Neutral impactCorporate Action
Tax on share profits: When can Income Tax reject your LTCG claim? Mumbai ITAT’s ₹85 lakh ruling explained
Mint 1 hr ago·1 Sept 2026, 3:40 am
The Mumbai Income Tax Appellate Tribunal (ITAT) recently ruled that the tax department cannot automatically reject a Long-Term Capital Gains (LTCG) claim if the underlying shares were purchased using foreign currency. The tribunal upheld a ₹85.35 lakh tax exemption for an investor, finding that the Income Tax Department failed to provide sufficient evidence to prove the funds were unexplained.
This decision is significant for retail investors who trade in foreign stocks. It clarifies that simply holding foreign shares does not make the gains suspicious. The ruling emphasizes that the tax authority must prove the money used to buy the shares was illicit, rather than assuming it was.
Investors should monitor how the tax department responds to this judgment. This ruling sets a precedent that could make it harder for authorities to challenge legitimate foreign investments. It highlights the importance of maintaining clear records of foreign exchange transactions to defend against future tax disputes.
Excerpt from Mint
The Mumbai ITAT has ruled in favour of an investor whose ₹ 85.35 lakh long-term capital gains (LTCG) from Sunrise Asian shares were treated as unexplained income by the tax department. The Mumbai bench of the Income Tax Appellate Tribunal (ITAT) has deleted a ₹ 85.35 lakh addition made against a taxpayer who claimed…Read the original at Mint
Key takeaways
- Category: Corporate Action.
- Assessed as a significant, market-relevant update.
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A meaningful update worth tracking. Use the price and stock snapshot to gauge how the market is responding.
