The Ahmedabad bench of the Income Tax Appellate Tribunal ( ITAT ) quashed the addition of Rs. 6.99 crore presumptive addition on share transfer due to lack of evidence.
Here Revenue has appealed against the order of the Commissioner of Income Tax Appeals [ CIT( A ) ] and one of the grounds raised by the assessee was in relation to the deletion of the addition of short-term capital gain on account of the transfer of shares of Rs. 6,99,65,000.
The assessee, Navratna Organisers And Developers Pvt. Ltd. is engaged in the business
of development of various projects from which it earned development fees. The assessee had developed the “Kings Square” project for Sujan Infrastructure Pvt. Ltd. ( SIPL ) and acquired 14,000 equity shares of SIPL, later sold to Dubey Group at a face value of Rs. 10 each by showing NIL capital gain in its return of income.
Get a Handbook on TDS Including TCS as Amended up to Finance Act 2024, Click Here
The AO determined a deemed value per share of Rs. 35 based on an estimated project value of Rs. 15 crore and costs of Rs. 8 crore. The AO calculated the deemed sale value for 19,99,000 shares at Rs. 6,99,65,000, disallowed the cost of acquisition, and computed a taxable capital gain of Rs. 6,99,65,000.
The CIT( A ) relied on the decision of ITAT in the case of SIPL and deleted the addition made
by the AO and observed that the entire addition made by the AO was on a presumption, which
cannot be sustained without bringing on record evidence suggesting actual receipt of consideration over and above the face value of shares.
The ITAT held that the addition based by AO was based on presumption and will not sustain due to lack of evidence showing actual receipt of consideration over and above the face value of shares.
ITAT upheld the decision of CIT( A ) and held that the addition made by the AO for Rs 6,99,65,000 will not be sustained.
The bench, comprising Annapurna Gupta ( Accountant Member ) and T.R. Senthil Kumar ( Judicial Member ) dismissed the appeal filed by the Revenue.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates
