Exemption for listed equity share transfers applied where statutory conditions for long-term capital gains relief were satisfied.

Transfer of listed equity shares was treated as exempt under section 10(38) because the asset was a long-term capital asset and the transaction was chargeable to securities transaction tax, satisfying the statutory conditions for exemption. The treaty-shopping objection did not displace the express exemption, and no illegality in the advance ruling was shown to warrant interference under Article 226. The ruling therefore remained undisturbed and the proposed transfer was not subjected to tax.

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Issues: Whether the proposed transfer of listed shares attracted tax liability in view of the exemption under section 10(38) of the Income-tax Act, 1961, and whether the advance ruling holding no tax liability called for interference in writ jurisdiction.

Analysis: The transfer related to listed equity shares, and income arising from the transfer of a long-term capital asset being an equity share, where the transaction is chargeable to securities transaction tax, falls within the exemption under section 10(38). The provisions of Chapter VII of the Finance (No.2) Act, 2004, including the definition of taxable securities transaction and the levy of securities transaction tax, supported the view that the transaction answered the statutory conditions for exemption. The objection based on treaty shopping was treated as answered by the statutory exemption itself, and no illegality in the advance ruling was shown to justify interference under Article 226 of the Constitution of India.

Conclusion: The proposed transfer was exempt from tax under section 10(38), and the advance ruling was left undisturbed.

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