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TMI Blog2011 (8) TMI 1085X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by the appellant on sale of shares by taking the share value at Rs. 1.52 per share instead Rs. 0.26 at which the appellant entered into the transaction. 2. The Ld. CIT (A) has failed in appreciating the evidences and submissions of the appellant while adjudicating the above ground of appeal. 3. Initiation of penalty u/s. 271(1)(c) of the act is not justified." 3. The facts till the assessment stage are noted by the Ld. CIT(A) in paragraph 4.1 of his order which is reproduced below:- "4.1. During the year the assessee has sold shares of the company Market Creators on 10-2-04 to Shri Rashmi Acharya, Director of the assessee company and Shri J. A. Shah at an average price of Rs. 0.26 per share. The AO has mentioned that the closing pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the market value of the shares in question was more than sale price adopted by the assessee at 0.26 per share, there is no provision in the Income tax Act to consider market value for the purpose of computing the capital gain. It was submitted that section 50C has been introduced in the Statute Book w.e.f. 1-4-2003 but that is applicable in the case of sale of a capital asset being land or building or both but the capital asset in the present case is share and not land or building or both and hence the provisions of section 50C are not applicable in this case. It is submitted that for the purpose of computing the capital gain, the provisions of section 48 are applicable as per which, the income chargeable under the head "capital Gain" shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by showing sale of shares at a lower price as compared to the market value of such shares. It was submitted that these are quoted shares and the quotation of these shares in the Stock Exchange at the relevant date was Rs. 1.52 per share but the shares in question were sold by the assessee to related parties at only Rs. 0.26 per share and hence, excess loss was claimed on account of such sale of shares. Regarding the judgment of Hon'ble Gujarat High Court relied upon by the assessee, it was submitted that this judgment is in relation to sale of plot of land and not of shares and hence, that judgment of Hon'ble Gujarat High Court is not applicable in the present case. Regarding the Tribunal decision cited by the Ld. A.R. of the assessee, it ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... et value of the capital asset transferred in section 48 or in any other section except section 50C, which is applicable only in case of sale of landed property. In the case of Judgment of Hon'ble Gujarat High Court rendered in the case of CIT vs. Shri Girish Damjibhai Patel (supra), Hon'ble Gujarat High Court has also referred to the same provisions of section 48 and on the basis of same section 48 of the Act, it was held that since section 48 of the Act does not have any reference to the market value but only to the consideration referred to in the sale deed, there is no error in the ultimate conclusion arrived at by the CIT(A) as well as by the Tribunal in that case. Hence, ratio of this decision of Hon'ble Gujarat High Court is this that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... it was held that provision of section 45(2) are not applicable in the case of sale of capital asset and the same is applicable where there is conversion of capital asset into stock in trade. It was noted by Hon'ble Gujarat High Court in paragraph 19 that counsel for the Revenue was unable to point out any other provision in which in a situation like the present case, the Assessing Officer could have made a reference to a valuer for ascertaining the fair market value of the assets in question as on the date of its transfer In the present case also, no provision in the Income tax Act has been brought to our notice as per which, market value can be considered for the purpose of computation of capital gain. Regarding the reliance placed by Ld. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,940 shares. It was submitted that it cannot be said that the price charged by the assessee was unreasonably low in the facts of the present case. 8. Considering the facts of the present case in its entirety as discussed above and by respectfully following the judgment of the Hon'ble Gujarat High Court rendered in the case of CIT vs. Girish Damjibhai Patel (supra), we are of the considered opinion that for the computation of capital gain in the present case, the A.O. shall work out the capital gain/capital loss on the basis of consideration received by the assessee and not on the basis of alleged market value of the shares sold by the assessee. We direct the A.O. accordingly. 9. In the result appeal of the assessee is allowed. Order pron ..... X X X X Extracts X X X X X X X X Extracts X X X X
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