Appeal allowed for GDSS shares sale. BSE shares cost upheld. Recompute capital gain with original cost + indexation.

The appeal was partly allowed for statistical purposes. The Assessing Officer's decision regarding the sale of GDSS shares was set aside, and the matter was remanded for reassessment based on Net Asset Value (NAV). The Commissioner of Income Tax (Appeals) decision on the cost of acquisition for BSE shares was upheld, requiring the Assessing Officer to recompute the capital gain using the original cost of the shares and allowing indexation from the date of acquisition of the membership card.

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Issues Involved:
1. Whether the loss of Rs. 2 crores on the sale of shares of M/s GDSS should be considered genuine.
2. The appropriate cost of acquisition for 9123 shares sold and the recomputation of capital gain.
3. Validity of the CIT(A)'s order and whether it should be set aside in favor of the Assessing Officer's (AO) findings.

Issue-wise Detailed Analysis:

1. Genuineness of the Loss on Sale of Shares of M/s GDSS:
- The assessee purchased 1,000,000 shares of M/s GDSS at Rs. 30 per share (including a Rs. 20 premium) and sold them for Rs. 10 per share, resulting in a claimed capital loss of Rs. 2 crores.
- The AO disallowed the loss, considering it bogus, arguing the shares were unquoted and sold to family members, and the loss was artificially created to offset short-term capital gains.
- The CIT(A) allowed the loss, noting the shares were sold at a justified price considering the lack of dividend declaration by GDSS and the impending merger that would have nullified the shares.
- The Tribunal found that the CIT(A)'s justification for discounting due to non-declaration of dividends was incorrect, as GDSS had profits in previous years. The case was remanded to the AO to determine the share value based on Net Asset Value (NAV) at the time of sale.

2. Cost of Acquisition for 9123 Shares Sold and Recomputed Capital Gain:
- The AO calculated the long-term capital gain based on the written-down value (WDV) of the BSE membership card, which was converted into shares, arguing that taking the original cost would result in double deduction.
- The CIT(A) disagreed, stating that under Section 55(2)(ab), the cost of acquisition should be the original cost of the BSE membership card, not the depreciated value.
- The Tribunal upheld the CIT(A)'s decision, directing the AO to recompute the capital gain using the original cost of Rs. 91,23,000 for the BSE shares and allowing indexation from the date of acquisition of the membership card.

3. Validity of CIT(A)'s Order:
- The Tribunal found that the CIT(A) had erred in allowing the loss on the sale of GDSS shares without proper justification and directed the AO to reassess the value based on NAV.
- However, the Tribunal upheld the CIT(A)'s decision regarding the cost of acquisition for the BSE shares, agreeing that the original cost should be used for capital gain computation.

Conclusion:
- The appeal was partly allowed for statistical purposes. The AO's decision regarding the GDSS shares was set aside, and the matter was remanded for reassessment based on NAV. The CIT(A)'s decision on the cost of acquisition for BSE shares was upheld, requiring the AO to recompute the capital gain accordingly.

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