. IN VIEW OF THE LETTER IS SUED BY LD. CIT(A) TO THE AO AND REMAND REPORT OBTAINED THEREON, THE FINDINGS RECORD ED BY THE AO IN THE ASSESSMENT ORDER STAND DILUTED. COPIES OF BOTH TH ESE DOCUMENTS ARE ALSO REPRODUCED IN THE ABOVE PART OF THIS ORDER. IF REF ERENCE IS MADE TO THE REQUISITION MADE BY THE LD. CIT(A) TO AO VIDE HIS L ETTER DATED 1/6/2011, HE REQUIRED THE AO TO EXPLAIN REGARDING SHARES OF TCS WHICH ACCORDING TO AO WERE NOT OWNED BY THE DONOR ON THE DATE OF GIFT AS THE ASSESSEE HAD DISPUTED SUCH FINDINGS RECORDED BY AO. LD. CIT(A) HAS FORWA RDED THE SUBMISSIONS OF THE ASSESSEE ON THIS ACCOUNT. LD. CIT(A) DIRECTED THE AO TO EXAMINE THE SAID REPLY AND FURNISH THE COMMENT AND TO STATE WHETHER SUCH POSITION IS CORRECT OR NOT. 9.1 FURTHER, LD. CIT(A) REQUIRED THE AO TO EXAMINE ABOUT THE GENUINENESS OF THE SIGNATURES OF THE DONOR ON THE DECLARATION OF G IFT DATED 10/2/2006 ALONGWITH THE LIST OF SHARES WHICH WERE STATED TO B E DONATED BY THE DONOR TO THE ASSESSEE. HE DIRECTED THE AO TO MAKE ENQUIRIES FR OM THE BANK WITH WHICH DONOR WAS MAINTAINING HIS ACCOUNT TO VERIFY SIGNATU RES APPENDED ON THE DECLARATION OF GIFT. COPY OF THE SAME WAS FORWARDE D BY LD. CIT(A) TO THE AO. IT WAS FURTHER DIRECTED THAT ORIGINAL COPY OF DECLARAT ION ALONGWITH ENCLOSED LIST SHOULD BE OBTAINED FROM THE ASSESSEE FOR THE PURPO SE OF CONDUCTING VERIFICATION. THE AO WAS FURTHER DIRECTED TO CON DUCT ENQUIRY TO ASCERTAIN THE DETAILS OF PAYMENT MADE BY THE DONOR TO THE ASSESSE E FOR THE PURPOSE OF PURCHASING THE SHARE CLAIMED TO HAVE BEEN GIFTED T O THE ASSESSEE AND THE REPORT WAS REQUIRED TO BE SUBMITTED BY 1/7/2011. 9.2 IN RESPONSE TO AFOREMENTIONED LETTER ISSUED BY LD. CIT(A) TO AO, THE AO HAS SUBMITTED A LETTER DATED 13/1/2012 IN WHICH HE HAS STATED THAT THE ITA NO.1902/MUM/2012 (A. Y 2007-08) 12 ASSESSEE WAS REQUIRED TO PRODUCE COPY OF DEMAT ACCO UNT STATEMENT WHICH SUBMITTED. ACCORDING TO SAID COPY THE SHARES OF TC S WERE REFLECTED AT THE QUANTITY OF 2073 SHARES. THE AO FURTHER STATED THA T AS PER DONORS LETTER DATED 14/6/2006 ADDRESSED TO M/S. PRADIP C. DOSHI STOCK BROKER PVT. LTD. AND THE LIST OF SHARES ENCLOSED WITH THE DECLARATION, THE D ONOR WAS HAVING 1750 SHARES OF TCS AS ON 14/6/2006. THE AO FURTHER MENTIONED T HAT ACCORDING TO THE DIRECTIONS ENQUIRIES WERE MADE FROM ORIENTAL BANK OF COMMERCE AND IT WAS CERTIFIED BY THE BANK THAT THE SIGNATURES WERE OF T HE DONOR AND AO FURNISHED XEROX COPY OF THE DOCUMENTS WHICH WERE CERTIFIED BY THE BANK FOR THE PURPOSE OF RECORD. 