The Income Tax Appellate Tribunal (ITAT), Delhi bench has held that the claim for long-term capital gain shall be allowed for the reason that the Revenue failed to establish the link between the transactions carried out by the assessee and the investigation carried out by the Directorate of Investigation, Kolkata, and report of SEBI
The assessee has purchased 5000 shares of Esteem Bio Organic Food Processing Ltd. on 15.06.2012 for a consideration of Rs.50,000/-. Subsequently, the assessee was allotted bonus shares in the ratio 1:3 which resulted into 15000 shares. The shares were de-mated on 17.11.2017. Out of above 15000 shares, the assessee sold 11000 shares for a consideration of Rs.46,91,079/-. After deducting the cost of acquisition of Rs.50,000/-, the assessee declared Long Term Capital Gain of Rs.46,41,079/- which was claimed as exempt u/s10(30) of the Act. The assessing officer found that the share transactions are not genuine and that the assessee is not a regular investor in the share market and has not done any transaction in the share market.
The bench comprising Accountant Member Mr. R K Panda and Judicial Member Mr. N K Chaudhary observed that the assessee has also very limited information about Esteem Bio Organic Food Processing Ltd. and the company is having a poor financial record. The assessee has purchased 5000 shares of Esteem Bio Organic Food Processing Ltd. when the company has no proven financial results which are an indicator of events to be occurring in the future. He also relied upon the report of the
Relying on a catena of decisions, the bench held that “since the Revenue has failed to comply to the direction of the Bench in furnishing any report from the AO as to in what manner, the investigation carried out by the Directorate of Investigation, Kolkata and report of SEBI has any link with the transactions carried out by the assessee, we allow the claim of Long Term Capital Gain on account of sale of shares of M/s Esteem Bio Organic Food Processing Ltd. and consequently the exemption claimed u/s 10(38) of the Act. The grounds raised by the assessee are accordingly allowed.”
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