Tribunal rules in favor of appellant, categorizing share income as capital gain, citing precedent.

The Tribunal allowed the appellant's appeal, directing the Assessing Officer to accept the income from the sale and purchase of shares as long term capital gain, overturning the lower authorities' decision to treat it as income from undisclosed sources. The Tribunal relied on a previous case with similar circumstances to support its decision.

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Issues:
Assessment of income from sale and purchase of shares as income from other sources instead of long term capital gain.

Analysis:
The appellant filed an appeal against the appellate order dated 16/08/2011 passed by Ld. CIT(A)-22, Mumbai for the assessment year 2005-06. The primary issue raised in the appeal was the treatment of income declared on the sale and purchase of shares of Robinson Worldwide Trade Ltd. as income assessable under the head 'income from other sources' by the income tax authorities, contrary to the assessee's claim of it being assessable as long term capital gain.

During the assessment proceedings, it was observed that the assessee had purchased 11,500 shares of Robinson Worldwide Trade Ltd. and subsequently sold them for a considerable amount. The Assessing Officer (AO) deemed the purchase of shares as a sham transaction and treated the sale consideration as income from undisclosed sources. Consequently, the exemption claimed under section 54 EC of the Act was disallowed. The Ld. CIT(A) affirmed the AO's decision, leading to the current appeal.

The appellant highlighted a similar case of Jagdish H. Shah where the Tribunal accepted the income earned from the sale of shares as long term capital gain. The appellant presented a tabulation showcasing the similarities between the two cases, including the broker involved and the actions taken by the AO and CIT(A) in both cases. The Revenue did not dispute the factual similarities presented by the appellant.

After examining the orders of the authorities and the submissions made, the Tribunal found significant parallels between the present case and the case of Jagdish H. Shah. The Tribunal decided to rely on the reasoning from the previous case and held that the income tax authorities erred in treating the sale consideration as income from undisclosed sources. The Tribunal referred to specific details from the previous case to support its decision and directed the AO to accept the long term capital gain as returned by the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, overturning the lower authorities' decision and directing the AO to accept the long term capital gain as declared by the assessee.

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