STERLING FINVEST PVT. LTD.,KOLKATA V. DCIT, CIR. 5(1), KOLKATA

ITA 113/KOL/2024

AI Insights

The case involves Sterling Finvst Private Ltd., which appealed against the order of the National Faceless Appeal Centre, Delhi, concerning the assessment year 2014-15. The primary issue was the treatment of capital gains from the sale of equity shares of Midland Polymer Limited. The AO had treated the long-term capital gain (LTCG) of 53,24,681 as non-genuine while accepting the short-term capital gain (STCG) of 65,96,424 as genuine. The Tribunal questioned the inconsistency in the AO's decision, given that both gains were from the same shares, and directed the deletion of the addition made under Section 68 of the Income Tax Act.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 786610 (ITAT-KOLKATA)
• Duration Of Justice: 1 year(s) 9 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-11-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 22-01-2024
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P.P. RANJAN
• Assessee Lawyers: ABHISHEK BANSAL
• Keywords: Set aside; Rule 8D; Bogus
• Section: 143(3); 68; 14A

Judgement Text

" IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH, KOLKATA BEFORE SHRI RAJESH KUMAR, AM AND SHRI PRADIP KUMAR CHOUBEY, JM ITA No. 113/KOL/2024 (Assessment Year: 2014-15) Sterling Finvst Private ltd. 1, Bonafide Lane, First Floor, Kolkata-700001, West Bengal Vs. DCIT, Circle-5(1), Aaykar Bhavan P-7, Chowringhee Square, Kolkata-700069, West Bengal (Appellant) (Respondent) PAN No. AACCA8245L Assessee by : Shri Abhishek Bansal, AR Revenue by : Shri P.P. Ranjan, DR Date of hearing: 18.11.2025 Date of pronouncement: 19.11.2025 O R D E R Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 24.11.2023 for the AY 2014-15. 02. The only issue raised by the assessee at the time of hearing is against the order of Learned CIT (A) upholding the assessment order wherein the Learned AO treated the long-term capital gain (LTCG) of ₹53,24,681/- from transactions in equity shares of Midland polymer limited, to be not genuine, while simultaneously accepting the short- term capital gain (STCG) of ₹65,96,424/- from same equity share as genuine. Printed from counselvise.com 1 Page | 2 ITA No. 113/KOL/2024 Sterling Finvst Private ltd.; A.Y. 2014-15 03. The facts in brief are that the assessee filed the return of income on 28-09-2014, showing total income of ₹60,43,770. The case of the assessee was selected for scrutiny and assessment u/s 143(3) of the Act the was framed vide order dated 28-12-2016, assessing the total income at ₹1,17,69,646/- after making an addition of ₹53,24,681/- u/s 68 of the Act in respect of bogus long-term capital gain arising from sale of shares of Midland Polymer Limited and also ₹1,69,467 u/s 14A of the Act read with rule 8D of the rules. The addition of Rs. 53,24,681/- was made by the ld. AO on the ground that the said company is a penny stock company and assessee has earned non-genuine and bogus long- term capital gain from the sale of equity shares of the said company. 04. In the appellate proceeding, the Learned CIT (A) deleted the addition in respect of disallowance u/s 14A, read with Rule 8D of the Rules, while sustaining the addition of ₹53,84,681 as made by the Learned AO under Section 68 of the Act, by upholding the order of the Learned AO on this issue. 05. After hearing the rival contentions and perusing the materials available on record, we find that the learned AO has treated the equity shares of Midland Polymer Limited to be penny stock. We note that during the year, the assessee has earned long-term capital gain as well as short-term capital gain on the sale of equity shares from the said script. i.e. Midland Polymer Limited. During the year, the assessee has earned ₹53,24,681/- as long-term capital gain from sale of 1,20,000 equity shares, which were held for a period of more than one year. The assessee also earned short-term capital gain of Rs. 65,96,424 from sale of 1,28,000 equity shares of the said company, which were hold for less than one year. We note that both income from the sale of equity shares Printed from counselvise.com 1 Page | 3 ITA No. 113/KOL/2024 Sterling Finvst Private ltd.; A.Y. 2014-15 were shown by the assessee in the return of income i.e. LTCG of ₹53,24,681 was claimed as exempt under Section 10(38) of the Act, while STCG of ₹65,96,424 was shown as under Section 111A of the Act. The ld. AO treated the long-term capital gain of ₹53,024,681 as bogus and non-genuine, whereas the short-term capital gain of ₹65,096,424 made from the sale of equity shares of the same company i.e. Midland Polymer Limited was treated as genuine and accepted in the return of income. Thus, we have failed to understand as to how long term capital gain from sale of equity shares is non-genuine and bogus while at the same time the short term capital gain is genuine . In other words the ld. AO has a adopted a very capricious and whimsical approach while making the assessment by accepting STCG as genuine and rejecting the LTCG as bogus and non-genuine particularly, when both these gains have reason from the sale of equity shares of the same company. Under these circumstances, we are we are not in a position to agree with the appellate order passed by the ld. CIT (A) upholding the order of AO. Accordingly, we set aside the same and direct the ld. AO to delete the addition. The appeal of the assessee is allowed. 06. In the result, the appeal of the assessee is allowed. Order pronounced in the open court on 19.11.2025. Sd/- Sd/- (PRADIP KUMAR CHOUBEY) (RAJESH KUMAR) (JUDICIAL MEMBER) (ACCOUNTANT MEMBER) Kolkata, Dated: 19.11.2025 Sudip Sarkar, Sr.PS Printed from counselvise.com 1 Page | 4 ITA No. 113/KOL/2024 Sterling Finvst Private ltd.; A.Y. 2014-15 Copy of the Order forwarded to: BY ORDER, True Copy// Sr. Private Secretary/ Asst. Registrar Income Tax Appellate Tribunal, Kolkata 1. The Appellant 2. The Respondent 3. CIT 4. DR, ITAT, 5. Guard file. Printed from counselvise.com "