The Delhi bench of Income Tax Appellate Tribunal ( ITAT ) deleted the addition made under Section 69 of the Income Tax Act, 1961 when finding that capital gains earned from the sale of shares of CCL International is genuine.
The Assessee Gaurav Goel,purchased 12500 equity shares of CCL International Ltd on 22.8.2011 for Rs 1,25,000/- in off market through a stock broker M/s Narayan Securities in cash. The payment for the same was made out of disclosed sources of income by the assessee.Thereafter the Registrar and Transfer Agent (RTA) M/s Alankit Assignment Limited transferred the shares in the name of the assessee.
The assessee sold 9500 equity shares of CCL International Ltd in 4 tranches. The aforesaid shares were sold through a registered stock broker at a price quoted on the stock exchange and consideration for the same was received by the assessee through the registered stock broker in regular banking channels. After selling 9500 shares during the year under consideration, the assessee held remaining 3000 shares in his demat account. The AO wrongly stated that the assessee had sold these 3000 shares on 8.12.2015 relevant to Asst Year 2016- 17. On filing the return the assessee claimed exemption under Section 10(38) of the Income Tax Act
The AO during the assessment preceding after considering the return of the assessee doubted the veracity of receipt of money in the form of sale consideration of shares of CCL International Ltd by making an addition under Section 69 of the Income Tax Act.
Aggrieved by the order the assessee filed an appeal before the CIT(A) who confirmed the addition . Therefore the assessee filed another appeal before the tribunal.
Akhilesh Kumar, the counsel for assessee submitted that Since the assessee had held the shares for more than a year from the date of its purchase, the resultant gain from such transfer would be long term capital gains and accordingly, the assessee eligible for exemption under Section 10(38) of the Income Tax Act in the return of income. Further all the documents produced by the assessee are genuine and CCL International Ltd cannot be construed as a shell company or a penny stock company as alleged by the lower authorities. On the contrary, the said company is regularly carrying on its business deriving income thereon regularly from both Government and Private Sector. Hence the entire allegations leveled by the revenue qua this company falls flat.
Pradip Kumar Mishra,counsel for revenue supported the order of lower authorities
After reviewing the facts the ITAT bench of Yogesh Kumar U.S, (Judicial Member) and M. Balaganesh (Accountant Member) observed that the AO had not found any material against this company CCL International Ltd. There is no allegation / statement of any party regarding the said company giving any adverse remarks on the ground that the said company‟s share prices were artificially manipulated in the stock market.
Accordingly the capital gains earned by the assessee on sale of shares of CCL International Ltd is genuine and the addition made under Section 69 of the Income Tax Act by the AO deleted .
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