This compilation indexes 12 rulings — spanning Gujarat High Court, Madras High Court, and eight ITAT benches — in which Section 10(38) of the Income Tax Act, 1961 was a material issue. The disputes range from reassessment and search-and-seizure proceedings to bogus long-term capital gain claims, unexplained cash credits under Section 68, and Section 14A disallowances in relation to exempt income. The compilation is arranged in reverse chronological order and covers the period August 2025 to June 2026. It is intended for use by in-house tax teams, Big-4 associates, and law firm researchers who require a structured index of recent Section 10(38) litigation before proceeding to the full judgments.

Research index only — not legal or tax advice. This page catalogues publicly available court and tribunal orders for research reference. Readers must independently verify each ruling against the full judgment text, check for any subsequent stay, reversal, or appeal, and consult qualified advisers before relying on any case for compliance or planning purposes.

The statutory framework in one paragraph

Section 10(38) of the Income Tax Act, 1961 provided an exemption from income tax in respect of any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity-oriented fund or a unit of a business trust, where such transaction was entered into on or after the 1st day of October 2004, and the transaction was chargeable to securities transaction tax. The exemption applied to income referred to in Section 112A only after the Finance Act 2018 substituted the prior regime; for assessment years up to and including AY 2018-19 (i.e., transfers on or before 31 January 2018), Section 10(38) as it stood before amendment was the operative provision. The section was a frequent flashpoint in litigation because the Revenue alleged, in a significant number of cases, that the claimed long-term capital gains on listed shares were fictitious — structured through penny-stock or entry-operator arrangements — and therefore assessable as unexplained income rather than as exempt capital gains.

The 12 rulings

1. Sanjiv Dhireshbhai Shah vs Income Tax Officer Ward 1(3)(5)

Bench: Gujarat High Court
Date: 15 June 2026
Sections engaged: 10(38), 142(1), 143(3), 147, 148, 14A
Outcome: Outcome not specified in source
Procedural / substantive ground: This writ petition (R/Special Civil Application No. 18268 of 2019) was filed before the Gujarat High Court and was taken up for final hearing with the consent of both parties. Per the source preview, the petitioner had disclosed exempt income in the original return of income and had provided details of long-term capital gain of Rs. 1,74,34,398/- claimed under Section 10(38); the Revenue's Senior Standing Counsel was reportedly unable to controvert this position at the time of hearing. An ad-interim relief had been granted by a coordinate bench of the court on 21 October 2019, and the matter was heard for final disposal on 15 June 2026.

2. ACIT,Circle-20(1),Mumbai, Piramal vs Manju Paras Prwal, Mumbai

Bench: Income Tax Appellate Tribunal - Mumbai
Date: 15 June 2026
Sections engaged: 10(38), 143(1), 147, 148, 68
Outcome: Outcome not specified in source
Procedural / substantive ground: This appeal (ITA No. 5810/MUM/2025) was filed by the Revenue before the Mumbai Bench of the ITAT for Assessment Year 2012-13. The source preview records share transactions by the assessee — including purchases of shares in Nouveau Multimedia Limited through Motilal Oswal Securities Pvt. Ltd. on 14 December 2007 and 27 December 2007, and a preferential allotment of shares in Blue Circle Services Ltd. on 30 August 2010 — that appear to have been scrutinised in the context of exemption claimed under Section 10(38) and the Revenue's position under Section 68.

3. Dhiresh Shashikant Gosalia ,Mumbai vs DCIT, Circle 22(1), Mumbai

Bench: Income Tax Appellate Tribunal - Mumbai
Date: 11 June 2026
Sections engaged: 10(38), 69A, 69C
Outcome: Outcome not specified in source
Procedural / substantive ground: This appeal (ITA 191/MUM/2026) was filed by the assessee before the Mumbai Bench of the ITAT against the order of the National Faceless Appeal Centre (NFAC), Delhi / CIT(A) dated 21 November 2025 for Assessment Year 2017-18. Per the source preview, one of the grounds of appeal challenged an addition on account of commission under Section 69C, which the assessee contended was unjustified as it was based on presumption, assumption, and surmises; the appeal also engaged Section 10(38) as a substantive issue.

