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TMI Blog2023 (2) TMI 1361X X X X Extracts X X X X X X X X Extracts X X X X ..... distinctive number linking it with its subsequent sale is not available. Section 45(2A) stipulates that in the case of securities held in dematerialized form, for determining date of transfer and period of holding , the FIFO method would be applicable. FIFO method is generally used to determine the value of any item moving out of a stock account and those remaining in stock at any point of time. When applied to an account holding dematerialized stock, it implies that, out of the existing holdings, the item that first entered into the account is deemed to be the first to be sold out. Once a sale is linked with an earlier purchase, for determination of their date of transfer and period of holdings . Board s Circular No.704 would be applicabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following substantial questions of law: (i) Whether, in view of Circular No.704 dated April 28, 1995 issued by the Central Board of Direct Taxes, the capital gains of Rs. 56,81,483/- from the sale on February 22, 23 and 28, 2005 of share purchased by the appellant on February 10, 2004 were long term capital gains exempt under section 10(38) of the Income Tax Act, 1961 and the purported findings of the Tribunal reversing the order of the Commissioner of Income Tax (Appeals) are arbitrary, unreasonable and perverse? (ii) Whether on a true and proper interpretation of Circular No.704 dated April 28, 1995 and No.768 dated June 24, 1998, Circular No.704 was applicable in respect of shares in dematerialised form and the date of acquisition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deeds duly signed by the registered holders. The seller is entitled to receive the consideration agreed to as on the date of contract. The Board are of the opinion that it is the date of broker s note that should be treated as the date of transfer in cases of sale transitions of securities provided such transactions are followed up by delivery of shares and also the transfer deeds. Similarly, in respect of the purchasers of the securities, the holding period shall be reckoned from the date of the brokers' note for purchase on behalf f the investors. In case the transactions take place directly between the parties and not through stock exchanges, the date of contract of sale as declared by the parties shall be treated as the date of tran ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ge even when the securities are held in the dematerialized form. The only problem when securities are held in dematerialized form is that the distinct trail linking every share to a certificate and its unique distinctive number linking it with its subsequent sale is not available. 5. Section 45(2A) stipulates that in the case of securities held in dematerialized form, for determining date of transfer and period of holding , the FIFO method would be applicable. The FIFO method is generally used to determine the value of any item moving out of a stock account and those remaining in stock at any point of time. When applied to an account holding dematerialized stock, it implies that, out of the existing holdings, the item that first entered int ..... X X X X Extracts X X X X X X X X Extracts X X X X
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