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TMI Blog2012 (10) TMI 746X X X X Extracts X X X X X X X X Extracts X X X X ..... 5000 shares would work out to be Rs. 1,25,55,000/- which is liable to be deducted as cost of acquisition of 5000 shares while working out the capital gains. Thus, the assessee has correctly worked out the cost as per the provisions of section 55(2)(ab). Accordingly no infirmity in the order of the CIT(A) in directing the AO to adopt the cost of acquisition of 5000 shares at Rs. 1,25,55,000/- - against Revenue. - ITA No. 171/Ind/2011 - - - Dated:- 17-7-2012 - SHRI JOGINDER SINGH AND SHRI R.C. SHARMA, JJ. Appellant by Shri Keshav Saxena Respondent by Shri Navin Mohta ORDER PER SHRI R.C. SHARMA, ACCOUNTANT MEMBER This is an appeal filed by the assessee against the order of the learned CIT(A) dated 30.5/2011 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee was a member of Bombay Stock Exchange. It was allotted 10,000 equity shares of face value Re. 1 per share of Bombay Stock Exchange Ltd. (BSE Ltd.). This allotment was made in accordance with the scheme of demutualisation and corporatisation of Bombay Stock Exchange (BSE), also known as the Stock Exchange, Mumbai, as per the relevant SEBI s notification dated 20.05.2005. During the year, under consideration, the assessee filed its return on 30.9.2008 declaring a total income of Rs. 6,67,990/- from business to be taxed @ 30%. Apart from that, it has also shown long term capital gain of Rs. 1,34,45,000/- from sale of 5,000/- equity shares of BSE Ltd. The total sale consideration of these shares was shown at Rs. 2,60,00,000/-. As agains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... apital asset, being trading or clearing rights of the recognised stock exchange acquired by a shareholder who has been allotted equity share or shares under such scheme of demutualisation or corporatisation, shall be deemed to be nil; 4.1.1 The clause (ab) of sub-section (2) of section 55 was brought in statute by the Finance Act, 2001 w.e.f. 01.04.2002, whereas, the proviso was inserted by the Finance Act, 2003 w.e.f. 01.04.2004. Moreover, the word corporatisation occurring in the clause (ab) was replaced by demutualisation or corporatisation by the Finance Act, 2003 which was of clarificatory nature. These provisions were brought on statute in the context of demutualisation and corporatisation of Stock Exchanges in cognisance of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ding rights of a recognised Stock Exchange of such shareholder is to be taken as nil. This has also been clarified in explanatory notes as contained in Board s circular no. 7/2003, dated 05.09.2003. The A.O. while examining the issue has wrongly interpreted the provisions to mean that the said proviso to section 55(2)(ab) was inserted in respect of cost of acquisition of equity shares. The A.O.s decision to adopt cost of acquisition of the equity shares, which were allotted by BSE Limited, in the process of SEBI s approved demutualisation and corporatisation scheme, 2005, as nil is not correct. The cost of acquisition is to be adopted in accordance with clause (ab) of section 55(2) which would mean the value of original membership. In thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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