JAIKISHAN NANDALAL KHATRI, CHENNAI V. ITO NON CORPORATE WARD 4(2), CHENNAI

ITA 3151/CHNY/2018

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 4424 (ITAT-CHENNAI)
• Duration Of Justice: 4 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-03-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 19-11-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: T VASUDEVAN
• Keywords: Date of conversion; Set aside; Capital Gains

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, CHENNAI . . . , ! ' , $ '% BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER ./ ITA NOS.3151 & 3152/CHNY/2018 ( )( / ASSESSMENT YEARS : 2010-11 & 2011-12 SHRI JAIKISHAN NANDALAL KHATRI, OLD NO.6, NEW NO.7, 3 RD FLOOR, VENKATNARAYAN STREET, PARK TOWN, CHENNAI - 600 003. PAN : ASSPK 9327 Q V. THE INCOME TAX OFFICER, NON CORPORATE WARD - 4(2), CHENNAI. (+,/ APPELLANT) (-.+,/ RESPONDENT) +, / 0 / APPELLANT BY : SHRI T. VASUDEVAN, ADVOCATE -.+, / 0 / RESPONDENT BY : SHRI AR.V. SREENIVASAN, JCIT 1 / 2$ / DATE OF HEARING : 25.02.2019 34) / 2$ / DATE OF PRONOUNCEMENT : 21.03.2019 / O R D E R PER N.R.S. GANESAN, JUDICIAL MEMBER : BOTH THE APPEALS OF THE ASSESSEE ARE DIRECTED AGA INST THE RESPECTIVE ORDERS OF THE COMMISSIONER OF INCOME TAX (APPEALS)-5, CHENNAI, DATED 19.09.2018 AND PERTAIN TO ASSESSMENT YEARS 2010- 11 AND 2011-12. SINCE COMMON ISSUE ARISES FOR CONS IDERATION IN BOTH THE APPEALS, WE HEARD BOTH THE APPEALS TOGETHE R AND DISPOSING THE SAME BY THIS COMMON ORDER. 2 I.T.A. NOS.3151 & 3152/CHNY/18 2. SHRI T. VASUDEVAN, THE LD.COUNSEL FOR THE ASSESS EE, SUBMITTED THAT THE ASSESSING OFFICER FOUND THAT THE DATE OF CONVERSION OF PHYSICAL SHARE INTO DEMAT FORM WAS TH E DATE OF ACQUISITION. THEREFORE, ACCORDING TO THE LD. COUNS EL, THE CAPITAL GAIN HAS TO BE ASSESSED AS SHORT TERM CAPITAL GAIN, HENCE, REJECTED THE CLAIM UNDER SECTION 10(38) OF THE INCOME-TAX AC T, 1961 (IN SHORT 'THE ACT'). ACCORDING TO THE LD. COUNSEL, THE ASSE SSEE ACQUIRED THE PHYSICAL SHARES AS ON 10.04.2008 AND 11.06.2008. T HE ASSESSEE HAS PRODUCED COPIES OF CONTRACT NOTE BEFORE THE ASS ESSING OFFICER. ACCORDING TO THE LD. COUNSEL, THE CONVERSION OF PHY SICAL SHARES INTO DEMAT FORM CANNOT BE CONSIDERED TO BE A FRESH ACQUI SITION. ONLY THE FORM OF HOLDING SHARES WAS CONVERTED INTO DEMAT FORM, THEREFORE, ACCORDING TO THE LD. COUNSEL, THE DATE O F ACQUISITION SHALL CONTINUE TO BE AS ON 10.04.2008 AND 11.06.2008. IF THOSE DATES ARE TAKEN AS DATES OF ACQUISITION, THE GAIN ARISING ON SALE HAS TO BE TREATED AS LONG TERM CAPITAL GAINS. THEREFORE, ACC ORDING TO THE LD. COUNSEL, THE ASSESSEE IS ELIGIBLE FOR EXEMPTION UND ER SECTION 10(38) OF THE ACT. 3. ON THE CONTRARY, SHRI AR.V. SREENIVASAN, THE LD. DEPARTMENTAL REPRESENTATIVE, SUBMITTED THAT WHEN TH E ASSESSEE 3 I.T.A. NOS.3151 & 3152/CHNY/18 CLAIMS TO HAVE PURCHASED SHARES