Smt. Snehlata Maheshwari, Indore V. The ACIT 2(1), Indore

ITA 24/IND/2014

• Counselvise Citation: 2422714 RSA 2014
• Duration Of Justice: 4 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-05-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2007-2008
• Appeal Filed On: 08-01-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R A VERMA

Judgement Text

, A IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BE NCH INDORE , . ., BEFORE : SHRI JOGINDER SINGH, JM & SHRI R.C.SHARMA, AM !' ./ ITA NO.24/IND/2014 ( #$% & /ASSESSMENT YEAR : 2007-08) SMT. SNEHLATA MAHESHWARI, 23, BADA SARAFA, INDORE VS. ACIT 2(1), INDORE ' ./ ( ./PAN/GIR NO. : ABTPM 7989 E ( !' ') /APPELLANT ) .. ( *+') / RESPONDENT ) #$,- /ASSESSEE BY : SHRI ANIL KAMAL GARG /REVENUE BY : SHRI R.A. VERMA . # / -0 / DATE OF HEARING : 28 TH APRIL, 2014 1&% / -0 /DATE OF PRONOUNCEMENT : 21.5.2014 / O R D E R PER R.C.SHARMA (A.M.) : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER OF CIT(A)-I, INDORE DATED 11-10-2013, FOR THE ASSESSME NT YEAR 2007- 08, IN THE MATTER OF ORDER PASSED UNDER SECTION 143 (3) OF THE I.T. ACT. 2. THE ONLY GRIEVANCE OF THE ASSESSEE RELATES TO DISA LLOWING ASSESSEES CLAIM OF LONG TERM CAPITAL GAIN ON SALE OF SHARES ON LISTED COMPANIES U/S.10(38) OF THE I.T. ACT. 3 . RIVAL CONTENTIONS HAVE BEEN HEARD AND RECORD PERU SED. FACTS IN BRIEF ARE THAT THE ASSESSEE THROUGH A REGISTERED BROKER PURCHASED 5005 SHARES OF ZENITH INFOTECH LIMITED AND 2000 EQU ITY SHARES OF ITA NO.24/IND/2014 2 ASIAN ELECTRONICS LIMITED, WHICH WERE HELD BY BROKE R IN CLIENTS POOL ACCOUNT FROM 20-4-2005 I.E. FROM THE DATE OF PURCHA SE OF SUCH SHARES. DURING THE YEAR UNDER CONSIDERATION, THE AS SESSEE HAS SOLD THESE SHARES AFTER HOLDING THE SAME FOR MORE THAN 1 2 MONTHS AND LONG TERM CAPITAL GAINS WAS OFFERED THEREON. IT WAS SUBMITTED THAT SHARES WERE PURCHASED THROUGH REGISTERED BROKER, BI LLS OF SALES AND PURCHASE WERE ALSO FURNISHED BEFORE THE AO, THESE S HARES WERE ALSO ADMITTED BY THE AO AS HAVING BEEN TRANSFERRED TO THE DEMAT ACCOUNT OF THE ASSESSEE, THE PAYMENT OF WHICH WAS M ADE BY ACCOUNT PAYEE CHEQUE ON 20-4-2005. THE AO OBSERVED THAT THERE WAS DELAY IN PRESENTATION OF CHEQUE AND THE SAME WA S ENCASHED ONLY ON 27-7-2005. THE AO ALSO ENQUIRED FROM M/S AN GLE CAPITAL & DEBT MARKET LTD. TO WHOM THE ASSESSEE HAD SOLD THE SHARES AND HE CONFIRMED THE TRANSACTION OF PURCHASES AND THE