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TMI Blog2015 (8) TMI 861X X X X Extracts X X X X X X X X Extracts X X X X ..... , on identical facts of computation of capital gain on the sale of shares of “Market creators Ltd.”, on the basis of actual consideration received ie., @ ₹ 0.26 per share and not on the basis of alleged market value, it has been decided by the Tribunal in favour of the assessee on an earlier occasion in another assessee’s case mentioned supra. - Decided in favour of assessee. - ITA No. 1251/Ahd/2012 - - - Dated:- 24-9-2012 - SHRI G. C. GUPTA, VP AND SHRI A. MOHAN ALANKAMONY, JJ. For The Appellant : Ms. Urvashi Shodhan, AR For The Respondent : Shri A. Mathivanan, Sr. DR ORDER PER A. MOHAN ALANKAMONY: This appeal is filed by the assessee aggrieved by the order of the learned CIT(A)-III, Baroda in Appeal No. CAB/III-42/10-10 dated 19-04-2012, for assessment years 2004-05 passed u/s 250 read with section 271(1) of the Act. 2. The assessee s lone effective ground of appeal reads as under: 1. The learned CIT(A) has erred in confirming the penalty) levied by the AO u/s. 27(1) of ₹ 83,914/- on conversion of business loss into capital loss and in adoption of higher rate for shares sold. Both the lower authorities failed to appreciate the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pellant and the contentions of the A. O. In the instant case, the shares have been sold by the appellant to the director/ husband of the director. From the details, it appears that the transaction was done outside the Stock Exchange. Shares were sold at the price of 26 paise per share despite the fact that book value of shares worked out to ₹ 9.94. Further, one day before the date of sale, these shares were sold at Stock Exchange @ 1.52 per share. Hence the sale of shares @ 26 paise per share was totally unjustified. The appellant has not submitted any evidence to show that the price of 26 paise per share was the market rate of shares on the date of their sale. In such circumstances, it is to be held that the appellant had claimed a wholly unjustifiable loss and hence, had filed inaccurate particulars of income. Besides, the appellant had also claimed this loss as business loss and not as capital loss despite the fact that the shares were shown in its books of accounts as investment as on 31.03.2003 and in earlier periods. The action of the appellant in claiming the loss as business loss also amounted to furnishing of inaccurate particulars. Moreover, the appellant has failed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... A.O. is upheld. 6. The learned AR submitted that the issue is now squarely covered by the decision of the Tribunal in the case of Allure Investment Finance (P) Ltd. Vs ACIT in ITA No.3431/Ahd/2010 for AY 2004-05 order dated 5-8-2011 and in the case of Cura Finstock (P) Ltd. Vs ACIT in ITA No.3474/Ahd/2010 for AY 2004-05 order dated 09-09-2011. The learned AR also further relied on the order of the ITAT Ahmedabad B Bench dated 31.10.2011 in ITA No.3432/Ahd/2010 Ergon Investment Fincance (P) Ltd. Vs ACIT, wherein following the aforesaid two decisions the Tribunal has decided the same issue on identical facts in assessee s favour and prayed that the order of the learned CIT(A) may be set aside and the penalty may be deleted. 7. The learned DR relied on the orders of the authorities below, but cold not controvert the submissions of the learned AR. 8 We have heard the rival submissions and perused the material on record. As referred to by the learned AR, ITAT Ahmedabad B Bench in ITA No.3432/Ahd/2010 for AY 2004-05 in the case of Ergon Investments Finance (P) Ltd. dated 31-10-2011 has decided same issue(i. E., computation of capital gain on the sale of shares of Mark ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this case because assets in that was landed property whereas in present case, it is quoted share. As per the ratio laid down by Hon ble Gujarat High Court, capital gain has to be computed on the basis of consideration accruing or received for transfer of capital asset and for that purpose, no reference is required to be made to the market value of the asset in question because there is no provision in section 48 of the Act. In that judgment, reference has been made to section 45(2) also where it is specified that market value of the asset in question has to be considered where there is conversion by the owner of the capital asset into stock in trade but 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 pre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ingly. Admittedly, the facts of the assessee s case are identical because the assessee has sold the shares of the same company on the same date and at the same price. Following the above order of the Tribunal, we are of the view that for computation of capital gain in the present case, the AO shall work out the capital gain/capital loss on the basis of consideration received by the assessee. We direct the AO accordingly. 8. In the result, the appeal filed by the assessee is allowed. 9. Considering the facts of the case and the above discussions, though the assessee has not preferred any quantum appeal, we do not find it appropriate to levy of penalty because, on identical facts of computation of capital gain on the sale of shares of Market creators Ltd. , on the basis of actual consideration received ie., @ ₹ 0.26 per share and not on the basis of alleged market value, it has been decided by the Tribunal in favour of the assessee on an earlier occasion in another assessee s case mentioned supra. Accordingly, we set aside the order of the learned CIT(A) and delete the penalty. 10. In the result, the appeal of the assessee is allowed. Order pronounced in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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