She bought Rs 13.5 lakh shares, sold them for Rs 77.47 lakh; gets tax notice
The Mumbai bench of the Income Tax Appellate Tribunal ruled in favor of a taxpayer who was denied a capital gains tax exemption after selling bonus shares. The tribunal deleted tax additions of Rs 79 lakh, rejecting the tax department's claims of unexplained income.
Why it matters
This case clarifies the legal standing of taxpayers regarding long-term capital gains exemptions on bonus shares and highlights the scrutiny of stock market transactions by tax authorities.
You buy shares in a company and after over a year you sell them. In between the company also issues bonus shares, taking your total holdings up. You claim the proceeds from the sale under capital gains tax exemption, but the Income Tax Department rejects your claim. What do you do?In one such case, the Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has deleted additions of around Rs 79 lakh made in connection with the sale of shares.The case concerned a woman who claimed an exemption on long-term capital gains of Rs 65.41 lakh from the sale of shares.What the case is aboutA woman purchased 60,000 shares of a company Ltd between March 3 and March 15, 2011, for Rs 13,52,850, at Rs 22.55 per share.
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