Satish Kumar Garg vs. Income Tax Officer, Ward-5, Aayakar Bhavan, Uditnagar, Rourkela

Parties Involved

Facts Summary

The case involves an appeal filed by the revenue against the order of the Commissioner of Income Tax (Appeals) dated 26.12.2022 in Appeal No.CIT(A),Sambalpur/10380/2016-17 for the assessment year 2014-15. The assessee, Satish Kumar Garg, is a trader in Milk powder and Ghee. The assessee had disclosed long term capital gain from the trading in scripts NCL Research & Financial Services Ltd. The assessee had purchased 1000 shares of NCL Research & Financial Services Ltd. on 1.8.2011 and sold them between 22.11.2013 to 24.2.2014. The Assessing Officer treated the purchase and sale of the shares as bogus and denied the assessee the benefit of exemption claimed under Section 10(38) of the Income Tax Act, 1961. The Commissioner of Income Tax (Appeals) upheld the order of the Assessing Officer. The assessee claimed exemption under Section 10(38) of the Income Tax Act, 1961, which requires the share to be held for more than one year, listed and sold on a recognized stock exchange, and the sale to be chargeable to securities transaction tax (STT). The assessee had paid STT on the purchase of the shares. The assessee's Demat account showed regular transactions in shares, and the transactions were done through a recognized stock exchange. The Hon’ble Jurisdictional High Court had upheld the orders of the Income Tax Appellate Tribunal deleting the addition in similar cases and directing to grant the benefit of exemption under Section 10(38) of the Act.…

Legal Issues

• 1. Whether the learned Tribunal has rightly accepted the claim of the assessee as per law regarding exemption under Section 10 (38) with respect to alleged income under the head “Long Term Capital Gain” on sale of shares of penny stock by ignoring the admission by their group before the Income Tax Authority that complete tax would be paid on the bogus LTCG claimed by the group subsequent to survey operation under Section 133A?
• 2. Whether the learned Tribunal has rightly dismissed the appeal of the revenue with the observation that as the sale of shares were effected through recognized stock exchange and STT had been paid at the time of transfer, therefore it cannot be held as bogus?

Judgment Outcome

Decided in favour of Partly Assessee / Partly Revenue.

Precedents Relied Upon

Similar Judgements

• Sri Hari Prasad Agarwal Vs ITO Ward-46(1), Kolkata

  SMC Bench, Kolkata benchAY 2015-2016Allowed

• Kavita Manish Kheni vs. Income Tax Officer

  Mumbai bench

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

  Mumbai Bench 'E', Mumbai benchAY 2014-15Allowed

• Krutik Ashokkumar Parikh-HUF vs. Income Tax Officer, Ward-1(2)(2), Ahmedabad

  Ahmedabad bench

• Shri Mohan Sharma Vs. ITO, Ward-1(5), Faridabad

  Delhi Bench benchAY 2014-15Dismissed

• Girish Chimanlal Sangani vs. DCIT-Central Circle

  Mumbai bench