ITAT Mumbai Allows LTCG Exemption on Lifeline Drugs Shares; Deletes Section 68 Additions and Commission Allegation
Court / Authority
Income Tax Tribunal
Update / Judgement Date
24 Aug 2026
Source
WCP News Bulletin
Author
Manas Yadav — WCP Legal Desk
Reading Time
2 min read
View Count
Key Facts and Tribunal Findings
The Income Tax Appellate Tribunal (ITAT), Mumbai Bench, allowed appeals filed by Mahaveer Sukhanraj Kawar for Assessment Years 2014–15 and 2015–16, deleting additions made on account of alleged bogus long-term capital gains (LTCG) from sale of shares of Lifeline Drugs and Pharma Ltd.
The assessee had acquired shares of the company through preferential allotment and subsequently sold them on the Bombay Stock Exchange (BSE), declaring LTCG of ₹95.58 lakh and ₹1.07 crore in the respective years. The gains were claimed as exempt under Section 10(38).
The Assessing Officer treated the transactions as accommodation entries based on an Investigation Wing report categorising the scrip as a “penny stock.” The exemption claim was denied, and the gains were added as unexplained cash credit under Section 68. A further addition was made towards alleged commission paid for arranging such entries.
The Tribunal noted that the shares were held in demat form, transactions were executed through SEBI-registered brokers on the BSE platform, and payments were routed through banking channels. All supporting documents were furnished, and no specific defect was identified by the authorities.
It further observed that the assessee was a regular investor in shares, and similar transactions in other scrips were accepted by the department. The reliance placed solely on Investigation Wing reports, without independent verification or contrary evidence, was held to be insufficient.
The Tribunal held that the transactions could not be treated as non-genuine in absence of any material disproving the documentary evidence. Accordingly, it directed deletion of additions under Section 68 as well as the consequential commission addition.
Full Judgement / Attachment
Full Judgement
Frequently asked questions about Income Tax Tribunal
- What is the Income Tax Appellate Tribunal (ITAT)?
- The ITAT, set up in 1941, is the second appellate authority in direct tax matters and the final fact-finding body. It hears appeals against orders of the Commissioner (Appeals) and certain other authorities, through benches across India.
- What is the time limit to file an appeal before the ITAT?
- An appeal must be filed within two months from the end of the month in which the order is communicated. This rule has applied since 1 October 2024 and continues under the Income-tax Act, 2025. The Tribunal can condone delay for sufficient cause.
- Can the ITAT stay a tax demand?
- Yes. The Tribunal can stay recovery of a disputed demand while an appeal is pending, usually on deposit of a part of the demand or furnishing security. Stays are granted for a limited period, and the appeal is expected to be decided within it.
- Where does an appeal go after the ITAT?
- An appeal against an ITAT order lies to the High Court, but only on a substantial question of law. A further appeal lies to the Supreme Court.
- How can White Collar Professional help with a ITAT matter?
- Post your requirement on White Collar Professional to receive proposals from verified Chartered Accountants and tax Advocates, compare them, and pay securely through the platform. This page also tracks the latest ITAT ITAT orders as they are reported.