4. Raju Jamnadas Babani,Hyderabad vs DCIT, Circle-6(1), Hyderabad

Bench: Income Tax Appellate Tribunal - Hyderabad
Date: 10 June 2026
Sections engaged: 10(38), 133(6), 143(3), 148, 148A(b), 148A(d)
Outcome: Outcome not specified in source
Procedural / substantive ground: These consolidated appeals (ITA No. 2058 & 2059/HYD/2025) were filed by the assessee before the Hyderabad Bench of the ITAT for Assessment Year 2016-17 against the orders passed by the Commissioner of Income Tax (Appeals). The source preview indicates the appeals were directed against the CIT(A) orders, with the engagement of reassessment provisions including Sections 148, 148A(b), and 148A(d), alongside the Section 10(38) exemption claim; the hearing concluded on 3 June 2026 and the order was pronounced on 10 June 2026.

5. Principal Commissioner Of Income Tax vs Shri M.Kiran Kumar

Bench: Madras High Court
Date: 30 April 2026
Sections engaged: 132(4), 2(22)(e), 10(38)
Outcome: Outcome not specified in source
Procedural / substantive ground: This Revenue appeal (TCA No. 248 of 2021) was filed before the Madras High Court under Section 260A of the Income Tax Act, 1961, challenging the order dated 1 March 2021 of the ITAT, Madras 'C' Bench in ITA No. 3374/Chny/2019. Per the source preview, one of the substantial questions of law admitted by the High Court was whether the ITAT was correct in deleting an addition of Rs. 20 crores without evidence when the assessee had never retracted his statement made under Section 132(4); the matter also engaged Section 10(38) as part of the substantive issues arising from the ITAT's order.

6. Rameshkumar Karsanbhai Patel,Surat vs ITO, Ward 2(3)(5), Surat

Bench: Income Tax Appellate Tribunal - Surat
Date: 9 April 2026
Sections engaged: 10(38), 68
Outcome: Outcome not specified in source
Procedural / substantive ground: This appeal (I.T.A. No. 669/SRT/2025) was filed by the assessee before the Surat Bench of the ITAT for Assessment Year 2015-16. The source preview records that the assessee's shares were reflected in a demat account and that sale transactions were carried out through a recognised stock exchange with Securities Transaction Tax payment — facts apparently relied upon in support of the Section 10(38) exemption claim. The preview also contains BSE price data for shares of a company (referred to as SAL) tracking significant price appreciation between October 2012 and March 2013, which appears to have been analysed in the context of whether the claimed exemption was genuine or structured.

7. Assistant Commissioner Of Income Tax vs Abhishek Kumar Balar, Pali

Bench: Income Tax Appellate Tribunal - Jodhpur
Date: 25 March 2026
Sections engaged: 10(38), 153A
Outcome: Outcome not specified in source
Procedural / substantive ground: These consolidated Revenue appeals (ITA Nos. 518–527/Jodh/2025, covering Assessment Years 2013-14 and 2014-15) were filed before the Jodhpur Bench of the ITAT against multiple individual assessees from the Balar family — including Piyush Kumar Balar (PAN AEMPB6394Q), Achal Chand Balar (PAN ABAPB8617M), Dimple Balar, Minaxi Balar (PAN ADUPB2087R), Abhishek Balar (PAN AATPB8811B), and Saraswati Devi Balar (PAN ABAPB8616L) — arising from proceedings under Section 153A in the context of Section 10(38) exemption claims.