AS ON 10.04.2008 AN D 11.06.2008, IT IS NOT A PURCHASE AT ALL AND IT IS ONLY AN ACCOM MODATION ENTRY THROUGH BROKERS WHO ARE ACTING AS ACCOMMODATION ENT RY OPERATORS FOR THE PURPOSE OF CLAIMING EXEMPTION UNDER SECTION 10(38) OF THE ACT. AS PER THE DEMAT ACCOUNT, THE DATE OF PURCHAS E WAS 04.06.2009. THEREFORE, ACCORDING TO THE LD. D.R., THE SALE OF SHARES HAS TO BE CONSTRUED AS SHORT TERM CAPITAL GA IN, HENCE, THE ASSESSEE IS NOT ELIGIBLE FOR EXEMPTION UNDER SECTIO N 10(38) OF THE ACT. 4. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS ON EITH ER SIDE AND PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IF THE INITIAL PURCHASE ON 10.04.2008 AND 11.06.2008 ARE NOT THE D ATES OF PURCHASE, IT IS NOT KNOWN HOW THE SHARES WERE CONVE RTED INTO DEMAT FORM. UNLESS THERE IS A VALID PURCHASE OF SHARES, THE SHARES CANNOT BE CONVERTED INTO DEMAT FORM. THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT IF THE CLAIM OF PURCHASE ON 10.04.2008 AND 11.06.2008 IS CORRECT AS PER CONTRACT NOTE, THEN THE CONVERSIO N INTO DEMAT FORM CANNOT BE DOUBTED. THEREFORE, IT IS NOT CORRECT TO SAY THAT THE PURCHASE OF SHARES HAS TO BE TAKEN ONLY ON THE DATE OF CONVERSION INTO DEMAT FORM. IF THE ASSESSING OFFICER ACCEPTS THE CONVERSION OF 4 I.T.A. NOS.3151 & 3152/CHNY/18 SHARES, THEN NATURALLY THE PHYSICAL ACQUISITION OF SHARES ON 10.04.2008 AND 11.06.2008 HAS TO BE TAKEN AS DATES OF ACQUISITION. 5. MOREOVER, IT IS NOT KNOWN HOW THE ASSESSING OFFI CER CAME TO A CONCLUSION THAT THE INITIAL ACQUISITION WERE ONLY BOGUS ENTRIES, ESPECIALLY WHEN THE ASSESSEE CLAIMS THAT THE SHARES WERE PURCHASED THROUGH A CONTRACT NOTE. IN THOSE CIRCUM STANCES, THIS TRIBUNAL IS OF THE CONSIDERED OPINION THAT THE MATT ER NEEDS TO BE RE- EXAMINED. ACCORDINGLY, ORDERS OF BOTH THE AUTHORIT IES BELOW ARE SET ASIDE AND THE ENTIRE ISSUE IS REMITTED BACK TO THE FILE OF THE ASSESSING OFFICER. THE ASSESSING OFFICER SHALL RE- EXAMINE THE MATTER IN THE LIGHT OF THE MATERIAL AVAILABLE ON RE CORD AND THEREAFTER DECIDE THE ISSUE AFRESH IN ACCORDANCE WITH LAW, AFT ER GIVING A REASONABLE OPPORTUNITY TO THE ASSESSEE. THE ASSESS ING OFFICER SHALL ALSO FURNISH ALL THE DOCUMENTS RELIED UPON BY HIM TO THE ASSESSEE DURING THE COURSE OF PROCEEDING BEFORE HIM . IT IS OPEN TO THE ASSESSEE TO FURNISH ALL THE NECESSARY MATERIAL TO SUPPORT HIS CLAIM. 6. WITH THE ABOVE OBSERVATION, BOTH THE APPEALS FIL ED BY THE ASSESSEE ARE ALLOWED FOR STATISTICAL PURPOSES. 5 I.T.A. NOS.3151 & 3152/CHNY/18 ORDER PRONOUNCED IN THE COURT ON 21 ST MARCH, 2019 AT CHENNAI. SD/- SD/- ( ! ' ) ( . . . ) (INTURI RAMA RAO) (N.R.S. GANESAN) $ / ACCOUNTANT MEMBER /JUDICIAL MEMBER /CHENNAI, 6 /DATED, THE 21 ST MARCH, 2019. KRI. / -278 98)2 /COPY TO: 1. +, /APPELLANT 2. -.+, /RESPONDENT 3. 1 :2 () /CIT(A)-5, CHENNAI-34 4. PRINCIPAL CIT-9, CHENNAI 5. 8; -2 /DR 6. <( = /GF.