PARESH MANUBHAI DESAI,KHAR WEST, MUMBAI V. WARD 22(2)(1), MUMBAI, PIRAMAL CHAMBERS

ITA 2663/MUM/2025

AI Insights

The case revolves around the classification of capital gains from the sale of equity shares by the assessee, Paresh Manubhai Desai, for the Assessment Year 2015-16. The primary contention was whether the gains should be treated as Short-Term Capital Gains (STCG) or Long-Term Capital Gains (LTCG). The assessee argued that the shares were inherited from his parents and held for more than a year, thus eligible for LTCG exemption under section 10(38) of the Income-tax Act. The AO initially treated the gains as STCG, leading to an appeal before the CIT(A), which upheld the AO's decision due to lack of sufficient documentary evidence at that time. However, the Tribunal, upon reviewing new evidence including a transmission certificate and a detailed reconciliation of the shares, ruled in favor of the assessee.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 711690 (ITAT-MUMBAI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-07-2025
• Appeal Filed By: Assessee
• Order Result: Allowed
• Assessment Year: 2015-2016
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: VIRABHADRA S. MAHAJAN
• Assessee Lawyers: DNYANESH PATADE
• Keywords: Capital Gains
• Section: 143(3)

Judgement Text

"IN THE INCOME-TAX APPELLATE TRIBUNAL “C” BENCH, MUMBAI BEFORE SMT. BEENA PILLAI, JUDICIAL MEMBER & SMT. RENU JAUHRI, ACCOUNTANT MEMBER आयकर अपील सं./ITA No.2663/MUM/2025 (निर्धारण वर्ा/Assessment Year :2015-16) Paresh Manubhai Desai Budling No.8, Flat No. 90, Ramkrishna Nagar, Near Khar Police Station, Mumbai 400052 v/s. बिधम Income Tax Officer Ward 22(2)(1), Mumbai Pratishtha Bhava, 3 rd & 4th Floor, 101 M. K. Road, Mumbai 400020 स्थायी लेखा सं./जीआइआर सं./PAN/GIR No: AHLPD1616K Appellant/अपीलधर्थी .. Respondent/प्रनिवधदी निर्ााररती की ओर से /Assessee by: Shri. Dnyanesh Patade रधजस्व की ओर से /Revenue by: Mr. Virabhadra S. Mahajan, Sr. DR सुिवधई की िधरीख / Date of Hearing 26.06.2025 घोर्णध की िधरीख/Date of Pronouncement 21.07.2025 आदेश / O R D E R PER RENU JAUHRI [A.M.] :- This appeal is filed by the assessee against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter referred to as “CIT(A)”] dated 21/03/2025 passed u/s. 250 of the Income-tax Act, 1961 [hereinafter referred to as “Act”] for Assessment Year [A.Y.] 2015-16. 2. The assessee has raised the following grounds of appeal: “1. On the based-on circumstances and facts, the Learned AO erred in treating entire sales consideration of Rs. 2,09,22,187/- under the head STCG instead of LTCG, thereby not allowing the exemption u/s 10(38) to the assessee. Printed from counselvise.com P a g e | 2 ITA No. 2663/Mum/2025 AY 2015-16 Paresh Manubhai Desai 2. On the based-on circumstances and facts, the Learned AO erred in appreciating the facts that the shares were received from parents of the assessee, which can be observed clearly from the NSDL demat statement, thereby treating entire sales consideration of Rs. 2,09,22,187/- and no COA, under the head STCG instead of LTCG. 3. The appellant craves to leave, to add, to alter or modify the grounds of appeal, as stated above, at any time on or before the hearing of appeal.” 3. Brief facts of the case are that the assessee filed his return declaring total income of Rs. 11,61,320/- on 29.08.2015 for AY 2015-16. The case was selected for scrutiny on the basis of information available regarding the share trading account of the assessee. Ld. AO noticed that the assessee had received sale proceeds from sale of equity shares amounting to Rs.2,09,36,220/- through HDFC Securities. The same was treated as short term capital gains in the hands of the assessee and the assessment was completed at income of Rs. 2,20,82,510/- vide order u/s. 143(3) dated 31.12.2017. Aggrieved with the order, the assessee preferred an appeal before Ld. CIT(A). It was contended by the assessee that the shares were received by him from his parents which were transferred to his accounts after their death. It was pointed out that from the demat account statement, it was clear that all the shares sold by the assessee during the year were either shown as opening balance or were transferred from the family members demat accounts and were, therefore, held for a period of more than one year. The assessee was therefore entitled to claim the exemption on account of Long-Term Capital Gains (LTCG) received from such sale u/s. 10(38) of the Act. During the course of appellate proceedings, Ld. CIT(A) sought a remand report from the Ld. AO on the submissions filed by the assessee. Vide Printed from counselvise.com P a g e | 3 ITA No. 2663/Mum/2025 AY 2015-16 Paresh Manubhai Desai remand report dated 27.07.2024. Ld. AO submitted that from the details made available, it was not possible to ascertain that the assessee was holding the impugned shares for more than two years. Further, no documentary evidence with respect to transmission of shares from his father to his mother and finally to him had been furnished by the assessee. Based on this remand report, Ld. CIT(A) provided an opportunity to the assessee to submit necessary evidences. However, in the absence of any such document any evidences in support of his claim regarding LTCG, Ld. CIT(A) confirmed the addition made by the Ld. AO. The assessee has filed an appeal before the ITAT against the order of Ld. CIT(A). 4. Before us, Ld. AR has submitted a copy of the HDFC Securities transmission certificate as well as copies of the assessee’s demat accounts, individual as well as joint with his parents, alongwith a chart explaining the computation on LTCG. It has been submitted that all these documents were submitted before the lower authorities and only the transmission certificate was not furnished as the same was not available at that time. The assessee has furnished before us a fresh reconciliation chart of shares sold and their receipt in the demat account along with a copy of the transmission certificate received from the HDFC Bank. The reconciliation chart is reproduced below: Printed from counselvise.com P a g e | 4 ITA No. 2663/Mum/2025 AY 2015-16 Paresh Manubhai Desai Printed from counselvise.com P a g e | 5 ITA No. 2663/Mum/2025 AY 2015-16 Paresh Manubhai Desai 5. We have heard the rival submissions. From the above reconciliation as well as the transmission certificate submitted by the assessee, it is clear that the he has indeed earned LTCG on the shares sold during the year which have been received earlier from his parents. The assessee is therefore, entitled to claim LTCG exemption u/s. 10(38) of the Act. Accordingly, addition made by the Ld. AO on account of short-term capital gains from these transactions is hereby deleted. Printed from counselvise.com P a g e | 6 ITA No. 2663/Mum/2025 AY 2015-16 Paresh Manubhai Desai 6. In the result, appeal of the assessee is allowed. Order pronounced in the open court on 21.07.2025. Sd/- Sd/- BEENA PILLAI RENU JAUHRI (न्यधनयक सदस्य/JUDICIAL MEMBER) (लेखधकधर सदस्य/ACCOUNTANT MEMBER) Place: म ुंबई/Mumbai दिन ुंक /Date 21.07.2025 दिव्य रमेश न ुंिग वकर/ स्टेनो आदेश की प्रनतनलनि अग्रेनित/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. विभागीय प्रविविवि, आयकर अपीलीय अविकरण DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. सत्यानित प्रनत //True Copy// आदेशािुसार/ BY ORDER, सहायक िंजीकार (Asstt. Registrar) आयकर अिीलीय अनर्करण/ ITAT, Bench, Mumbai. Printed from counselvise.com "