2011 (5) TMI 970 - AT - Income Tax

Summary

Issues Involved:
1. Whether the assessee is entitled to the benefit of concessional rate of taxation u/s 111A of the Income Tax Act, 1961 on capital gains from share transactions where no securities transaction tax (STT) was paid.
2. Whether the share transactions were genuine.

Summary:

Issue 1: Concessional Rate of Taxation u/s 111A

The department contested that the assessees, Smt. Ritaben B Panwala and Smt. Mitaben B Panwala, were not entitled to the concessional rate of taxation u/s 111A of the Income Tax Act, 1961 on capital gains from share transactions because no STT was paid. The Assessing Officer (A.O.) concluded that the transactions were off-market and not listed on the stock exchange, thus applying a normal tax rate of 30% on the capital gains.

The CIT(A) initially upheld the A.O.'s decision but later rectified the order u/s 154, allowing the concessional rate based on bills from Grishma Securities Pvt. Ltd. showing STT deductions. The Tribunal upheld the CIT(A)'s rectification, stating that the conditions of Section 111A were satisfied as the transactions occurred after the Finance Act No.2 of 2004 came into force and were chargeable to STT. The Tribunal found no contrary evidence to dispute the broker's certification of STT deduction.

Issue 2: Genuineness of Share Transactions

The department also argued that the share transactions were not genuine. However, the CIT(A) rejected this contention, and the Tribunal noted that the revenue did not raise any specific grounds challenging the genuineness of the transactions. The Tribunal found no reason to differ from the CIT(A)'s conclusion that the transactions were genuine.

Conclusion:

The Tribunal dismissed the appeals filed by the revenue, affirming that the assessees were entitled to the concessional rate of taxation u/s 111A of the Income Tax Act, 1961, as the conditions for such benefit were met, and the transactions were genuine.

Order pronounced in the open court on 31st May, 2011.