2011 (10) TMI 630 - AT - Income Tax

Summary

Issues Involved:
1. Treatment of Long Term Capital Gain (LTCG) as Income from Other Sources.
2. Treatment of Capital Gain as Short Term Capital Gain (STCG) on a protective basis.

Summary:

Issue 1: Treatment of Long Term Capital Gain (LTCG) as Income from Other Sources

The Revenue appealed against the CIT(A) order treating the profit of Rs. 29,00,317/- on the sale of shares as LTCG, whereas the A.O. had treated it as income from other sources, alleging the transaction was a colourable device to evade tax. The CIT(A) found the A.O.'s observations factually incorrect, noting that the assessee provided sufficient evidence of genuine purchase and sale of shares. The CIT(A) referenced the Hon'ble P&H High Court in CIT vs. Anupam Kapoor, stating that without material evidence, the A.O.'s presumption of a bogus transaction was unfounded. The Tribunal upheld the CIT(A)'s decision, stating that the A.O.'s conclusions were based on presumptions and surmises without proper enquiry, and dismissed the Revenue's appeal.

Issue 2: Treatment of Capital Gain as Short Term Capital Gain (STCG) on a Protective Basis

The A.O. alternatively treated the LTCG of Rs. 27,58,778/- as STCG on a protective basis, citing a lack of material evidence regarding the duration the shares were held. The CIT(A) found that the shares were held for more than 12 months, and the A.O.'s observations were incorrect. The Tribunal agreed with the CIT(A), noting that the assessee provided evidence of the purchase and dematerialization of shares, and there was no basis for treating the gains as STCG. The Tribunal dismissed the Revenue's appeal on this ground as well.

Conclusion:

The Tribunal dismissed the Revenue's appeal, upheld the CIT(A)'s order treating the gains as LTCG, and imposed a token cost of Rs. 100/- on the Revenue for filing an unnecessary appeal and wasting the court's time. The order was pronounced in the open court on 31st October 2011.