2011 (1) TMI 1356 - AT - Income Tax

Summary

Issues involved:
The judgment deals with the treatment of gain on sale of shares as short-term capital gain instead of income from other sources for the assessment year 2005-06.

Issue 1: Treatment of gain on sale of shares

The Revenue appealed against the CIT(A)'s direction to treat the gain on sale of shares as short-term capital gain instead of income from other sources. The assessee claimed long-term capital gain of Rs. 14,75,185 on transfer of shares of Bolton Properties P. Ltd., purchased for Rs. 26,372, with the entire gain claimed as exempt u/s.10(38). The AO received information questioning the genuineness of the transaction, leading to an investigation. The ld. CIT(A) found that the shares were actually purchased on 04-11-2004, not 15-05-2003 as claimed, reducing the holding period and directing to tax the gain as short-term capital gain. The Revenue challenged this decision.

The AO issued summons u/s.131 to Bolton Properties Ltd., confirming the transfer of shares to the assessee on 15-05-2003. The company also provided details of the previous owner, M/s. Albright Constructions P. Ltd., and confirmed the listing of shares on Calcutta Stock Exchange. Despite these details, the AO was not convinced of the transaction's genuineness and treated the entire sale proceeds as income from other sources.

The ITAT, after considering the evidence and submissions, found that the purchase of shares by the assessee was adequately proven. The shares were transferred to the assessee's name, and subsequent sale was legitimate. The ITAT upheld the CIT(A)'s decision to treat the gain on sale of shares as short-term capital gain, overturning the AO's assessment. The appeal by the Revenue was dismissed.

The judgment was pronounced on January 21, 2011, by the Appellate Tribunal ITAT Mumbai, with Shri R.S. Syal (AM) and Smt. Asha Vijayaraghavan (JM) presiding over the case. The appellant was represented by Shri Surendra Kumar, and the respondent by Shri Hitesh P. Shah.