TaxTMI 
TaxTMI 
2022 (7) TMI 1255
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....) of the Act for the entire LTCG. Further, the assessee had also shown LTCG of Rs.1,00,31,538/- on redemption of fifty (50) Non-Convertible Debentures (NCDs) of M/s. Skydeck Properties Pvt. Ltd. However, the AO has treated the amount received by the assessee on sale of shares as business income but allowed the LTCG claim of Rs.17,01,85,391/- on sale of shares by treating the assessee as an investor. Whereas the AO did not accept the assessee's claim in respect of the claim of STCG and he treated sale of shares in this regard as business income. Aggrieved by the action of the AO, the assessee preferred an appeal before the Ld. CIT(A) who was pleased to accept the stand of the assessee that the assessee was an investor and the claim of STCG on sale of shares was accepted and the AO's action of treating the same as business income was reversed. Aggrieved by the aforesaid action of the Ld. CIT(A), the revenue is in appeal before us by preferring the aforesaid ground of appeal. 3. We have heard both the parties and perused the records. We note that the assessee is an individual who has earned substantial LTCG of Rs.17.02 crores which included capital gain on some shares held for as l....
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....2001-02, 2002-03, 2005-06, 2006-7, 2007-08, 2008-09, 2012-13 at the assessment stage only. For A.Ys.2003-04, 2004-05, 2009-10 & 2010-11, the status of the assessee as an investor was accepted by the Ld. CIT(A) which action was confirmed by the Tribunal. Further, it was brought to our notice that the appeal of the revenue for A.Y.2003-04 and 2004-05 has been dismissed by the Hon'ble Bombay High Court. It was brought to our notice that for AY.2010-11 the assessee's stand that she was an investor in shares has been accepted by this Tribunal in ITA. No.4093/Mum/2016 vide order dated 28.12.2018. Therefore, on the principle of consistency also the assessee's role as an investor should not have been disturbed. It was brought to our notice that for A.Y.2014-15, the AO had accepted the assessee's status as an investor and hence he did not treat the claim of STCG on sale of shares as business income. We also note that the assessee had been maintaining her books of accounts by showing the shares as investment which are reflected in the balance-sheet accordingly. We also note that the shares are always valued at cost and assessee never took any benefit of valuation loss for invested shares, ev....
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....nbsp;23.059232.85 914.575 132.45 16142248.75 9916984.10 Total 914.575 23.31 127,209,995,.66 17.65 92,996,374.60 5. Even though, it is undisputed that the seven scrips were sold in the off-market transactions at the prevailing market price as on date of sale without suffering STT, the AO has disallowed the loss claimed by the LTCL claimed by the assessee. According to the AO, the assessee had sold these shares to some of the parties whose demat statements were managed by the share-broking company in which the assessee is one of the director; and moreover, the AO noted that even though these seven scrips were purchased by the assessee & held for more than 12 months after purchasing it on which STT were paid, she had claimed loss, by selling the same off-market without STT, which action of assessee the he/AO refused to accept. According to AO since assessee had purchased these shares by remitting STT & held them for more than 12 months therefore the assessee's was entitled to exemption u/s 10(38) of the Act for any LTCL provided the shares were sold on stock exchange. According to the AO if the assessee had incurred loss (LTCL) on s....
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....ne in mind that the transfer in and out of these De-mat account are permitted only when the client signs the instruction slip and not otherwise. It is like a bank maintaining a saving /current account of a client. In this context, the Ld. DR could not point out how this allegation of AO has any material bearing in this case. Moreover, it was brought to our notice that the AO in the assessment year for A.Y.2014-15 has accepted the same transaction in the scrutiny assessment u/s 143(2) of the Act (except in-respect of three scrips, where the reasons given by AO was that same were executed at a price more than the prevailing market price on the relevant date). We note that the AO has accepted the other transaction carried out by the assessee in the off-market transaction where the price was as per the prevalent market prices. Thus we note that the AO had no objection to off-market transactions per-se for A.Y.2014-15, when the same was transacted off-market. Coming back to the relevant AY 2013-14, it was brought to our notice that all the transactions (except) the scrip of Baroda Rayon where shares were not traded for long and hence market price was not available. Considering the afore....
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.... Stock Exchange, which are called on-market transactions. If there is some off-market transaction, namely, which is undertaken without involvement of a Stock Exchange and is directly between the buyer and seller, then no STT is payable thereon. This implies that if the transaction is off-market, then, no STT would be payable and, ex ITA No.1880/Del/2014 consequenti, the provisions of section 10(38) would not be magnetized. Once this section is not applicable, there can neither be any exemption of income nor there can be any question of denial of benefit of set off and carry forward of loss. In other words, loss arising from transfer of shares etc., held as long term capital assets, on which no STT is paid because of off-market sale transaction, does not fall within purview of section 10(38) and consequently becomes eligible for set off and carry forward as per the other relevant provisions. This is a lacuna in the provision which has been lawfully exploited by the assessee by transferring shares held as long-term capital assets through off market transactions resulting into genuine loss and thus escaping the rigor of the exemption provision contained in section 10(38), which would ....