2019 (5) TMI 299

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..../- as long term capital gain as claimed by the assessee. 3. Briefly stated the facts as noted by the AO is that the assessee is engaged in share trading and share broking. According to AO, the assessee had claimed Long Term Capital Gain (LTCG) of Rs. 1,87,17,838/- as exempt u/s. 10(38) of the Income-tax Act, 1961 (hereinafter referred to as the "Act"). The AO completed the assessment u/s. 143(3) of the Act and allowed the claim of the assessee. Subsequently, the AO found that the LTCG was earned by assessee from sale of unquoted shares of Bombay Stock Exchange (BSE) and STT too was not deducted on it so, according to AO, the assessee was not eligible for claiming exemption. Hence, the case was reopened u/s. 147 of the Act and notice u/s.....

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....provide any new explanation, and hence, the AO taxed it as business income. Aggrieved, the assessee preferred an appeal before the Ld. CIT(A) who allowed the assessee's claim by relying on ITAT Mumbai Bench decision in ITA No. 3118/M/2012 M/s. Parag Parikh Financial Advisory Services Ltd. Vs. ITO dated 29.01.2014 . Aggrieved, revenue is in appeal before us. 4. The Ld. DR assailing the decision of the Ld. CIT(A), wants us to reverse the order of the Ld. CIT(A) and uphold the order of AO and relied upon the order of AO. Per contra, the Ld. AR supported the action of the Ld. CIT(A) and does not want us to interfere with the order of the Ld. CIT(A). 5. We have heard rival submissions and gone through the facts and circumstances of the cas....

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....E. However the BSE could only accept 4562 shares out of 5000 shares applied for Buy Back. According to the terms of Buy Back, R M Shares Trading Pvt. Ltd. received Rs. 2,37,22,400/-(Rs. 5200 * 4562 shares). The assessee computed the LTCG as under;- 6. We note that issue before us is no longer res-integra. The co-ordinate bench of ITAT Mumbai decision in ITA No. 3118/M/2012 M/s. Parag Parikh Financial Advisory Services Ltd. Vs. ITO dated 29.01.2014, has adjudicated an identical issue, wherein it was held that section 2(42A)(ha) is relevant for deciding the point in issue which is reproduced as under: "2. Definitions In this Act, unless the context otherwise requires,- (42A) 9 ["short-term capital asset" means a capital asset held....

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.... held by an assessee for not more than 36 months immediately preceding the date of its transfer, the same will fall in the definition of short term capital asset and if the period is more than 36 months then the asset will fall in the definition of long term capital asset. As per the section 2(42A)(ha) supra, for determining the holding period of capital asset being equity shares allotted in pursuance to demutualisation of a recognised stock exchange in hand, the period for which the assessee was a member of the recognised stock exchange prior to such demutualisation shall also be included. Hence, the holding period of the asset is to be calculated from the acquisition of date of 'BSE card' and not from the date of conversion of 'BSE card' ....