Ketan Harilal Mehta vs Assistant Commissioner of Income-tax-32(2), Mumbai

Parties Involved

Facts Summary

The assessee, Ketan Harilal Mehta, filed his return of income for the assessment year 2014-15 and declared Long Term Capital Gain (LTCG) of Rs. 74,34,044/- under section 10(38) of the Income-tax Act, 1961 as exempted income. He had purchased 10,000 shares of Transcend Commerce Ltd in June 2012 for Rs 1,00,000/- and after an approved scheme of amalgamation, he held 22,000 shares of SRK Industries in his demat account for more than 18 months. These shares were sold through screen-based trading at the BSE stock exchange. The Assessing Officer (AO) rejected the assessee’s claim under section 10(38) and treated the LTCG as a bogus transaction, adding the sale consideration and an estimated commission to the assessee’s income. The assessee provided all relevant documents and evidence during the assessment proceedings, which were not rejected as fake or bogus by the AO. The assessee appealed this decision to the Commissioner of Income-tax (Appeals) (CIT(A)), which upheld the AO’s order. Further aggrieved, the assessee filed an appeal before the Income-Tax Appellate Tribunal (ITAT).…

Legal Issues

• 1. Whether the AO was justified in rejecting the assessee’s claim of exemption under section 10(38) of the Income-tax Act, 1961 and treating the LTCG as a bogus transaction.

Judgment Outcome

Decided in favour of Assessee.

Precedents Relied Upon

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