Long Term Capital Gains exemption upheld where demat trading with STT confirmed; unexplained-income additions deleted.

Long term capital gain exemption under Section 10(38) was treated as applicable where shares were held in demat form for over one year, sold through a registered broker on an exchange platform and securities transaction tax was paid; on those factual and precedent foundations the Tribunal found the 10(38) conditions satisfied and deemed the gain genuine. Consequently, additions under unexplained income provisions (alleged unexplained sale consideration and expenses) under Sections 68 and 69C were not sustained and were deleted, resulting in allowance of the appeal in favour of the assessee.

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Issues: Whether long term capital gain claimed under Section 10(38) of the Income-tax Act, 1961 arising from sale of equity shares of M/s. Kappac Pharma Ltd. is genuine and whether additions made under Section 68 and Section 69C of the Income-tax Act, 1961 in respect of the sale consideration and alleged expenditure are deletable.

Analysis: The Tribunal examined evidence that the shares were held in demat form for more than one year, sold through a registered broker on the online trading platform of a recognised stock exchange, and securities transaction tax was paid. Decisions of coordinate benches and the High Courts treating transactions in M/s. Kappac Pharma Ltd. shares as genuine and allowing exemption under Section 10(38) were followed. On these facts and precedents, the conditions for exemption under Section 10(38) were found satisfied and the premise for additions under Section 68 and Section 69C, namely that the sale consideration and expenses were unexplained or bogus, was not sustained.

Conclusion: The long term capital gain under Section 10(38) of the Income-tax Act, 1961 is allowed as genuine; the additions made under Section 68 and Section 69C of the Income-tax Act, 1961 are deleted and the appeal is allowed in favour of the assessee.

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