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TMI Blog2025 (2) TMI 31X X X X Extracts X X X X X X X X Extracts X X X X ..... erred in unilateral assessing the long-term capital gain from sale of shares amounting to Rs. 29,432,755/- as unexplained cash credit under section 68 of the income tax act without providing any opportunity to the appellant. The learned CIT failed to appreciate that all the facts and evidence pertaining to sale of shares were filed on record before the learned AO was assessed the income from sale of shares as long-term capital gains and it is not the AO's case to assess the same as unexplained credit under section 68. ii. On the facts and in the circumstances of the case, the learned AO has order in announcing the long-term capital gain on sale of shares by denying the appellant's claim of exemption under section 54F of the income tax act 1961 four Rs. 29,357,775/- on account of the acquisition of new residential house (on the ownership). iii. On the facts and in the circumstances of the case the learned AO has erred in disallowing expense of Rs. 75,000/- on account of stamp duty paid on sale of shares. The learned CIT - A faceless Centre failed to adjudicate this ground. 3. Brief facts of the case shows that assessee is a non-resident Indian and has filed her return of income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... leads to suspicion that more than transaction of transfer of shares in assessee's name and transfer of right in property is preplanned with a motive to avoid tax payment. b. The AO raised doubt that why the shares worth Rs. 287,500 were sold for Rs. 3 crores to another director having a substantial interest in the company. The AO asked for the valuation report on what basis the shares are valued. Assessee could not produce any valuation report. c. The assessee was asked to prove the genuineness of the transaction with corroborative evidence. 6. Assessee submitted deed of transfer dated 1/3/2015 where assessee purchased 60% right in the property which originally belongs to his husband for a consideration of Rs. 3 crores. The AO found that this document is not registered and therefore the AO asked to produce the purchase agreement, share certificate from the society, change in the percentage of share certificate after purchases and whether any no objection certificate was obtained from the society for sale of the property. The assessee submitted on 15/20/2017 documents for purchase however with respect to the other queries of the society, assessee submitted that as the society ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alse capital gain offered. For this finding the learned CIT A looked at the balance sheet of the company i.e., Beam Developers Private Limited whose shares are transferred. According to him the amount of Rs. 29,432,755/- upon sale of shares derived is questionable and not supported by any evidence as to how the value has been derived at. Therefore, according to him the long-term capital gain claimed by the assessee is wrong and therefore deduction under section 54F is also not allowable. Therefore, he held that long-term capital gain earned by the assessee, accepted by the AO, is unexplained income under section 68 of the act. In fact, he considered the capital gain earned by the assessee as fictitious because there is an astronomical rise in the price of those shares as transacted by the assessee. According to him the gift of 28,750 shares from the sun to the mother (assessee) is having value of Rs. 287,500 as on 11/12/2014 [ Rs 10/- per share] but on 27/2/2015 the assessee transferred those shares to Mr. Suresh Galani for Rs. 3 crores [ Rs 1043/- per share] . Thus, the value of the shares transferred by the assessee is fictitious. He looked at the annual accounts of the company a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the learned CIT - A without issuing notice under section 251 of the income tax act could not have done so. He further referred to the sequence of the event and stated that it is a simple transaction of son of the assessee making a gift of 28,750 shares of a private limited company to his mother i.e., assessee, the assessee is selling/transferring all these shares to another promoter of the group of the private limited company at fair market value. Therefore, the cost of acquisition in the hands of the donor and the period of holding of the donor of the asset shall be considered for the purposes of computation of capital gain in the hands of the assessee, Donee. On this basis, the assessee computed the long-term capital gain on transfer of the shares. With the consideration received, the assessee acquired 60% shares in the residential property owned by assessee's husband. He submits that assessee has executed gift deed on stamp paper of Rs. 100/-. As the assessee has acquired the right to acquire 60% of the property from husband in a residential house property, the assessee claimed deduction under section 54F of the act. The assessee satisfies all the conditions of the computation o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is appropriate. He submits that the finding of the learned CIT - A is without any basis. His finding is also incorrect to ignore that the assessee has a real estate inventory of Rs. 9.29 crores. For this proposition he referred to schedule 13 of the balance sheet. He further referred to the deed of transfer by the husband of the assessee in the name of the assessee of flat number 803 on the eighth floor admeasuring 113.17 m² of the property for which consideration of Rs. 3 crores were paid. He also submitted that the husband of the assessee has also offered capital gain on the