ITAT allows Long Term Capital Gains claim

ITAT allows Long Term Capital Gains claim

It held that the investigation carried out by the Directorate of Investigation did not show any link with transactions

The Delhi Branch of the Income Tax Appellate Tribunal (ITAT) has held that the Long Term Capital Gains (LTCG) claim would be allowed. The ruling came as the revenue department had failed to establish the link between the transactions carried out by the assessee, the investigation carried out by the Directorate of Investigation, Kolkata, and the report of the Securities and Exchange Board of India (SEBI).

In June 2012, the assessee had purchased 5000 shares worth Rs.50,000 of Esteem Bio Organic Food Processing Ltd. He was allotted bonus shares in the 1.3 ratios totaling to 15,000 de-mated in November 2017. The assessee later sold 11,000 shares for Rs.46,91,079.

On deducting the cost of acquisition, he declared the LTCG of Rs.46,41,079, which was claimed as an exempt under the IT Act. But the assessing officer (AO) claimed that the share transactions were not genuine. He said that the assessee had not done any transaction, as he was not a regular investor in the share market.

The bench comprising accountant member R K Panda and judicial member NK Chaudhary observed that the assessee had limited information about the company having a poor financial record. He had purchased 5000 shares when the company had no proven financial results.

ITAT ruled, "The revenue department had failed to comply to the bench's direction in furnishing any report from the AO. Also, the investigation carried out by the Directorate of Investigation and SEBI's report did not show any link with the transactions carried out by the assessee. Hence, we allow the claim of LTCG raised by the assessee."