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Facts
The assessee claimed exemption under Section 10(38) of the Income Tax Act for transactions in shares of NCL Research. The Assessing Officer disallowed this claim, and the CIT(A) confirmed the disallowance. The assessee appealed this decision.
Held
The Tribunal noted that the issue was identical to a previous decision in the case of the assessee's brother. Following that precedent, the Tribunal directed the Assessing Officer to allow the benefit of deduction under Section 10(38) of the Act.
Key Issues
Whether the assessee is entitled to exemption under Section 10(38) for the sale of NCL Research shares, and whether consequential penalty under Section 271 is sustainable.
Sections Cited
10(38), 271
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Income Tax Appellate Tribunal, “CUTTACK BENCH, CUTTACK
Before: SHRI GEORGE MATHAN & SHRI RAJESH KUMAR
filed by the assessee against the order of the NFAC, Delhi [hereinafter referred to as the ‘CIT(A)’] in appeal no.NFAC/2013-14/10167015 dated 10.10.2025 for the assessment year 2014-15. 2. Shri Abhijeet Agarwal, AR represented on behalf of the assessee and Shri Shakeer Ahamed, Sr. DR represented on behalf of the revenue.
&823/CTK/2025 3. It was submitted by the ld. AR that only issue raised was with regard to assessee’s claim u/s 10(38) of the Act. The ld. AR submitted that this is in regard to shares of NCL research. It was the submission that on identical transaction, the ‘SMC’ Bench of the Tribunal has already held the issue in favour of the case of assessee’s brother being case no.ITA No.223/CTK/2023 in Satish Kr. Garg vs. ITO wherein in para 9 to 12, the Tribunal held as under:
“9. The assessee is having investment in listed and unlisted shares. The said Demat account is as on 31.3.2015. The demat account as on 31.3.2014 is found at page 14 of PB, which reads as follows:
“10. The list of shares shows variation. Thus, it is noticed that this is not a single transaction, which has been done by the assessee but the assessee is transacting in shares regularly. The holding statement as on 31.3.2013 shows the existence of NCL Research & Financial Services Ltd.,, which read as follows:
&823/CTK/2025 “11. The transaction in the demat account which is found at page 13 also shows that the transactions have been done through demat account only, which reads as follows:
“This being so, as also on account of the fact that it is noticed that the transactions have been done through the National Stock Exchange and STT has also been paid, respectfully following the principles laid down by the Hon’ble Jurisdictional High Court in the case of Smt. Bimala Devi Singhania in IT Nos.84 & 85 of 2022 vide order dated 10.10.2023, I am of the view that no addition in the hands of the assessee is called for. Consequently, the addition as made by the Assessing Officer and confirmed by ld CIT(A) in respect of alleged penny stock stands deleted. The Assessing Officer is directed to allow the benefit of exemption claimed u/s.10(38) of the Act.” 3.1 It was the submission that the issue is fully covered by the decision of the Coordinate Bench of this Tribunal. It was further submitted by the ld. AR that 271 confirmed by the ld. CIT(A).
We have considered the rival submissions. It is noticed that the issue in the present case is in regard to the shares of NCL research and the issue has already held in favour of the assessee in the case of assessee’s brother. Respectfully following the decision of the Tribunal in the case of Satish Kr. Garg vs. ITO (supra) on identical issue, the Assessing Officer is directed to grant the benefit of deduction u/s 10(38) of the Act. As the additions itself has been deleted, the penalty u/s 271 is no more survive and the penalty stands deleted.
In the result, both the appeals of the assessee are allowed.
Kolkata, the 16th March, 2026.