ITAT Allows Section 10(38) LTCG Exemption on Sunrise Asian Shares

Amita Rambilas Agarwal Vs ITO (ITAT Mumbai)

The assessee appealed against the order of the Commissioner of Income Tax (Appeals), National Faceless Appeal Centre, dated 18.12.2025 for Assessment Year 2014-15. The principal dispute concerned the addition of Rs. 85,35,780 representing Long-Term Capital Gain (LTCG) on the sale of shares of Sunrise Asian Ltd. (formerly Santoshima Trade Links Ltd.), which the Assessing Officer treated as unexplained cash credit under Section 68 after rejecting the assessee’s claim for exemption under Section 10(38) of the Income-tax Act, 1961. The assessee also challenged the addition of Rs. 2,56,073 alleged to be commission paid for obtaining a bogus LTCG entry and the initiation of penalty proceedings under Section 271(1)(c).

The Tribunal identified Ground No. 1 as the principal issue, namely whether the Commissioner (Appeals) was justified in confirming the denial of exemption under Section 10(38).

The Tribunal observed that during the relevant year, the assessee had disclosed LTCG of Rs. 85,35,780 on the sale of 8,000 equity shares of Sunrise Asian Ltd. and claimed exemption under Section 10(38). The claim had been rejected by the Assessing Officer and the rejection was upheld by the Commissioner (Appeals).

Upon examining the record, the Tribunal found that the assessee had produced several documents demonstrating that the shares had been purchased through banking channels and had also filed detailed written submissions in support of the claim. The Tribunal noted that the Assessing Officer had not pointed out any defect in the documentary evidence relied upon by the assessee.