TaxTMI 
TaxTMI 
2026 (3) TMI 630
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....term capital gains of Rs. 1,16,18,632/- on sale of the Appellant's shares in BSE Ltd as short term capital gains of Rs. 5,98,32,250/- in the assessment order. This treatment of the long term capital gains as short term capital gains is misconceived and deserves to be set right in appeal 2. Ground no. 2: On facts and circumstances of the case and in law, the leamed Commissioner (Appeals) also erred in sustaining the action of the learned Assessing Officer in not allowing the cost of acquisition of the shares of BSE Ltd at the written down value of the erstwhile BSE Membership card of Rs. 2,33,70,555/- and Rs. 30,000/- paid to BSE Ltd at the time of allotment. The learned Commissioner (Appeals), in the process, lost sight of the audited accounts of the Appellant and evidences submitted to substantiate the cost of acquisition. The computation of the cost of acquisition by the Appellant is correct and may please be restored in appeal. 3. Ground no. 3: On facts and circumstances of the case and in law, and without prejudice to Ground no. 2 above, the learned Commissioner (Appeals) also failed to consider the Appellant's alternate clai....
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....hares of BSE, after taking the w.d.v. value of its erstwhile membership card as cost of acquisition and indexation from FY 2005-06 as base year (year on demutualization/corporatization of BSE) --- (Page 152 of paper book- computation of income for AY 2015-16). Legally, the Appellant ought to have claimed cost of acquisition of the BSE shares sold at the original cost of acquisition of the BSE membership cards (Section 55(2)(ab) and not at w.d.v, of the membership cards. Further period of holding should have been taken at the date of acquisition of the BSE Membership Card and not the date of acquisition of the BSE Shares allotted on corporatization. (Section 2(42A) (ha) in Explanation 1)." The Ld. AO rejected the assessee's plea and the addition was confirmed amount to Rs. 14,84,27,662/- on the ground that sale of share is treated as short term capital gain instead of long term capital gain claimed by the assessee, not allowing the cost of acquisition. Aggrieved assessee filed an appeal before the Ld. CIT(A). During the 1st appeal the assessee has taken additional ground related cost of acquisition of original shares ought to be taken at original cost of acquisition of m....
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....om the date of original membership of BSE and not from date of allotment of shares in BSE Ltd. 36. I thus agree with the view taken by the learned Judicial Member that the cost of shares will be original cost of the membership card in terms of Section 55(2)(ab) of the Act." Since, majority view now is that the cost of acquisition of shares of BSE Ltd. shall be the original cost of acquisition of Membership called in term of section 55(2)(ab) of the Act and period of holding of shares of BSE Ltd will be period for which the person was a member of the recognised stock exchange in India immediately prior to such de-mutualisation or corporatisation shall also be included in the period of holding of shares i.e. period of shares of BSE Ltd shall be reckoned from the date of original members of the BSE and not from the date of allotment of shares in BSE shares in BSE Ltd. This conformity order is accordingly passed." 5. The learned DR relied upon the orders of the revenue authorities. He contended that since the assessee had claimed depreciation on the erstwhile membership card, the learned AO was justified in treating the gains arising on its transfer as Short-Term C....
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....BSEL plus its trading rights. Also, the scheme of "Demutulization" envisages separation of ownership from trading, and the accumulated reserves of BSE which was an AOP, were transferred to the members in the guise of shares issued at par value of rupees one per share in BSEL. In view of above I find no infirmity in the assessment order of the AO making computation of income under Short term capital gain of Rs. 5,98,32,250/- in as much as the same being justified and being made in accordance with law. Therefore, I have no hesitation in holding that the impugned addition/ computation under short term capital gain is based on apropos consideration of facts and law and justified for which the addition of Rs. 5,98,32,250/- made by the AO vide order dated 26-12-2017 stand confirmed. The ground relating to this issue is dismissed." 6. We have heard the rival submissions, perused the material available on record, and carefully considered the judicial precedents relied upon by the parties. Ground No. 1 (Conversion of Long-Term Capital Gain into Short-Term Capital Gain) The core issue involved in this ground is whether the gain arising on sale of shares of BSE Ltd. pursu....