2011 (12) TMI 594 - AT - Income Tax

Summary

Issues involved:
The only issue in this appeal is against the order of ld. CIT(Appeals) confirming the action of Assessing Officer in treating the long-term capital gain on sale of shares as short-term capital gain.

Details of the judgment:

Issue 1: Treatment of capital gains as short-term instead of long-term:
The Assessing Officer noted discrepancies in the purchase and sale of shares of Magma Leasing Limited by the assessee. The AO opined that since the actual purchase of shares was on 29.03.2005, and the sale occurred on 20 & 21/03/2006, the capital gain should be treated as short-term instead of long-term. Ld. CIT(Appeals) upheld this decision.

Issue 2: Assessee's contention and supporting evidence:
The assessee purchased shares on 11.06.2004 from Celica Developers Pvt. Ltd. for a total consideration of &8377; 4,20,750/-, supported by a purchase bill and bank statement. Despite receiving the shares in the Demat account on 31.03.2005, the assessee corresponded with Celica Developers Pvt. Ltd. for the release of shares, which were eventually delivered on 01.04.2005. The CBDT Circular No. 704 dated 28.04.1995 was cited to support the contention that the date of contract of sale should be treated as the date of transfer.

Judgment and Conclusion:
The Tribunal found that the intention of the parties was clear that the date of contract of sale, i.e., 11.06.2004, should be considered the date of transaction. Referring to the CBDT Circular, it was concluded that the assessee earned long-term capital gain and not short-term capital gain as assessed by the lower authorities. Consequently, the appeal of the assessee was allowed.

Outcome:
The appeal filed by the assessee was allowed, and the judgment was pronounced in the open court on 14/12/2011.