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2023 (1) TMI 1067 - AT - Income TaxComputation of Capital Gains (Loss) - Determining the cost of acquisition u/s 49(2AA) - Restriction of cost of acquisition in respect of shares sold - assessee had not produced Tax Residency Certificate (TRC) as directed by the DRP - return of income was filed in the capacity of non-resident - loss claimed under the head capital gains - HELD THAT - The assessee had furnished the proof that he has paid taxes in USA (as perquisite) and in India. In the instant case, since, the assessee had produced the TRC as per the directions of the DRP, we refrain from adjudicating whether TRC is mandatory for determining the cost of acquisition u/s 49(2AA) of the I.T.Act. Hence, we affirm the directions of the DRP. In the interest of justice and equity, we restore the issue to the files of the A.O. The A.O. is directed to examine the TRC and the same if it is found to be in order, the cost of acquisition shall be taken at Rs.2,13,73,563 as claimed by the assessee in his return of income. With these observations, we restore the matter to the files of the A.O. The A.O. is directed to afford a reasonable opportunity of hearing to the assessee and decide the issue in accordance with law - Appeal filed by the assessee is allowed for statistical purposes.
Issues:
Restriction of cost of acquisition in respect of shares sold Analysis: The judgment involves an appeal against a final assessment order concerning the restriction of the cost of acquisition of shares sold. The assessee, an individual employed with M/s.Wipro Limited, declared a total income for the assessment year 2019-2020, including income from salary, house property, capital gains, and other sources. The dispute arose when the Assessing Officer restricted the cost of acquisition of shares sold to Rs.72,27,660, contrary to the amount of Rs.2,13,73,864 claimed by the assessee. The assessee had acquired shares under the Employee Stock Option Scheme and provided documentation to support the claimed cost of acquisition. However, the AO restricted the cost based on the perquisite value offered to tax in the previous assessment year. The Dispute Resolution Panel (DRP) considered the submissions and directed the AO to verify taxes paid with reference to the Tax Residency Certificate (TRC) and adopt the cost of acquisition at Rs.2,13,73,563. The final assessment order was passed, maintaining the cost of acquisition at Rs.72,27,660 due to the assessee's failure to submit the TRC as directed by the DRP. The assessee challenged this decision before the Tribunal, presenting the TRC and arguing that it was not mandatory for determining the cost of acquisition under section 49(2AA) of the Income Tax Act. The Tribunal, considering the submissions and the DRP's directions, upheld the DRP's decision, emphasizing that since the TRC was produced as per the DRP's directions, the cost of acquisition should be taken at Rs.2,13,73,563 as claimed by the assessee in the return of income. The Tribunal directed the AO to re-examine the TRC and decide the issue accordingly, affording a reasonable opportunity of hearing to the assessee. Ultimately, the appeal was allowed for statistical purposes. In conclusion, the judgment addresses the contentious issue of the cost of acquisition of shares sold by the assessee, emphasizing the importance of complying with procedural requirements such as producing the TRC. The Tribunal's decision underscores the significance of following due process and providing necessary documentation to support claims in tax assessments, ensuring a fair and just resolution of disputes.
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