2010 (2) TMI 1185 - AT - Income Tax

Summary

Issues involved:
The only issue in the cross appeals is whether the capital gains on the sale of shares can be computed by discarding the actual sale price declared by the assessee.

Details of the Judgment:

1. Assessing Officer's Decision:
The Assessing Officer rejected the agreed price of &8377; 148/- per share declared by the assessee for the sale of shares, citing various valuation reports and guidelines. He concluded that the actual sale price should be higher based on these factors and family transactions.

2. CIT(A) Decision:
The CIT(A) upheld the Assessing Officer's decision to enhance the sale price, directing to adopt the full value of consideration based on profit earning capacity and Supreme Court judgments.

3. Appeals:
The assessee challenged the CIT(A)'s decision, arguing that only &8377; 148/- per share should be considered for computing capital gains. The Revenue challenged to restore the Assessing Officer's figure of &8377; 414/- per share.

4. Judgment:
The Tribunal held that as per section 48 of the Income Tax Act, the actual price received by the assessee should be considered for computing capital gains unless there is evidence of understatement. The family arrangement context supported the declared sale price of &8377; 148/- per share.

5. Family Arrangement:
The family arrangement among the members, including the sale of shares, was a significant factor in determining the genuineness of the sale price declared by the assessee. The Tribunal emphasized that the family arrangement supported the declared price.

6. Conclusion:
The Tribunal directed the Assessing Officer to compute the capital gains based on the agreed sale price of &8377; 148/- per share. The appeal of the assessee was allowed, and the Department's appeal was dismissed.