9.3 SO AS IT RELATES TO PAYMENT MADE BY THE DONOR T O THE ASSESSEE FOR THE PURPOSE OF PURCHASING THE SHARES WHICH WERE CLAIMED TO HAVE BEEN GIFTED TO THE ASSESSEE THE AO EXAMINED THE LEDGER ACCOUNT OF THE DONOR WITH M/S. PRADIP C. DOSHI STOCK BROKER PVT. LTD., WHICH WAS A RUNNING ACCOUNT AND ALSO COPIES OF RELEVANT BROKERS NOTE AND THOSE WERE SUBMITTED BY T HE AO TO LD. CIT(A) WITH NO ADVERSE COMMENT OR FINDING WHICH MAY AFFECT THE CL AIM OF THE ASSESSEE. EVEN AFTER OBTAINING SUCH REPORTS WHICH HAS ALSO BEEN RE PRODUCED IN THE ORDER PASSED BY LD. CIT(A), HE HAS UPHELD THE DISALLOWAN CE BY MERELY STATING THAT ASSESSEE COULD NOT PROVE EXISTENCE OF LOVE AND AF FECTION BETWEEN DONOR AND DONEE AND, THEREFORE, GIFTS ARE NOT GENUINE. WHI LE DECIDING THE ISSUE LD. CIT(A) HAS NOT GIVEN CREDENCE TO THE REMAND REPORT OBTAINED FROM THE AO IN WHICH AO COULD NOT FIND ANY ADVERSE MATERIAL AGAINS T THE ASSESSEE DESPITE SPECIFIC DIRECTION GIVEN BY LD. CIT(A) TO THE AO. HOWEVER, LD. CIT(A) HAS UPHELD THE DISALLOWANCE UNDER SECTION 56 OF THE ACT . AS PER SUBMISSIONS MADE BEFORE US, IT IS CLEAR FROM THE PROVISIONS OF SECT ION 56 THAT SO AS IT RELATES TO SUB-CLAUSE (C) OF CLAUSE (VII) OF SECTION 56(1) WHI CH REGULATES THE PROPERTY OTHER THAN IMMOVABLE PROPERTY IN EXCESS OF RS.50,0 00/- IS APPLICABLE W.E.F. 1/10/2009 AND IS INSERTED BY FINANCE (NO.2) ACT 200 9 AND CANNOT BE APPLIED TO THE YEAR UNDER CONSIDERATION. THEREFORE, APPLYI NG THE PROVISIONS OF SECTION 56 THIS ADDITION CANNOT BE UPHELD AND IT IS HELD TH AT ADDITION IS LIABLE TO BE ITA NO.1902/MUM/2012 (A. Y 2007-08) 13 DELETED UNDER SECTION 56 OF THE ACT. ONLY ON THIS GROUND THE APPEAL FILED BY THE ASSESSEE SUCCEEDS. HOWEVER, FOR THE SAKE OF CO MPLETENESS, AS LD. CIT(A) HAS OBSERVED THAT GIFT IS BOGUS, WE HAVE TO EXAMIN E THAT WHETHER THE ASSESSEE WAS ABLE TO DISCHARGE THE INITIAL ONUS LAID UPON HI M TO PROVE THE IDENTITY OF THE DONOR, HIS CAPACITY TO MAKE SUCH GIFT AND GENUINENE SS OF THE GIFT. SO AS IT RELATES TO IDENTITY THE SAME CANNOT BE DOUBTED AS A O HAS MADE VERIFICATION FROM THE BANK WHERE THE DONOR WAS MAINTAINING DEMAT ACCOUNT AND IT WAS CERTIFIED BY THE BANK THAT THE DONOR HIMSELF HAS SIGNED DECLARATION OF GIFT. 9.4 SO AS IT RELATES TO CAPACITY OF THE DONOR, THE SAME IS NOT DOUBTED EVEN BY THE AO AS IN THE ASSESSMENT ORDER ITSELF IT HAS BEE N WRITTEN THAT THE DONOR WAS HOLDING NUMBER OF SHARES WHICH WERE VALUED FROM RS. 9.00 TO 10.00 CRORES. SO AS IT RELATES TO GENUINENESS OF THE GIFT, AFTER MAK ING VERIFICATION FROM THE BANK REGARDING SIGNATURE ON THE DECLARATION OF THE GIFT AND THE LIST OF SHARES ATTACHED TO THE SAID DECLARATION IT HAS BEEN CERTIF IED BY THE BANK THAT THE DONOR HAS SIGNED THE SAME. THE EXECUTOR OF THE WILL AL SO CONFIRMED THE SAID FACT. NO ADVERSE MATERIAL WHATSOEVER COULD BE BROUGHT ON RECORD BY THE REVENUE TO DISLODGE THESE FINDINGS. THEREFORE, IT CANNOT BE S AID THAT THE GIFT RECEIVED BY THE ASSESSEE WAS NON-GENUINE. IN VIEW OF ABOVE DIS CUSSION WE ARE OF THE OPINION THAT ADDITION HAS WRONGLY BEEN SUSTAINED BY LD. CIT(A) AND THE SAME IS LIABLE TO BE DELETED. ACCORDINGLY, THE SAME IS DEL ETED. 10. SO FAR AS IT RELATES TO ADDITIONAL GROUND, THIS ISSUE HAS BEEN DEALT BY AO IN PARA-5 OF THE ASSESSMENT ORDER. THE ASSESSEE HA D DISCLOSED LONG TERM CAPITAL GAIN OF RS.86,07,606/- ON THE SALE