therefore, the gain should be taxed at the special rate of 20%. The CIT(A) after taking into consideration the factual and legal submissions made by the assessee, noted that the shares need not be one of a company, which is listed in its stock exchange and even shares of private limited companies are eligible to be treated as long term asset, if it is held for more than twelve months. Accordingly, the appeal was partly allowed by order dated 25.05.2012, directing the Assessing Officer to treat the sale of shares as long term capital asset, allowing the indexation and tax the resultant capital gain at the special rate of 20%. Aggrieved by the same, the Revenue was on appeal before the Tribunal contending that the proviso to Section 2 (42A) of the Act would apply only to shares listed in a recognized stock exchange which shall be treated as long term capital asset which are held for more than twelve months. It was further contended that the CIT(A) ought to have seen that the shares which were sold by the assessee were unquoted and not listed in a registered stock exchange and were held for less than thirty six months and therefore, would not be covered by the proviso to Section 2(42A) of the Act. The Tribunal after considering the submissions on either side, the definition of “short-term capital asset” as defined under Section 2(42A), the amendment brought out by Finance Act, 1994 with effect from 01.04.1995, the relevant extracts of the explanatory notes on the provision of the Finance Act and the definition of the term “securities” as defined in Section 2(h) of the Securities Contracts (Regulation) Act, 1956 (hereinafter referred to as “the Securities Contracts Act”), held that the intention of the Legislature while introducing the amendment to the Act was very much clear not to include shares in the term “security” and therefore, concluded that there is no distinction between unlisted and listed shares for classifying them as short term capital asset under the Act. Thus, the only issue involved in the instant case is whether the shares held by the assessee in a company, which is not a listed company when sold, can be brought under the definition of “short-term capital asset” as defined under Section 2(42A) of the Act or whether it should be treated as a “long term capital asset”.
