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| The Tax Publishers2019 TaxPub(DT) 0326 (Del-Trib) INCOME TAX ACT, 1961
Section 68
Where assessee claimed exemption under section 10(38) on shares of a company sold which were purchased through BSE by making payment through banking channel, he was entitled to exemption and AO was not justified in disallowing same merely on basis of a statement of a director of that company that he had arranged entries for commission @ 3% from various clients.
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Exemption under section 10(38) - Long-term capital gains - Purchase and sale of shares being genuine -
AO observed that assessee has sold shares of a company and claimed exemption under section 10(38) as long term capital gains. AO came to know that a survey was carried out at registered office of that company wherein in his statement a Director of company accepted that he had arranged entries for commission @ 3% from various clients. He had also accepted that his company had provided long term capital gain to various clients. AO formed a belief that long term capital gain in share of that company claimed by assessee was bogus and fictitious and disallowing same added back to income of assessee under section 68.Held: Transactions had been done by BSE through proper banking channels evidenced by supporting documentary evidences. Moreover, securities transactions tax had also been paid. Merely on strength of statement of third party addition made was not justified. More so, when specific request was made by assessee for allowing cross examination was denied by AO. First appellate authority also did not consider it fit to allow cross-examination. This was in gross violation of principles of natural justice. AO was accordingly directed to allow claim of exemption under section 10(38).
Relied:Andaman Timber Industries v. CCE 2015 (324) ELT 641 (SC) : 2015 TaxPub(EX) 2155 and CCE v. Andaman Timber Industries Ltd. 2005 (187) ELT A33 (SC).
REFERRED :
FAVOUR : In assessee's favour.
A.Y. :
IN THE ITAT, NEW DELHI BENH
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