2011 (11) TMI 788

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....ing the course of assessment proceedings, the AO noted that the assessee has returned short-term capital gains. These short-term capital gains have accrued to the assessee on account of purchase and sale of securities/units of mutual fund. The AO, while going through the portfolio and the ingredients of short-term capital gains, further noted that in respect of certain shares, the assessee has acquired these through the 'IPO Mechanism' i.e. through the primary market. Out of the huge number of shares applied for by the assessee, the IPO Mode, only very small amount of shares were finally allotted. Some of these shares were purchased during the later half of the immediately preceding year, i.e. F.Y. 2005-06, only to be sold this year resulti....

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....ied for along with the pure allotment cost of the IPO shares as if the said interest cost is nothing but the purchase price of the share. The AO held that it is thus clear that the purchase price claimed for IPO shares was in fact a combination of two ingredients, one being the allotment cost of shares i.e. the pure purchase price and the other being the interest cost not at all of the shares allotted but rather of the entire lot applied for. According to the AO, section 48(2) speaks of cost of acquisition in acquiring the capital assets to be allowed in computing the capital gain from the full value of consideration. The AO stated that the interest cost must be attributable to the capital assets (i.e. which are actually such capital assets....

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....ng in all the grounds the sustenance of addition of Rs. 16,84,685/- made by the AO as short-term capital gain. 5. At the time of hearing, the ld. counsel for the asessee, at the outset, submits that this issue stands covered in favour of the assessee by the decision of the Tribunal in Smt. Neera Jain vs. ACIT, Cir.12(3), Mumbai, dated 22-02- 2010 (ITA No.1861/Mum/2009) and Harshad N. Patel vs. ITO-18/17 (3)(2), Mumbai (ITA Nos.1252 & 1958/Mum/2010 dated 15-07-2011. He also placed on record copies of the said orders of the Tribunal. 6. On the other hand, the ld. D.R. supports the orders of the A.O. and the ld. CIT(A). 7. We have carefully considered the submissions of the rival parties and perused the material available on record. W....