INCOME TAX ACT, 1961

Section 10(38)

Exemption under section 10(38) - Long-Term capital gains on sale of shares - Penny stock company -

AO made addition towards the long-term capital gain (LTCG). Assessee purchased 54,000 shares to CCL. According to Revenue, the price of the shares were manipulated for claiming capital gain or loss. Since assessee had not furnished any details in this regard, AO has taken the LTCG/Short-term capital gain at certain lakhs of rupees. In the remand report filed before CIT(A), AO found that there was no transaction of sale of shares during the assessment year 2014-15. Revenue submitted that CIT(A) was under mistaken belief that the whole capital gain and CCL was a penny stock company therefore, the CIT(A) ought not to have allowed the claim of the assessee. Held: Assessee had not sold any shares during the year, hence, there was no question of any capital gain/capital loss arising for consideration for assessment year 2014-15. During the assessment year 2015-16, the assessee sold the shares and declared the same under Income Declaration Scheme, 2016 and paid the taxes. In such circumstances, the Tribunal was of the considered opinion that CIT(A) had rightly deleted the entire addition made by AO. Therefore, Tribunal did not find any reason to interfere with the order of CIT(A).

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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