Long-term capital gain on share sale retained its character; addition as income from other sources was unsustainable.

Long-term capital gain could not be recharacterised as income from other sources merely because the Revenue questioned the date or rate of share acquisition, where DEMAT records showed the shares were credited in an earlier period and sold in the relevant assessment year. Any addition based on unexplained acquisition would, on the Revenue's own doubt, relate to the year of acquisition or first reflection in the DEMAT account, not the year of sale. As the holding period remained more than one year even on the later credit date, the gain retained its character as long-term capital gain and the addition for the year under appeal was unsustainable.

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Issues: Whether the addition made on account of long term capital gain by treating the sale proceeds as income from other sources in the assessment year of sale was justified, and whether any proposed addition relating to unexplained acquisition of shares could at all be made in the year of sale.

Analysis: The assessee's DEMAT records showed credit of the shares in an earlier period and their sale in the relevant assessment year. Even on the Revenue's own doubt regarding the exact date and rate of purchase, the possible addition would relate to the year in which the shares were acquired or first reflected in the DEMAT account, not the year in which they were sold. The holding period, even on the later date of credit, remained more than one year, so the resulting gain continued to retain the character of long term capital gain and was not liable to be assessed as income from other sources in the year of sale.

Conclusion: The addition was held to be unsustainable in the assessment year under appeal, and the assessee succeeded.

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