ACIT-23(1), MUMBAI, MUMBAI vs. KEYUR DILIP SHAH, MUMBAI

In the above cited appeal, the issue to be adjudicated is whether the long term capital gains (LTCG) claimed by appellant by selling the shares of M/s. Rajlakshmi Mills Ltd, is genuine or not.

The appellant claims that these shares were bought by him in 1994 and in proof of the same filed copies of share certificates, details of shareholders of company as on 30.9.2010. The appellant also claimed he used to receive dividend from company earlier and he kept these shares for almost two decades and sold the shares in this year and paid STT, reflected in Return of Income and claimed exemption under section 10(38) of the I.T. Act. The summary of the arguments of Ld. AR of the appellant to claim of Long term capital gains is as follows :- a) The appellant purchased the shares and kept for two decades and was getting dividend also. b) Purchase and sale of shares was done through registered broker and banking channels.

The Ld. DR relied on the assessment order, where the Investigation Wing report of Kolkata Investigation Wing was extensively quoted

Heard both sides. In similar circumstances, the ITAT Mumbai held the case in favour of appellant, vide the order quoted above. There were no independent enquiries by Ld. AO to show that the Long Term Capital Gains claimed by appellant is bogus. The cases-law quoted by Ld. AO and in Grounds of Appeal are distinguishable on facts. Penny stocks manipulated are done by appellant by buying and selling the shares in a very short span and the appellant exit when the there is quoted at very high rate. Such characteristics are absent in this case. As the appellant purchased these shares more than two decades back and was receiving dividend earlier, the same cannot be treated as penny stock and price manipulated cannot be attributed to him. Hence, the claim of LTCG of appellant is correct and valid. The order of Ld. CIT(A) is confirmed and appeal of Revenue is Dismissed.