The Mumbai Bench of Income Tax Appellate Tribunal (ITAT) has denied exemption of Long Term Capital Gains (LTCG) earned on sale of shares, the sale proceeds added to assessee’s income along with estimated commission.
The assessee, Vasantlal Nyalchand Kikavat has sold certain shares of a scrip namely Unisys during the year. These shares were purchased during March, 2010. The shares were purchased in online mechanism at recognized stock exchange through registered share broker and the shares were duly credited in assessee’s demat account. The payment has been settled through banking channels. Similarly, the shares have ultimately been sold in an online mechanism at a recognized stock exchange through a registered share broker namely M/s Pragya Securities Limited. The purchase or sale transactions are duly evidenced by contract notes, broker’s ledger, demat account statement and bank statements etc. The sale proceeds have been received through banking channels and the shares have been delivered by the assessee from demat account. These transactions have been subjected to applicable Securities Transaction Tax (STT). Prima-facie the assessee has fulfilled all the requisite conditions to claim exemption u/s 10(38).
The coram of Judicial Member, Amarjit Singh and Accountant Member, Manoj Kumar Aggarwal held that impugned additions are not sustainable in the eyes of law. The assessee had discharged the primary onus of establishing the genuineness of the transactions whereas the onus as casted upon revenue to corroborate the impugned additions by controverting the documentary evidences furnished by the assessee and by bringing on record, any cogent material to sustain those additions, could not be discharged by the revenue.
“The whole basis of making additions is a third-party statement and no opportunity of cross-examination has been provided to the assessee to confront these parties. As against this, the assessee’s position that that the transactions were genuine and duly supported by various documentary evidences, could not be disturbed by the revenue. Hence, going by the factual matrix and respectfully following the binding judicial precedents as enumerated in the order, the additions made by Ld. AO and confirmed by CIT(A), are not sustainable in the eyes of law. Therefore, we are inclined to delete the same. We ordered so. Consequently, the addition of estimated commission also stands deleted. Resultantly, the appeal, on merits, stands allowed,” the ITAT said.
The ITAT further ruled that an assessment was framed u/s 143(3) r.w.s. 147 on 30/11/2017 wherein the exemption of LTCG earned by the assessee on sale of certain shares of Unisys was denied and the sale proceeds was added to the income of the assessee along with estimated commission.
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