2022 (5) TMI 332

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....and without prejudice to each other, 4. The appellant craves liberty to add, to alter and /or amend any of the grounds of appeal at or before the time of hearing. 3. The assessee in this case received a sum of Rs. 1,42,32,400/- on sale of 2737 shares of Bombay Stock Exchange. However, capital gain was not offered. On Assessing Officer's query it was informed that broking concern of Shri Harkisondas Dalai ie. H.L. incurred huge loses. Since 1983, Shri Mukul Dalal was Managing Director of Carbon Corporation Ltd till 1991 and as such was not actively engaged in the broking concern. However, when he succeeded in business, he paid dues of certain creditors of the brokering concern where upon Bombay Stock Exchange changed the status of Membership to activity Membership. As per the information available with the assessee, this amount aggregated to Rs. 1.58 crore and same will be eligible to be considered as cost for sale of shares and. will be eligible for indexation too. 4. The AO had noted following submissions:- "As can be seen from the above; the assessee has made a claim for increasing the cost of acquisition of the shares sold by it by adding to such cost the....

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....ue of the asset on 01-04-81 at the option of the assessee. Since, section 55(2)(ab) applies in this case and as the provisions of section 55(2)(b)(i) relate to any other capital asset", the cost of the shares sold by the assessee have to be taken in accordance with' section 55(2)(ab) as the cost at which the membership of the exchange was originally acquired by the assessee and there is no ground to adopt fair market value under section 55(2)(b)(i). c) The claim for adopting fair market value as on 01-04-1981 .in respect of shares sold is also not allowable for the reason that when the shares were allotted, the capital gain arising from the transfer of membership right was entitled for not being regarded as a transfer by virtue of section 47(xiii)(a). Accordingly, the cost of- the shares was also specifically provided by section 55(ab), by which it is apparent that the, legislative intent was to deny adoption of fair market value. Since the assessee has not beer, able to furnish the cost paid by him for acquiring the membership of the stock exchange. Therefore, the same is estimated at Rs. 20,000." 6. Upon assessee's appeal, the details noted by ld.CIT(A) are as und....

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....e creditors, it is submitted by the AR of the appellant vide letter dated 16.01.2012 that payment was made to respective parties as under :- Details of Payment by to Respective Parties Sr No. Party Details Paid Amount Date I S.S. Miranda 100,000.00 1986 To 1987 2 Swastik safe Deposite + Friend 50,000.00 1986 To 1992 3 Advance Paints Pvt Ltd 292,670.10 1990 4 Harshad Sheth 25,000.00 1983 5 Rrukh Enterprise 25,000.00 1 983 6 Sumara Foundation 33,000.00 1983 7 Vakil&Co 80,000.00 1983 8 Ramaniklal Mohanlal 1,246,000.00 1991 To 1992 9 Ramaniklal Mohanlal(Interest Paid) 1,403,011.00 I991 To 1992 10 Herdilia Chemicals 92,500.00 1983 11 Musco(PF/(Graduaty) 2,200,000.00 1983 To 1987 12 Babulal Bagri 957,000.00 1983 13 Hind Marketing 500,000.00 1986 14 Dun can Agro Ind. Ltd 975,000.00 1985 To 1989 15 Ceat Finance Co. Ltd 60,000.00 1985 TO 1986 16 Eastern Aviation & Ind. Ltd 17,464.00 1987 17 Chitrakoot Inv. Ltd 320,969.00 1 993 To 1 994 18 Swan Mills Ltd 62,552,....

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.... shares which is not correct in view of the above discussion. Therefore, it is held that AO is justified in rejecting their claim and justified in working of LTCG for Rs.1,42,02,239/- on sale of 2737 shares. 8. Against the above order, assessee is in appeal before us. 9. We have heard the ld. DR and perused the records. The ld. Counsel of the assessee summarized the submission as under:- The question for consideration pertains to the computation of capital gains arising from the sale of shares of the BSE Ltd. sold by the Appellant in the relevant previous year to AY 2008-09. The shares of the BSE were allotted to the Appellant when the BSE corporatized on 30th March 2006. Prior to that the Appellant held a membership of the BSE. The flow depicting the acquisition of the BSE Ltd. shares is as under: 1. This membership of the BSE was initially acquired by the Appellant's father Shri Harkisondas Dalai in 1933 and was used for the running of a proprietary share trading business. 2. The appellant's brother Shri Manharkant Dalai joined the concern as a partner of the stock broking concern in 1939. 3. Shri Shri Harkisondas Dalai p....