2011 (8) TMI 768 - AT - Income Tax

LTCG on the sale of shares - non-acceptance of claims - treated by the Revenue as income from other sources - assessee was unable to prove the share transaction(s) yielding the capital gain - Matter remanded to regular Bench.

Summary

Issues:
Difference of opinion between Members of Division Bench on treatment of long term capital gain as income from other sources.

Analysis:
In the case involving two individuals for different assessment years, the primary issue was the disagreement between the Members of the Division Bench regarding the treatment of long term capital gain (LTCG) on the sale of shares. The Revenue contended that the assessee failed to substantiate the share transactions resulting in capital gains. The Judicial Member accepted the genuineness of the transactions based on evidence provided by the assessee, leading to the acceptance of the assessees' claims. However, the Accountant Member dissented, citing similarities with another case and upholding the Revenue's stance. This dissent led to the matter being referred to a Third Member under Section 255(4) of the IT Act, 1961.

The Third Member reviewed the cases and the dissenting opinions, particularly referencing a previous case involving similar issues. After careful consideration, the Third Member agreed with the view of the Judicial Member, emphasizing the erroneous treatment of LTCG as income from other sources by the Assessing Officer. The Third Member's decision favored the assessees, leading to the allowance of their appeals. The Third Member's decision was based on the resolution of the differences arising from the dissent between the Members of the Division Bench, ultimately aligning with the Judicial Member's position.

The written submissions in one case highlighted the dissent by the Accountant Member based on discussions in a previous case, which had been resolved by the Third Member in favor of the assessee. The counsel in the other case also drew parallels with the same previous case, advocating for a similar outcome. The agreement among the parties and the Third Member's decision in the referenced case further supported the assessees' positions in the present cases.

In conclusion, the Third Member's decision resolved the differences between the Members of the Division Bench, leading to the allowance of the assessees' appeals. The matter was directed to the regular Bench for further proceedings in line with the majority opinion, emphasizing the importance of factual and legal accuracy in determining the treatment of income, specifically distinguishing between long term capital gains and income from other sources.