PAYM ENT OF SALE CONSIDERATION. HOWEVER, BY STATING THAT BROKER THRO UGH WHOM THE ASSESSEE HAS PURCHASED THE SHARES HAS DECLINED, THE AO DISALLOWED ASSESSEES CLAIM OF LONG TERM CAPITAL GA IN, HOWEVER, HE TREATED THE GAIN AS SHORT TERM CAPITAL GAINS. BY TH E IMPUGNED ORDER, THE CIT(A) CONFIRMED THE ACTION OF THE AO, AGAINST WHICH THE ASSESSEE IS FURTHER APPEAL BEFORE US. 4 . WE HAVE CONSIDERED RIVAL CONTENTIONS AND FOUND FR OM THE RECORD THAT ASSESSEE HAS CLAIMED LONG TERM CAPITAL GAINS IN RESPECT OF SHARES OF ZENITH INFOTECH LTD. AND ASIAN ELECTRO NICS LTD., WHICH WAS PURCHASED ON 20-4-2005, PAYMENT OF RS.2,31,186/ - WAS MADE ITA NO.24/IND/2014 3 BY ACCOUNT PAYEE CHEQUE ON 20-4-2005. THIS CHEQUE W AS ALSO PRESENTED FOR ENCASHMENT AND CLEARED FROM ASSESSEE S ACCOUNT ON 27-7-2005. SINCE, THESE SHARES WERE HELD BY BROKER IN CLIENTS POOL ACCOUNT WERE TRANSFERRED IN DEMAT ACCOUNT ONLY IN N OVEMBER, 2006. THE AO HAS ALSO VERIFIED THE DEMAT ACCOUNT AND FOUN D THAT 2000 SHARES OF ASIAN ELECTRONICS WERE TRANSFERRED IN DEM AT ACCOUNT ON 16-11-2006. SIMILARLY 2000 SHARES OF ZENITH INFOTEC H LIMITED WAS TRANSFERRED IN DEMAT ACCOUNT ON 16-11-2006. HOWEVER , 3500 SHARES WERE TRANSFERRED IN DEMAT ACCOUNT ON 23-11-2006. TH US, THE SHARES HAVING BEEN PURCHASED FOR WHICH CONSIDERATION WAS P AID THROUGH ACCOUNT PAYEE CHEQUE AND ALSO TRANSFERRED IN DEMAT ACCOUNT AFTER HOLDING IN CLIENTS POOL ACCOUNT IS NOT IN DISPUTE. THESE SHARES WERE DULY SHOWN AS INVESTMENT IN A STATEMENT OF AFFAIRS AS ON 31-3-2006 AS FURNISHED BY ASSESSEE ALONG WITH THE RETURN OF I NCOME FOR ASSESSMENT YEAR 2006-07. TO VERIFY THE GENUINENESS OF SHARES SO SOLD, THE AO HAS ALSO MADE ENQUIRY FROM THE PURCHAS ER OF SHARES OF M/S ANGEL CAPITAL AND DEBT MARKET LTD., WHO HAS CON FIRMED THE PURCHASE. THE PAYMENT OF PURCHASES AND SALE CONSIDE RATION WAS ALSO MADE BY ACCOUNT PAYEE CHEQUE. AFTER PURCHASES THESE SHARES WERE HELD BY THE BROKERS IN THE CLIENTS POOL ACCOU NT FROM 20-4-2005 I.E. FROM THE DATE OF PURCHASE OF SUCH SHARES AND C OPY OF CERTIFICATE OF SUCH HOLDING WAS ALSO FILED BEFORE THE LOWER AUT HORITIES. SINCE THERE WAS DELAY IN TRANSFER OF SHARES IN DEMAT ACCO UNT, THE LOWER AUTHORITIES DID NOT ACCEPT ASSESSEES CLAIM OF LONG TERM CAPITAL ITA NO.24/IND/2014 4 GAINS. WHEN THE FACT OF SHARES BEING HELD IN CLIENT S POOL ACCOUNT, AND TRANSFERRED IN DEMAT ACCOUNT IS NOT DISPUTED, P ROFIT ARISING ON SALE