OF SHAR ES, THE VALUE OF WHICH WAS TREATED AS INCOME UNDER SECTION 56 OF THE ACT. ACC ORDING TO AO SINCE THESE SHARES WERE SOLD DURING THE YEAR I.E. WITHIN A PERI OD OF ONE YEAR FROM 18/09/2006 (THE DATE OF GIFT) AND BY TAKING THE S AID DATE AS DATE OF ACQUISITION THE AO TREATED THE GAIN AS SHORT TERM C APITAL GAIN. IT IS THE CASE OF LD. AR THAT ACCORDING TO EXPLANATION TO SECTION 49(1) R.W.S. EXPLANATION 1(1)(B) FOR DETERMINING THE PERIOD FOR ANY ASSET HE LD BY ASSESSEE UNDER GIFT, THE ITA NO.1902/MUM/2012 (A. Y 2007-08) 14 PERIOD FOR WHICH THE SAID ASSET WAS HELD BY THE PR EVIOUS OWNER HAS TO BE INCLUDED. LD. AR IN THIS REGARD HAS RELIED UPON T HE DECISION OF HONBLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANJULA J. SHAH , 249 CTR 270 (BOM). THEREFORE, IT IS THE CONTENTION OF LD. AR THAT GAIN EARNED BY THE ASSESSEE ON THE SHARES RECEIVED AS GIFT IS ASSESSA BLE AS LONG TERM CAPITAL GAIN INSTEAD OF SHORT TERM CAPITAL GAIN ASSESSED BY THE AO. 10.1 ON THE OTHER HAND, LD. DR RELIED UPON THE ASSE SSMENT ORDER. 10.2 WE HAVE CAREFULLY CONSIDERED THE SUBMISSIONS O F BOTH THE PARTIES. ACCORDING TO AFOREMENTIONED DECISION OF HONBLE BOMBAY HIGH COUR T, WHILE COMPUTING CAPITAL GAIN ARISING ON TRANSFER OF A CAPITAL ASSET ACQUIRED BY THE ASSESSEE UNDER A GIFT, THE INDEXED COST OF ACQUISITION HAS TO BE COMPUTED WIT H REFERENCE TO THE YEAR IN WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET AND NOT THE YEA R IN WHICH THE ASSESSEE BECAME THE OWNER OF THE ASSET. IN THE PRESENT CASE THE AO HAS TREATED THE ASSESSEE AS OWNER ON THE DATE WHEN THESE SHARES WERE TRANSFERRED TO THE ACCOUNT OF THE ASSESSEE. HOWEVER, ACCORDING TO AFOREMENTIONED DECISION FOR T HE PURPOSE OF COMPUTING LONG TERM CAPITAL GAIN THE DATE OF ACQUISITION HAS TO BE COMP UTED WITH REFERENCE TO THE DATE ON WHICH THE PREVIOUS OWNER FIRST HELD THE ASSET. THE REFORE, WE HOLD THAT THE DATE OF ACQUISITION OF SHARES BY THE ASSESSEE HAS TO BE TAK EN AS THE DATE ON WHICH PREVIOUS OWNER FIRST HELD THE SHARES. THE AO IS DIRECTED TO COMPUTE THE CAPITAL GAIN ACCORDINGLY AND ALLOW APPROPRIATE RELIEF TO THE ASS ESSEE. THE ADDITIONAL GROUND IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES IN THE MANNER AFORESAID. 11. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED IN THE MANNER AFORESAID. ORDER PRONOUNCED IN THE OPEN COURT ON 24/ 09/2013 E @ BCD # F GH 24 /09/2013 C @ I % SD/- SD/- ( !' / N.K.BILLAIYA ) ( . . / I.P. BANSAL ) # / ACCOUNTANT MEMBER / JUDICIAL MEMBER MUMBAI; G DATED 24 /09/2013 ITA NO.1902/MUM/2012 (A. Y 2007-08) 15 E E E E @ @@ @ >AJK >AJK >AJK >AJK LKDA LKDA LKDA LKDA / COPY OF THE ORDER FORWARDED TO : 1. := / THE APPELLANT 2. >?:= / THE RESPONDENT. 3. M ( ) / THE CIT(A)- 4. M / CIT 5. KNI >A , , / DR, ITAT, MUMBAI 6. IO P / GUARD FILE. E E E E / BY ORDER, ?KA >A //TRUE COPY// Q QQ Q / R R R R ; ; ; ; (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI . . ./ VM , SR. PS