IN INCOME TAX APPELLATE TRIBUNAL I BENCH, MUMBAI BEFORE SHRI SAKTIJIT DEY, JUDICIAL MEMBER AND SHRI MANOJ KUMAR AGGARWAL, ACCOUNTANT MEMBER ITA no.5485/Mum./2014 (Assessment Year : 2010 11) Asstt. Commissioner of Income Tax . Appellant Circle 19(3), Mumbai v/s IL & FS Employees Welfare Trust IL & FS Financial Centre Plot no.C 22, G Block . Respondent Bandra Kurla Comples Bandra (W), Mumbai 400 051 PAN AAATI0422N Revenue by : Shri B.C.S. Naik Assessee by : Shri Dilip V. Lakhani Date of Hearing 21.09.2016 Date of Order 30.09.2016 ORDER PER SAKTIJIT DEY, J.M. Instant appeal by Revenue is directed against order dated 27th June 2014, passed by learned Commissioner (Appeals) 30, Mumbai, for assessment year 2010 11. only effective ground raised by Department reads as under: On facts and in circumstances of case and in law, learned Commissioner (Appeals) erred in directing Assessing Officer to compute long term capital gain on account of sale / transfer of shares of IL & FS during year by determining cost of acquisition under section 45(2A) of Act r/w circular no.768 dated 24.06.1998 to CBDT instead of 2 IL & FS Employees Welfare Trust average cost method adopted by A.O. whereby disallowed long term capital gain of ` 12,76,44,285. 2. Brief facts are, assessee trust is engaged in activities of investment in shares and securities, dealing in shares, debenture and other securities. For assessment year under consideration, assessee filed its return of income declaring income of ` 57,73,28,600 on 22nd July 2010. During assessment proceedings, it was noticed by Assessing Officer that assessee had claimed long term capital loss of ` 29,30,17,200. On verifying details of assessee s claim, Assessing Officer found that assessee had taken cost of acquisition of shares @ by applying FIFO method as per section 45(2A) of Act. Assessing Officer, however, rejected assessee s claim and invoking provisions of section 55(2)(aa) of Act computed long term capital loss at ` 16,53,72,915. Being aggrieved of aforesaid decision of Assessing Officer, assessee preferred appeal before first appellate authority. 3. During course of appeal proceedings, learned Commissioner (Appeals) having noted that in assessment year 2009 10, while deciding similar nature of dispute in assessee s own case, he has allowed assessee s claim by deleting addition made by Assessing Officer, followed same and accepted assessee s claim of 3 IL & FS Employees Welfare Trust long term capital loss. Being aggrieved, Department is in appeal before us. 4. We have considered submissions of parties and perused material available on record. learned Counsels appearing for both parties agreed before us that issue in dispute is squarely covered by decision of Tribunal in assessee s own case for assessment year 2009 10. On perusal of order passed by Tribunal in ITA no.5235/Mum./2014, etc., dated 26th August 2016, in assessee s own case for assessment year 2009 10, it is noticed that Tribunal while deciding issue has upheld claim of assessee with following observations: 10. revenue has challenged direction given by CIT(A) on this issue to Assessing Officer to compute Long Term Capital Loss on account of IL & FS during year by determining cost of acquisition u/s.45(2A) of Act read with Circular No.768 dated 24.06.1998. However, revenue is of view that average cost method adopted by Assessing Officer is liable to be implemented whereas Assessing Officer disallowed Long Term Capital Loss to tune of Rs.7,50,92,618/-. Before going further it is necessary to advert finding of learned CIT(A) in regard. 4. I have duly considered submission of appellant and in said respect it is relevant to refer to section 45(2A) of Act, which is as follows: (2A) Where any person has had at any time during previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by depository or participant of such beneficial interest in respect of securities shall be chargeable to income-tax as income of beneficial owner of previous year in which such transfer took place and shall not be regarded as income of depository who is deemed to be registered owner 4 IL & FS Employees Welfare Trust of securities by virtue of sub-section (1) of section 10 of Depositories Act, 1996, and for purpose of (i) section 48; and (ii) (ii) proviso to clause (42A) of section 2, cost of acquisition and period of holding of any securities shall be determined on basis of first-in-first-out method. Inserted by Depositories, Act, 1996, w.e.f from 20.09.1995, which provides as follows: . appellant s is contention that it has domiciled IL & FS shares in two different demat accounts. In F.Y. 2008-09, 11,54,613 shares were lying as opening stock in demat account with DP ID 11177127 and 56,09,953 IL &FS shares lying as opening stock in demat account with DP ID 11396032 and since these shares were transferred by IEWT (the appellant) in demat form, it has applied sec. 45(2A), and, on basis of FIFO, taken cost of 11,54,613 shares Rs.150 per share and for balance 4,25,138 shares at Rs.85.06 per share. I, therefore, find that se.45(2A) is specific provision under Act, which prescribed method to determine cost of acquisition and period of holding of any security, i.e. on basis of first-in and first-out method. AO has not disputed that shares have been held by depository and transferred in demat form and FIFO method is not applicable in such cases. He has also not doubted computation of capital gain on FIFO basis. He has merely applied above two referred decisions without discussing as to how se.45(2A) is not applicable in above case and how two decisions without discussing as to how sec.45(2A) is not applicable in above case and how two decisions over-ride specific provisions of Act. I further find that decision in case of Bombay High Court in case of Dahiben Umedbhai (Supra) and Emerald & Co. (Supra) were rendered prior to insertion of provision of sub-section (2A) u/s. 45 of Act. In view of same, above two conditions are not applicable. I therefore, direct AO to compute Long Term Capital Gain / Loss on account of sale/transfer for shares of IL & FS during year by taking into account provisions of sec.45(2A) of Act and Circular No.768 dated 24.06.1998. Further, while computing income / loss under above head, he should take into account correct figures of opening stock as also for purpose of calculation of cost of shares. 4.1 above grounds of appeal taken by appellant, thus, stand allowed. 5 IL & FS Employees Welfare Trust At time of argument no distinguishable facts have been placed on record by revenue to which it can be assume that learned CIT(A) has passed order wrongly and illegally. specific directions has been given by CIT(A) to determine cost of acquisition u/s.45(2A) of Act read with Circular No.768 dated 24.06.1998. Nothing seems unjustifiable. Since matter of controversy has rightly been adjudicated by CIT(A), therefore, we nowhere found any ground to interfere with this order, therefore we uphold this issue in favour of assessee and against revenue. Accordingly, this issue is decided in favour of assessee and against revenue. 9. Accordingly, appeal of assessee is hereby allowed and appeal of revenue is hereby dismissed. 5. As there is no material difference in facts in impugned assessment year nor any contrary decision has been brought to our notice, respectfully following aforesaid decision of co ordinate bench of Tribunal rendered in assessee s own case cited supra, we uphold order of learned Commissioner (Appeals) by dismissing ground raised by Revenue. 6. In result, Revenue s appeal stands dismissed. Order pronounced in open Court on 30.09.2016 Sd/- Sd/- MANOJ KUMAR AGGARWAL SAKTIJIT DEY ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI, DATED: 30.09.2016 6 IL & FS Employees Welfare Trust Copy of order forwarded to: (1) Assessee; (2) Revenue; (3) CIT(A); (4) CIT, Mumbai City concerned; (5) DR, ITAT, Mumbai; (6) Guard file. True Copy By Order Pradeep J. Chowdhury Sr. Private Secretary (Dy./Asstt. Registrar) ITAT, Mumbai Asstt. Commissioner of Income Tax Circle–19(3), Mumbai v. IL & FS Employees Welfare Trust IL & FS Financial Centre