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TMI Blog2015 (5) TMI 890X X X X Extracts X X X X X X X X Extracts X X X X ..... transfer of capital asset viz., equity shares of a listed company by name Bhoruka Financial Services Ltd. (BFSL) on sale of which securities transaction tax had been paid. The further grievance of the revenue is that the CIT(A) treated the capital gain in question as long term capital gain on sale of shares as against the stand of the AO that the capital gain in question was short term capital gain without any basis. According to the Revenue, the CIT(A) in coming to the above conclusions had followed the decision of the Hon'ble Karnataka High Court in the case of Bhoruka Engineering Industries Ltd. Vs. DCIT ITA No.120/2011 dated 9.4.2013 which was a decision rendered in the case of another shareholder of BFSL who had sold shares under fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e initiated for disallowing the claim for exemption u/s.10(38) of the Act viz., on the long term capital gain on sale of shares of BFSL. 5. The facts with regard to capital gain on sale of shares of BSFL are as follows: The assessee during the year had sold 1,11,500 equity shares of M/s. BFSL to M/s. DLF Commercial Developers Ltd., ["DLFCDL" for short] and net consideration of Rs. 49,83,11,717/- [after payment of Security Transaction Tax, (for short 'STT')], was received from Rajat Shares and Stock Brokers (P) Ltd., a member of broker of Magadh Stock Exchange Association (MSEA), a recognized stock exchange, through whom the shares of BFSL were sold on MSEA's online terminal. The assessee claimed the long term capital gains of Rs. 49,83,11, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n 1985. 8. The Assessing Officer further noticed that during the FY 2004-05 BFSL sold all the listed equity shares. Accordingly, the investments which were worth Rs. 4.61 crores as on 31.03.2004 got reduced to Rs. 3.85 crores as on 31.3.2005. These investments as on 31.3.2005 were equity shares of M/s Bhoruka Power Corporation Ltd. During the FY 2005-06, BFSL sold even the investments of Rs. 3.85 crores. As aforesaid, BFSL had acquired 15 acres of land situated at Whitefield, Bangalore, during the FY 2004-05. BFSL purchased this land at a nominal price of Rs. 3.75 crores from Bhoruka Steel Ltd. During August 2005, M/s DLFCDL purchased the shares of BFSL at a negotiated rate of Rs. 4,490/- per share for a total consideration of Rs. 88.97 cr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncluded that DLFCDL has made the payment not to just buy the shares of BFSL but to acquire the underlying asset. The shares of the company were listed in the Bangalore Stock Exchange. Without making full and complete efforts to transact through Bangalore Stock Exchange, it has chosen to carry out the transaction from Magadh Stock Exchange. When the assessee company could have transacted through any other recognized stock exchange since Magadh Stock Exchange was not permitted to carry out the share transactions for a long time. The company, BFSL and its promoters had also applied to SEBI seeking exemption from making public offer for sale of these transactions. These unusual attempts of the assessee company finally culminated in selling a no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion of sale of shares by the assessee which was identical in all aspects to the sale of shares by Bhoruka Engineering Industries Ltd., was to be ignored and only substance of the transaction taken note of. 12. On appeal by the assessee, the CIT(Appeals) following the decision of the Hon'ble Karnataka High Court in the case of Bhoruka Engineering Industries Ltd., (supra), upheld the claim of the Assessee for exemption u/s.10(38) of the Act and reversed the order of the AO. 13. Aggrieved by the order of the CIT(Appeals), the revenue has preferred the present appeal before the Tribunal. 14. We have considered the grounds of appeal of the revenue and find that the issue raised by the AO in the order of assessment has already been decided by ..... X X X X Extracts X X X X X X X X Extracts X X X X
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