The Cuttack bench of Income Tax Appellate (ITAT) held that the claim of exemption under section 10(38) of Income Tax Act, 1961 for the long term capital gain from the sale of equity shares before the ending of assessment proceedings is valid.
Ridhi Bagaria, the appellant assessee was an individual, who was deriving income from capital gains from purchase and sale of shares.
The shares were sold through Inter Connected Stock Exchange of India Ltd. and the assessing officer suspected the assessee was not eligible for the exemption under Section 10(38) of Income Tax Act and made addition on long term capital from the sale of equity shares.
The Commissioner of Income Tax (Appeals) confirmed the order passed by the assessing officer and the assessee appealed against the order passed by the commissioner.
Keshav Dubey, counsel for the assessee contended that the order passed by the commissioner was against the provision of law and the addition as made by the assessing officer and as confirmed by the Commissioner of Income Tax (Appeals) may be deleted.
On the other hand, Kishore Ch. Mohanty, counsel for the department contended that addition of long term capital gain from the sale of equity shares of the assessee was not against the provision of law.
The tribunal bench observed that the assessee had not introduced his own unaccounted money by way of bogus long term capital gain, as all the entries were part of the bank account and the assessee dematerialized the shares in the account.
A single member bench comprising of Shri George Mathan (Judicial Member) held that the addition as made by the assessing officer and as confirmed by the Commissioner in respect of the claim of exemption under Section 10(38) of the Income Tax Act, 1961 in respect of sale of shares was deleted while allowing the appeal.
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