ITAT Allows LTCG Exemption u/s 10(38) as Inherited Shares Were Held Long-Term, Deletes STCG Addition [Read Order]
Before the tribunal, the assessee furnished the transmission certificate and demat statements showing inheritance and long-term holding.
![ITAT Allows LTCG Exemption u/s 10(38) as Inherited Shares Were Held Long-Term, Deletes STCG Addition [Read Order]](https://images.taxscan.in/h-upload/2025/07/26/2069358-fraudulent-capital-gain-capital-gain-itat-taxscan.webp "ITAT Allows LTCG Exemption u/s 10(38) as Inherited Shares Were Held Long-Term, Deletes STCG Addition [Read Order]")
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the Short Term Capital Gains (STCG) addition and allowed Long Term Capital Gains ( LTCG ) exemption under Section 10(38) of Income Tax Act,1961, holding that the shares sold were inherited and held for more than one year. Paresh Manubhai Desai,appellant-assessee, filed his return for AY 2015-16...
The Mumbai Bench of Income Tax Appellate Tribunal ( ITAT ) deleted the Short Term Capital Gains (STCG) addition and allowed Long Term Capital Gains ( LTCG ) exemption under Section 10(38) of Income Tax Act,1961, holding that the shares sold were inherited and held for more than one year.
Paresh Manubhai Desai,appellant-assessee, filed his return for AY 2015-16 declaring income of Rs. 11,61,320. The case was selected for scrutiny due to his share trading. The Assessing Officer ( AO ) found sale proceeds of Rs. 2,09,36,220 from shares sold through HDFC Securities and treated it as short-term capital gains, completing assessment with income of Rs. 2,20,82,510.
The assessee claimed the shares were inherited from his parents and held for more than one year, so LTCG exemption under section 10(38) applied. The Commissioner of Income Tax (Appeals )[CIT(A)] asked the AO for a report, who said there was no proof of holding period or share transmission. The assessee failed to provide documents, so the CIT(A) confirmed the addition. The assessee appealed to the ITAT.
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The assessee counsel submitted the transmission certificate from HDFC Securities, copies of individual and joint demat accounts with parents, and a chart showing LTCG calculation. They said all documents except the transmission certificate were given to lower authorities earlier. Before us, the assessee also provided a new reconciliation chart and the transmission certificate from HDFC Bank.
The two member bench comprising Beena Pillai (Judicial Member) and Renu Jauhri (Accountant Member) heard both sides and found that the reconciliation and transmission certificate showed the shares were inherited and sold after one year. The assessee qualified for LTCG exemption under section 10(38). The tribunal deleted the addition of short term capital gains made by the AO.
Accordingly the appeal was allowed.
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