8. Rajesh Sarda,Nagpur vs Assistant Commissioner Of Income Tax

Bench: Income Tax Appellate Tribunal - Nagpur
Date: 24 February 2026
Sections engaged: 153A, 10(38), 234A
Outcome: Outcome not specified in source
Procedural / substantive ground: This appeal (ITA 44/Nag/2022) was filed by the assessee before the Nagpur Bench of the ITAT against the order of CIT(A)-3, Nagpur dated 11 February 2022 for Assessment Year 2015-16. Per the source preview, the assessee raised a ground that the CIT(A) ought to have deleted the addition as the procedure was in complete violation of settled propositions of law; the appeal arose in the context of a Section 153A assessment and engaged Section 10(38) as a substantive issue.

9. Assistant Commisioner Of Income Tax vs Mohit Anand, Bareilly

Bench: Income Tax Appellate Tribunal - Lucknow
Date: 13 February 2026
Sections engaged: 10(38), 68, 153A
Outcome: Outcome not specified in source
Procedural / substantive ground: These three consolidated departmental appeals (IT(SS)A Nos. 336 & 337/LKW/2025 and IT(SS)A No. 334/LKW/2025) were preferred by the Revenue before the Lucknow Bench of the ITAT against separate orders dated 21 March 2025 of the CIT(Appeals)-3, Lucknow for Assessment Years 2014-15 and 2015-16, involving two different assessees — Ankur Anand (PAN AGPPA4219C) and Mohit Anand (PAN ABUPA3002H). Per the source preview, since the three departmental appeals had identical issues they were heard together, with the disputes engaging Section 10(38) exemption claims alongside Section 68 and Section 153A.

10. Shri Swatantra Kumar Shukla,Kanpur vs Deputy Commissioner Of Income Tax-3

Bench: Income Tax Appellate Tribunal - Lucknow
Date: 24 November 2025
Sections engaged: 10(38), 131
Outcome: Outcome not specified in source
Procedural / substantive ground: This appeal (ITA No. 575/LKW/2019) was filed by the assessee before the Lucknow Bench of the ITAT against the order of CIT(A)-1, Kanpur dated 29 July 2019, which had dismissed the assessee's appeal against an order passed under Section 143(3) for AY 2015-16 dated 29 December 2017. Per the source preview, the assessee had filed a return on 30 September 2015 for AY 2015-16 declaring total income of Rs. 36,76,850/- and had claimed long-term capital gain of Rs. 1,39,81,850/- as exempt income under Section 10(38); the case was taken up for scrutiny on the basis of inputs received from the Investigation Wing regarding suspicious long-term capital gains on shares.

11. M/S Hero Cycles Ltd.,Ludhiana vs ACIT, C-V, Ludhiana

Bench: Income Tax Appellate Tribunal - Chandigarh
Date: 8 September 2025
Sections engaged: 14A, 10(38)
Outcome: Outcome not specified in source
Procedural / substantive ground: These cross-appeals (ITA No. 588/Chd/2018 by the Revenue and ITA No. 473/Chd/2018 by the assessee) were heard before the Chandigarh Bench of the ITAT for Assessment Year 2012-13. The source preview records disallowance computations under Rule 8D(2)(ii) and 8D(2)(iii) totalling Rs. 3,97,31,691/-, alongside average investment figures and interest disallowance calculations — indicating that the central dispute concerned the quantification of disallowance under Section 14A in relation to exempt income under Section 10(38).

12. Sanjay Kumar Agrawal ,Satna vs Asst. Commissioner Of Incometax

Bench: Income Tax Appellate Tribunal - Jabalpur
Date: 21 August 2025
Sections engaged: 147, 68, 10(38)
Outcome: Outcome not specified in source
Procedural / substantive ground: This appeal (ITA No. 156/JAB/2024) was filed by the assessee before the Jabalpur Bench of the ITAT for Assessment Year 2016-17. Per the source preview, the Assessing Officer passed an order under Section 147 read with Section 144B on 30 March 2022, assessing income at Rs. 42,56,500/-, which included an addition of Rs. 26,29,800/- under Section 68 treating the sale consideration of shares as unexplained cash credit; the AO also rejected the assessee's claim of exemption under Section 10(38).

