ANUP AGARWAL,ROURKELA vs. INCOME TAX OFFICER, WARD - 1, ROURKELA, ROURKELA

In reply, SR DR vehemently support the order of the AO and CIT(A).

I have considered the rival submissions. As it is noticed that the issue is now squarely covered by the decision coordinate bench of this Tribunal in the case of Ridhi Bagaria, referred to supra, wherein the Tribunal in paras 5 to 7 observed as follows :-

I have considered the rival submissions. At the outset, the argument of the ld. Sr.DR that opportunity of cross-examination need not be granted, does not come out of the order of the AO or the CIT(A). Neither of the lower authorities have relied upon any statement or any investigation report for the purpose of the making the addition or confirming the same. It is an admitted fact that the assessee is doing the business of purchase and sale of shares. As pointed out by the ld. Sr. DR the assessee is doing purchases in IPOs. Thus, there is no dispute that the assessee earns her income from transaction in shares. Just because the assessee has shifted from the IPOs and has made a purchase of the shares in M/s Panchshul Marketing Ltd., would not shift the head of income from “capital gains” to the “Adventure in the nature of trade”, insofar as the assessee is an investor in the shares and is not in the business of dealing in shares. This being so, the decision relied on by the ld. Sr. DR would no more survive for consideration.

Now, I am faced with the decision of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra, referred to supra, wherein the coordinate bench of the Tribunal in the case of that assessee has also dealt with the shares in the case of M/s Kailash Auto Finance Ltd. and has been held to be eligible for exemption u/s.10(38) of the Act. In the said decision, there was another issue also considered insofar as in the course of survey the assessee therein had surrendered the claim of deduction u/s.10(38) of the Act

I have considered the rival submissions. At the outset, the argument of the ld. Sr.DR that opportunity of cross-examination need not be granted, does not come out of the order of the AO or the CIT(A). Neither of the lower authorities have relied upon any statement or any investigation report for the purpose of the making the addition or confirming the same. It is an admitted fact that the assessee is doing the business of purchase and sale of shares. As pointed out by the ld. Sr. DR the assessee is doing purchases in IPOs. Thus, there is no dispute that the assessee earns her income from transaction in shares. Just because the assessee has shifted from the IPOs and has made a purchase of the shares in M/s Panchshul Marketing Ltd., would not shift the head of income from “capital gains” to the “Adventure in the nature of trade”, insofar as the assessee is an investor in the shares and is not in the business of dealing in shares. This being so, the decision relied on by the ld. Sr. DR would no more survive for consideration.

Now, I am faced with the decision of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra, referred to supra, wherein the coordinate bench of the Tribunal in the case of that assessee has also dealt with the shares in the case of M/s Kailash Auto Finance Ltd. and has been held to be eligible for exemption u/s.10(38) of the Act. In the said decision, there was another issue also considered insofar as in the course of survey the assessee therein had surrendered the claim of deduction u/s.10(38) of the Act and the coordinate bench had held that the retraction from the surrender was permissible. When the revenue filed appeal against the said decision of the coordinate bench of the Tribunal before the Hon’ble Juri ictional High Court of Orissa, the question was raised as to whether after making certain statements in the survey the Assessee not claiming exemption under Section 10(38) of the income Tax Act, 1961 at the stage of 4 the assessment proceedings, could the Assessee turn around and make such claim of wanting to cross-examine persons make adverse statements against the Assessee at the stage of the appeal before the ITAT?” The revenue did not challenge the factual finding of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra (supra) in regard to the claim of deduction/s.10(38) of the Act. By not challenging the merits of the addition, the revenue has accepted the decision of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra & Others (supra). In these circumstances, the decision of the coordinate bench of the Tribunal on merits in the case of Deepansu Mohapatra (supra) have become final and binding on a Single Member Bench of the Tribunal as the said decision has been rendered by a Division Bench of this Tribunal. In view of the above, respectfully following the decision of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra (supra), which has also been affirmed by the Hon’ble Juri ictional High Court of Orissa in the appeal filed by the revenue, the addition as made by the AO and as confirmed by the CIT(A) in respect of the claim of exemption u/s.10(38) of the Act in respect of sale of shares of M/s Kailash Auto, stands deleted.

In view of the above, respectfully following the decision of the coordinate bench of the Tribunal in the case of Deepansu Mohapatra (supra), which has also been affirmed by the Hon’ble Juri ictional High Court of Orissa in the appeal filed by the revenue and also the decision of the SMC Bench of the Tribunal in the case of Rashi Agrawal (supra), the addition as made by the AO and as confirmed by the CIT(A) in respect of the claim of exemption u/s.10(38) of the Act in respect of sale of shares of M/s Kailash Auto, stands deleted.

Respectfully following the decision of coordinate of this tribunal in the case of Ridhi Bagaria, referred to supra, the AO is directed to allow the assessee’s claim of exemption under Section 10(38) of the Act.

In the result appeal of the assessee is allowed. Order dictated and pronounced in the open court on 22/09/2025 (जाज" माथन) (GEORGE MATHAN) "याियक सद"य / JUDICIAL MEMBER "दनांक Dated 22/09/2025 Prakash Kumar Mishra, Sr.P.S.

""थ" / The Respondent- ITO, Ward-1,Rourkela 3. आयकर आयु"(अपील) / The CIT(A), 4. आयकर आयु" / CIT 5. िवभागीय "ितिनिध, आयकर अपीलीय अिधकरण, कटक / DR, ITAT, Cuttack गाड" फाईल / Guard file. आदेशानुसार/ BY ORDER, 6. स"यािपत "ित //// (