Tribunal grants exemption for long-term capital gains on shares; no evidence of bogus claims The Tribunal allowed the appeal, directing the Assessing Officer to grant the assessee the benefit of exemption under section 10(38) for long term capital ...
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Tribunal grants exemption for long-term capital gains on shares; no evidence of bogus claims
The Tribunal allowed the appeal, directing the Assessing Officer to grant the assessee the benefit of exemption under section 10(38) for long term capital gains on shares purchased from M/s. Sulabh Engineers and Services Ltd. The Tribunal found no evidence connecting the assessee to the alleged bogus claims and emphasized the legitimacy of the transactions conducted through the Bombay Stock Exchange with payment of Securities Transaction Tax. The decision was made in Chennai on June 18, 2019.
Issues: Appeal against Commissioner of Income Tax (Appeals) order for AY 2015-16 disallowing exemption u/s.10(38) of the Act for long term capital gains on shares purchased from M/s. Sulabh Engineers and Services Ltd.
Analysis: The appeal was filed by the assessee against the CIT (Appeals) order disallowing the claim of exemption u/s.10(38) of the Act for long term capital gains on shares purchased from M/s. Sulabh Engineers and Services Ltd. The AO treated the transactions as non-genuine based on a report from the Directorate of Investigation, Kolkata, regarding a racket generating bogus entries for tax exemption. The assessee's transactions were conducted online through the BSE with payment of STT. The assessee argued that their transactions were legitimate, and they had no connection to the alleged racket. The Revenue contended that the profits made were indicative of penny stock dealings and cited a previous Tribunal decision for similar cases.
The Tribunal found that the AO failed to establish any bogus claim by the assessee regarding long term capital gains. The assessment order mainly focused on the company and the alleged modus operandi of the bogus claims, without concrete evidence against the assessee. The transactions were conducted through the BSE with STT payment, indicating legitimacy. The assessee's name did not appear in the investigation report received by the AO. Therefore, the Tribunal directed the AO to grant the assessee the benefit of exemption u/s.10(38) for the long term capital gains on shares purchased from M/s. Sulabh Engineers and Services Ltd.
In conclusion, the appeal filed by the assessee was allowed, and the Tribunal pronounced the order in Chennai on June 18, 2019.
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