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TMI Blog2024 (7) TMI 124X X X X Extracts X X X X X X X X Extracts X X X X ..... price of the shares sky rockets manifolds within a short span of time. We also have noticed that the assessee has substantiated the financials of M/s. ICL where it is inferred that the said company is merely not a bogus entity having dummy directors. Pertinently, the ld. A.O. has merely relied on the fact that inspite of increase in the debt, the sales of the said company has not increased proportionately. The assessee being a SEBI registered FPI is engaged in the investment in various companies out of which the assessee earns income and is also the only source of income for the assessee. A.O. has failed to substantiate how the assessee is involved with Shri Naresh Jain alleged to be an accommodation entry provider who has even otherwise not specifically mentioned the assessee to be the beneficiary of accommodation entry and the scrip of ICL to be a penny stock. High Court of Gujarat in the case of Pr. CIT vs. Jagat Pravinbhai Sarabhai[ 2023 (1) TMI 44 - GUJARAT HIGH COURT] where it has been held that the shares were retained for more than 10 years and sold after a long time which infer that the investment was not bogus and the scrip was held to be not a penny stock. It was also he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. 4. The assessee is in appeal before us, challenging the final assessment order. 5. The learned Authorised Representative ('ld. AR' for short) for the assessee contended that the assessee is a foreign portfolio investor which has been investing in India since 2006 onwards. The ld. AR then stated that the assessee had acquired 65 lacs shares of M/s. International Conveyors Ltd. from 2008 to 2009 and has been holding these shares for more than 10 years. The assessee had sold 22,41,929 shares for a consideration of Rs. 6,64,96,351/- at an average price of Rs. 29.66 per share and further to this the ld. AR stated that the assessee during the year under consideration has not only sold the shares of ICL but had sold a total shares of value amounting to Rs. 293,08,21,323/- in which the sale of the impugned order constitute only 2.27% of the total sale value. The ld. AR also contended that being a tax resident of Mauritius, the assessee was exempt to the capital gain income as per Indo-Mauritius DTAA substantiating that there was no necessity of the assessee to get into the bogus transaction. The ld. AR brought our attention to the audited financials, the share holding pattern of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n which only 2.27% of the total sale value is that of the alleged scrip which is held to be a penny stock by the lower authorities. The assessee has stated that it had provided the contract notes, the bank account details showing the purchase and sale consideration which was routed through the bank account in India and further to that the LTCG was claimed as exempt as per Article 13(3) of the India- Mauritius tax treaty. The assessee has also given the details of the financials of M/s. International Conveyors Ltd. which is said to be in the business of manufacture and marketing of PVC fire resistant antistatic conveyor bealting since 1978 having its factory at two locations with around 78 employees and the reserves and surplus being approximately 152 crores. The assessee has furnished the annual report of ICL for FY 18-19 and FY 19-20. The ld. A.O. have failed to consider the submission of the assessee for the reason that the company in whose share the assessee has invested has not given any return on net worth, the rate of growth on operating margin was not consistent, the debts during the financial year has increased by 56% whereas, the total sales was the same, the operating cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o substantiate how the assessee is involved with Shri Naresh Jain alleged to be an accommodation entry provider who has even otherwise not specifically mentioned the assessee to be the beneficiary of accommodation entry and the scrip of ICL to be a penny stock. The ld. AR has placed reliance on the decision of the Hon'ble High Court of Gujarat in the case of Pr. CIT vs. Jagat Pravinbhai Sarabhai [2022] 142 taxmann.com 247 (Guj) where it has been held that the shares were retained for more than 10 years and sold after a long time which infer that the investment was not bogus and the scrip was held to be not a penny stock. It was also held that such investments are not merely for the purpose of earning exempt income but is a genuine transaction. The ld. AR also relied on the decision of Hon'ble High Court of Gujarat in the case of Pr. CIT vs. Sangeeta Ben Jagdish Shah wherein it was held that where the assessee had given the complete details of the transaction, the same cannot be held to be a bogus transaction . The ld. AR had also relied on the decision Hon'ble High Court of Gujarat in the case of Mamta Rajivkumar Agarwal [2023] 155 taxmann.com 549 (Guj) where on identic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d scipt. We also note that there was no dispute raised by the Revenue with respect to the following facts: 1. Shares were purchased through broker on recognized stock exchange. 2. Purchase consideration of share was made through cheque. 3. Share was duly dematerialized in D-mat account. 4. Shares were sold through stock exchange after the payment of STT. The transactions have been confirmed by brokers. 5. The payments were received through ECS in the D-mat account. 6. Inflow of shares are reflected in D-mat account. Shares are transferred through D-mat account and buyer are not known to the assessee. 7. There is no evidence that the assessee has paid cash to the buyer or the broker or any other entry provider for booking LTCG and share were purchased by the determined buyer. 4 Hence, the Tribunal held, and in our opinion rightly so that there was no evidence available on record suggesting that the assessee or his broker was involved in rigging up of the price of the script of M/s Shree Nath Commercial Finance Ltd. The assessee had acted in good faith. The Tribunal, therefore, correctly held that the Assessing Officer had acted only on assumption which was misconceived. The CIT(A) o ..... X X X X Extracts X X X X X X X X Extracts X X X X
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