2011 (7) TMI 1266 - AT - Income Tax

Summary

Issues involved: Appeal by revenue against CIT(A) order on assessment year 2006-07 regarding deletion of addition as income from other sources against Long Term Capital Gains on sale of shares of M/s. Talent Infoway Ltd.

Details of the Judgment:

1. The appellant, an individual, declared Long Term Capital Gain (LTCG) on the sale of shares of M/s. Talent Infoway Ltd. The AO raised concerns about the transaction, considering it a sham one due to common directorship in the share broking companies involved. The AO treated the LTCG as income from other sources based on this belief.

2. The assessee provided evidence of the purchase and sale of shares, including account payee cheques and D-Mat account transfers. However, the AO disregarded this evidence, citing similarities with another case and a survey conducted on one of the share broking companies involved. The AO concluded that the LTCG was a result of accommodation entries.

3. On appeal, the CIT(A) found the AO's conclusions to be based on conjectures and surmises. Referring to a similar case, the CIT(A) directed the AO to treat the income as LTCG. The revenue appealed this decision to the Tribunal.

4. During the appeal hearing, the Tribunal noted that all evidence had been submitted by the assessee, including confirmation from the broker. The Tribunal upheld the CIT(A)'s order, stating that the revenue's stance lacked merit in light of a previous decision involving similar facts.

5. The Tribunal dismissed the revenue's appeal, affirming the CIT(A)'s decision. The order was pronounced on 29th July 2011.

This summary encapsulates the key issues, arguments, and decisions made in the legal judgment regarding the assessment of Long Term Capital Gains on the sale of shares, emphasizing the evidentiary support provided by the assessee and the subsequent dismissal of the revenue's appeal by the Tribunal.