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Facts
The assessee claimed exemption under Section 10(38) on the sale of listed shares of M/s Skipper Limited, treating the purchase price as Rs. 20 per share. The Assessing Officer (AO) disputed this cost, re-computing it based on market prices at the time of dematerialization and denying the exemption. The CIT(A) deleted the addition made by the AO.
Held
The Tribunal held that the AO could not dispute the cost of acquisition in the year of sale (AY 2017-18) when it had been verified and accepted in the year of purchase (AY 2015-16). The AO's failure to provide cogent evidence to dislodge the previously accepted cost was also noted.
Key Issues
Whether the AO can re-assess the cost of acquisition of shares in the year of sale when the same was accepted in the year of purchase, and whether the exemption under Section 10(38) is allowable based on the verified cost.
Sections Cited
10(38), 56(1), 143(2), 142(1), 133(6), 48, 3, 4, 5, 2(45)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “D” BENCH, KOLKATA
Before: SHRI RAJESH KUMAR, AM & SHRI PRADIP KUMAR CHOUBEY, JM
This is an appeal preferred by the Revenue against the order of the National Faceless Appeal Centre, Delhi (hereinafter referred to as the “Ld. CIT(A)”] dated 04.06.2025 for the AY 2017-18.
The Revenue has challenged the order of ld. CIT (A) deleting the addition of Rs.8,75,30,700/- as made by the Ld. AO by denying the exemption claimed by the assessee u/s 10(38) of the Act on sale of listed shares of M/s Skipper Limited.
The facts in brief are that the assessee is a limited liability partnership firm. The assessee filed the return of income on 18.10.2017, declaring
In the appellate proceedings, the ld. CIT (A) after taking into account the contentions and submissions of the assessee, allowed the appeal of the assessee and deleted the addition made by the ld. AO. Being aggrieved , the revenue has preferred this appeal.
The ld. DR primarily relied upon the order and findings of the ld. AO and vehemently contended that the market price prevailing at the time of transfer of shares to the demat account ought to be taken as the cost of acquisition. The ld. DR argued that the purchase consideration for the shares were paid by the assessee at the time of dematerialization and therefore, the cost price of shares ought to be adopted with reference to the market rates prevailing then as opposed to the actual cost price claimed to have been paid by the assessee.
Per contra, the ld. AR firstly pointed out that, the fact that the AO had ultimately allowed the exemption claimed by way of long term capital gains on sale of shares showed that the ld. AO has not disputed the date of purchase and that the limited issue in dispute was the purchase
After hearing the rival contentions and perusing the materials available on record, we find that the admitted fact is that, the assessee had sold listed shares of M/s Skipper Limited in several tranches resulting in aggregate sale consideration of Rs.10,90,17,795/-. It is not in dispute before us that, these shares held were long-term in nature and therefore the gain arising therefrom was exempt u/s 10(38) of the Act. The case of the Revenue before us relates to the determination of cost of acquisition of the shares of M/s Skipper Limited purchased in FY 2014-15.According to the Revenue, the shares were purchased on the date of dematerialization i.e. 24.03.2015&25.03.2015 at the prevailing market prices of Rs.142.96/- per share & Rs. 146.15/-share respectively, whereas the assessee has disclosed the shares to be purchased on 30.04.2014 at a price of Rs.20/share. It is seen that, the act of purchase of shares has not been disputed but it is the price paid for purchase which is in question before us. Be that as it may, it is not in dispute between the parties that the impugned shares were purchased in FY 2014-15. The question however is the relevant date of acquisition in FY 2014-15 and the price paid by the assessee. It is seen that, this was one of the issues for which the case of the assessee “Assessment on the total income of each assessment year has to be made separately and on the basis of fact situation prevailing in the year in question. The Explanation refers to the computation of total income of the individual referred to in clause (i), of section 64(1). It is clearly stipulated in the Explanation that for the purpose of inclusion in terms of clause (i) the total income of the husband or wife whose total income after excluding the income referred to in clause (i) is greater shall be included. Total income of each year has to be assessed separately. It is total income of an assessment year which is to be assessed.
5. The expression ‘total income’ is defined in section 2(45) of the Act in the following manner: "‘total income’ means the total amount of income referred to in section 5, computed in the manner laid down in this Act;"
“5.4. I have considered the facts of the case, observations of the AO and submission of theappellant. The primary issue in dispute pertains to the disallowance of exemption claimed u/s10(38) of the Act, amounting to Rs.8,75,30,700/-, arising from the alleged incorrectcomputation of LTCG by the AO. From the details available on record, it is observed that theappellant had purchased 4,80,000 equity shares of M/s Skipper Ltd. from M/s EdessaCommercial Pvt. Ltd. and 2,26,000 shares from M/s Rebecca Suppliers Pvt. Ltd. on30/04/2014 at a price of Rs.20 per share, which was the last traded price on the Calcutta StockExchange as on the date of purchase. Thus, the total cost of acquisition of 7,06,000 shareswas Rs.1,41,20,000/-. These transactions were carried out through proper banking channelsand were supported by documentary evidence including purchase bills, contract notes, ledgeraccounts, and Demat statements reflecting the credit of shares to the appellant’s Demataccount during F.Y. 2014-15. The shares were held in the appellant's Demat account for morethan 24 months and were subsequently sold during the F.Y. 2016–17 on various dates throughrecognized stock exchanges for a total consideration of Rs.10,90,17,795/-, after STT paid.Based on the actual cost of acquisition and sale consideration, the appellant computed LTCGof Rs.9,48,97,795/- and
In the result, the appeal of the Revenue is dismissed.
Order pronounced in the open court on 10.02.2026.