sale of the shares and further also referred to the income tax return of the buyer of the shares who has also disclosed acquisition of those shares. He further referred to the reply dated 29/11/2017 justifying the claim of deduction under section 54F. In the end he submits that the issue is squarely covered in favour of the assessee by the decision of the coordinate bench in ITA number 4150/Del/2018 of Mrs. Swati Oberoi [page No 117-126 of the Paper book] and also the decision of the honourable Bombay High Court in 413 ITR 248 in case of Vembu Vaidhyanathan to show that despite the non- registration of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... without looking at the balance sheet and ignoring the inventory of Rs. 9.29 crores at book value. He further submitted that the decision cited by the learned departmental representative and referred to by the learned DR of Suraj lamp and industries private limited versus state of Haryana in special lives leave petition number 13917 of 2009, the issue was with respect to the general power of attorney where the property was transferred based on that decision did not consider the definition of transfer as per Income tax Act. He submits that the decision has held that the sale agreement, general power of attorney and will transaction does not convey any title and does not create any interest in any immovable property. In this case the assessee has acquired 60% of the rights in the residential house property owned by the husband and therefore it perfectly satisfies the condition of section 54F of the act. He submits that the decision of the honourable Supreme Court was not with respect to the claim of deduction under section 54F of the act and the decision of the honourable Bombay High Court in case of a Vembu Vaidhyanathan clearly covers the issue. 11. We have carefully considered th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6 months, the property transferred is a long-term capital asset and the same is shown by the assessee as long-term capital gain. This is also not disputed by the learned AO but by the learned CIT - A. 13. The Ld. CIT (A) has disputed the price of the share at which those are sold to another Director Mr. Suresh Galani. According to him the price of the shares cannot be so much looking at the balance sheet of Beam developers private Limited. He compared the prices of the shares which are shown as cost of acquisition by the assessee [ Rs 10/- per share] and price at which are those shares are transferred on 06/02/2015 at Rs 1043/- per share. We find that the price of the taken by the assessee as cost of acquisition is only Rs 10/- per share and sale of shares by the assessee is at Rs 1043/- per share. This is so because the shares were allotted to the son of The Assessee Mr. Vijay Pamnani on 24/08/2006 at face value. These shares were gifted to assessee by Mr. Vijay Pamnani to her mother i.e. Assessee on 11/12/2014. Therefore, the price of shares should have been compared by ld. CIT (A) as of 11/12/2014 with the price of the shares on 06/02/2015. Firstly, he did not arrive at any pri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Rs 75,000/- which is also claimed by the assessee as cost . In these facts , purchase of stamp paper from same stamp vendor does not have any relevance. 19. Thus, assessee has shown how shares are acquired by her i.e., by gift from his son, to whom she has sold those shares to Mr. Suresh Galani, details of transfers also shown endorsed on the share certificates, consideration has also passed through, the share price of the company at which those shares are sold is also fair. In view of the above facts, we do not find any reason to sustain the appellate of the ld. CIT (A) that long term capital gain earned by the assessee is unexplained credit chargeable to tax u/s 68 of the act . Therefore, Assessee has correctly offered long term capital on the sale of shares to Mr. Suresh Galani. Accordingly Ground no 1 of appeal is allowed. 20. Now coming to second Ground of appeal on claim of assessee u/s 54F of the Act. Assessee has received consideration of Rs 3 Crores on sale of shares on which long term capital gain of Rs 2,93,57,775/- was computed. Assessee entered into a Deed of Transfer on 1/03/2015 with her husband Mr. Jetha Nand Berumal Pamnani , who is owner of flat no 803 , Kha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s purchased a house property for Rs 3 Crores. In case of PCIT V Vembu Vaidyanathan [(2019) 413 ITR 248 (Bom) ] honourable Bombay High court has held that even 'letter of allotment' also satisfies the requirement of section 54F is allowable. Comparing that case with the case of this assessee, it stands on a better footing where the assessee has acquired 60 % of the existing property. The decision of Honourable Supreme court in the case of Suraj Lamp Industries also cannot apply to the fact of the case as assessee has not entered into any sale deed and has not registered it. Therefore, the assessee deserves the benefit of section 54F of The Act. In view of this Ground no 2 of the appeal is allowed and ld. AO is directed to grant benefit of section 54F of the act. 23. Ground no 3 is with respect to deduction of Rs 75,000/- of stamp duty on sale of shares while computing capital gains. In fact, the relevant from NO SH 4 are furnished before us where in it is found that stamp duty is paid by the assessee when she transferred shares to Mr. Suresh Galani. We have not been explained why the Transferor assessee would pay stamp duty when the buyer is Mr. Suresh Galani . If it is so, under w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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