Patterns across these 12 rulings

Section 10(38) exemption as the primary dispute in bogus/penny-stock LTCG cases. Multiple cases in this compilation — including Cases 6, 10, and 12 — arise from scrutiny assessments or reassessments where the Investigation Wing or the Assessing Officer flagged suspicious long-term capital gains on shares. In such cases, the Revenue's standard counter-move was to recharacterise the claimed exempt gains as unexplained credits under Section 68, making the interaction between Section 10(38) and Section 68 a recurring litigation flashpoint.
Section 153A search-assessment proceedings intersecting with Section 10(38) claims. Cases 7, 8, and 9 all involve Section 153A, indicating that exemption claims under Section 10(38) frequently come under challenge when block assessments or search-and-seizure proceedings are initiated and the Revenue reopens multiple assessment years simultaneously.
Reassessment framework (Sections 147 and 148/148A) as a gateway to Section 10(38) disputes. Cases 1, 2, 4, and 12 involve reassessment provisions — either the pre-amendment Section 148 regime or the post-amendment Sections 148A(b) and 148A(d) — confirming that reopening of assessments is a frequently used mechanism through which the Revenue revisits Section 10(38) exemption claims that were accepted in the original assessment.
Section 14A disallowance as a parallel front in Section 10(38) litigation. Cases 1 and 11 both engage Section 14A alongside Section 10(38). The Hero Cycles case (Case 11) involves a detailed Rule 8D computation, illustrating that large corporate assessees face Section 14A disallowance disputes in addition to — or independent of — the genuineness challenge faced by individual assessees.
Section 10(38) exemption arising in search-statement and deemed-dividend contexts. Case 5 (Principal CIT vs. M. Kiran Kumar) demonstrates that Section 10(38) can arise alongside Section 132(4) search statements and Section 2(22)(e) deemed-dividend provisions, reflecting the breadth of contexts in which the exemption is contested beyond the typical penny-stock framework.

How to use this compilation

This compilation is a structured entry-point for legal research — not a substitute for reading the full judgment in each case. Every ruling listed above is identified by its ITA number, bench, and date as extracted from the source data; researchers should retrieve the complete order from indiankanoon.org, the official court portal, or a licensed law database before drawing any conclusions about ratio, obiter, or applicability. In particular, where the outcome field reads "Outcome not specified in source," the final operative direction of the order — whether the appeal was allowed, dismissed, or partly allowed — has not been confirmed from the available preview and must be verified against the full text.

Researchers should also check for subsequent developments: an ITAT order may have been challenged before the relevant High Court; a High Court judgment may be under appeal before the Supreme Court; or a stay may have been granted by a superior forum. The dates in this compilation reflect the date of the order at the indexed forum only. Parallel CBDT circulars, instructions, and Finance Act amendments — including the prospective repeal of Section 10(38) with effect from AY 2019-20 and its replacement by the regime under Section 112A — are not reproduced here and should be consulted independently.

When using this index to map litigation trends, note that the cases are sourced across geographically dispersed ITAT benches (Mumbai, Surat, Hyderabad, Jodhpur, Nagpur, Lucknow, Chandigarh, Jabalpur) and two High Courts (Gujarat and Madras). Bench-specific approaches and the weight attributed to particular precedents may vary; a ruling from one ITAT bench is not binding on another bench, and researchers should identify coordinate or superior-court rulings that have been followed or distinguished in the cases relevant to their research query.

Source

All cases listed above are drawn from the TaxNoticeAI structured legal corpus (16,101 Indian tax judgments, CBIC circulars, ITAT rulings, AAR rulings, GSTAT rulings), sourced from indiankanoon.org and official court portals.

Section 10(38) Long-Term Capital Gain Exemption: 12 ITAT and HC Rulings (2025-2026)