A listed Company is Entitled to Exemption for Amount Exceeding 10% of Capital Gain while computing LTCG: ITAT Delhi [Read Order]

Capital Gain Tax

In DDIT v. Shri Anand Persad Jaiswal, the ITAT Delhi ruled that a listed Company is entitled to get benefit of section 112(1) of the Income Tax Act while computing LTCG if tax exceeds 10% of the amount of the capital gain.

The Assessee is a non-resident, sold the shares of a listed Company. The Assessing Officer, while computing the capital gain from the sale of shares of JIL, computed the capital gain without allowing the benefit of indexation while considering the cost of acquisition and charged capital gains tax at the rate of 20%.The first appellate authority reversed the order and said that assessee-Company, being a listed Company is entitled to the benefit of s. 112(1) if tax exceeds 10% of capital gains before giving benefit of indexation under 2nd proviso to section 48, then such excess shall be ignored.

Concurring with the findings of the first appellate authority, the bench said, “from the proviso, it is evident that where the tax payable in respect of the transfer of a long term capital asset in the case of a listed company exceeds 10% of the amount of the capital gain before giving effect to the provisions of second proviso to Section 48, then such excess shall be ignored for the purpose of computing the tax payable by the assessee. In the case under appeal before us, admittedly, the assessee is a non-resident and JIL is a listed company. Therefore, proviso to section 112(1) was squarely applicable and learned CIT(A) rightly directed to Assessing Officer to give benefit of proviso to Section 112(1). We, therefore, find no infirmity in the order of learned CIT(A). The same is sustained.

Read the full text of the order below.