OF THESE SHARES ARE TO BE ACCEPTED. HOWEVER, U NDER THESE CIRCUMSTANCES, WE CAN IGNORE THE PURCHASE PRICE SHO WN BY ASSESSEE AND PROCEED TO RECOMPUTE THE GAINS AS PER PREVAILING MARKET PRICE OF THESE SHARES IN THE NATIONAL STOCK EXCHANGE. FROM THE RECORD, WE FOUND THAT AS PER THE PRINT OUT OF O FFICIAL WEBSITE OF NATIONAL STOCK EXCHANGE, THE CLOSING QUOTATION OF Z ENITH INFOTECH LTD. AND ASIAN ELECTRONICS LTD. AS ON 20-4-2005 WAS RS.16.80 AND RS.79.10 RESPECTIVELY. SINCE THE GENUINENESS OF THE PAYMENT MADE AGAINST PURCHASE OF SHARES WERE NOT DENIED BY THE A O NOR BY THE CIT(A), NOR THE SALE OF THESE SHARES TO ANGLE CAPIT AL AND DEBT MARKET LTD., IT HAS TO BE ACCEPTED THAT SHARES WERE PURCHASED BY THE ASSESSEE, PAYMENT OF WHICH WAS ALSO GIVEN BY AC COUNT PAYEE CHEQUE AND THE SAME WERE DULY SOLD BY THE ASSESSEE AFTER TRANSFER IN DEMAT ACCOUNT. KEEPING IN VIEW THE TOTALITY OF F ACTS AND CIRCUMSTANCES OF THE CASE, WE RESTORE THE MATTER TO THE FILE OF THE AO TO COMPUTE THE LONG TERM CAPITAL GAINS BY TAKING THE PURCHASE PRICE OF ZENITH INFOTECH LTD. AT RS.16.80 AND ASIAN ELECTRONICS LTD. AT RS.79.10, WHICH IS PREVAILING PRICE OF SHARES AS PER THE NATIONAL STOCK EXCHANGE, IN PLACE OF SHARES PRICE TAKEN BY T HE ASSESSEE. SINCE THERE IS NO DISPUTE WITH REGARD TO THE SALE P RICE OF THE SHARES, THE AO IS DIRECTED TO RECOMPUTE THE LONG TERM CAPIT AL GAINS BY TAKING THE ACTUAL PURCHASE PRICE OF SHARES PREVAILING AT N ATIONAL STOCK ITA NO.24/IND/2014 5 EXCHANGE DURING RESPECTIVE PERIOD OF PURCHASES WHIC H IS RS.16.80 IN CASE OF ZENITH INFOTECH LTD. AND RS.79.10 IN CAS E OF ASIAN ELECTRONICS LTD., RESPECTIVELY, INSTEAD OF PURCHASE PRICE SHOWN BY THE ASSESSEE IN THE COMPUTATION OF CAPITAL GAINS. W E DIRECT ACCORDINGLY. 5 . IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS ALLO WED IN PART FOR STATISTICAL PURPOSES. ',%-2 #$,- / !' 3/ 456 7 8 - / - 9 : ORDER PRONOUNCED IN THE OPEN COURT ON THIS 21/5/201 4. / 1&% . ; <#2 21/5/2014 / : SD/- SD/- ( ) (JOGINDER SINGH) ( . . ) (R.C.SHARMA) / JUDICIAL MEMBER / ACCOUNTANT MEMBER INDORE; <# DATED 21/5/2014 *. . ./PKM , # . / PS !' #'$ / COPY OF THE ORDER FORWARDED TO : % & / BY ORDER, ' / ( ) ( ASSTT. REGISTRAR) , / ITAT INDORE 1. !' ') / THE APPELLANT 2. *+') / THE RESPONDENT. 3. . A- ( !' ) / THE CIT(A), INDORE 4. . A- / CIT, INDORE 5. BC *-#D$ , !' 0 !D$% , / DR, ITAT, INDORE 6. E F / GUARD FILE. +B'- *- //TRUE COPY//