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2014 (6) TMI 666 - AT - Income Tax


Issues:
1. Recalculation of long term capital gains and sale of shares at a different price than declared.
2. Treatment of difference between sale value and book value of shares as income from other sources.

Analysis:
1. The appeal was filed against the order of the Ld. CIT(A)-40, Mumbai for the Assessment Year 2009-10 concerning the recalculation of long term capital gains and sale of 1,00,000 shares of ITL Industries Ltd. The AO calculated the book value per share at Rs.4.51 instead of Rs.21 as declared by the assessee, resulting in the balance amount being assessed as income from other sources. The Ld. CIT(A) upheld this action. However, the tribunal noted that the AO cannot substitute the value of consideration without material facts contradicting the assessee's calculation. Referring to previous judgments, the tribunal held that the AO cannot replace the sale consideration value unless specific provisions exist. Hence, the Ld. CIT(A) was deemed unjustified in confirming the addition made by the AO, and the claim of the assessee was allowed.

2. The assessee, engaged in the business of manufacturing garments/accessories, had shown long term capital gains in its return. The AO recalculated the capital gains based on the sale of shares of ITL Industries Ltd. The AO considered the book value per share at Rs.4.51, leading to the balance amount being treated as income from other sources. The tribunal emphasized that the AO lacks the authority to substitute fair market value for the full value of consideration unless specific provisions exist. Citing relevant case laws, the tribunal ruled in favor of the assessee, allowing the appeal.

 

 

 

 

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