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Income Tax Appellate Tribunal, “A” BENCH, MUMBAI
Before: SHRI PRASHANT MAHARISHI, AM
All these three appeals are filed by the assessee against the appellate order passed by the Commissioner of Income-tax (Appeals)-49, Mumbai [the learned CIT (A)] dated 26th May, 2023, for A.Y. 2013-14, 2014-15 and 2015-16, wherein the appeal filed by the assessee against the assessment orders passed by the Asst. Commissioner of Income Tax, Central Circle 7(1) (the learned Assessing Officer) under Section 153A of the Income-tax Act, 1961 (the Act), was dismissed.
[1] Disallowance under Section 14A of the Actin normal computation of income and in computation of book profit u/s 115 JB of the Act
[2] Disallowance of carried forward loss on long-term capital gain, gain of which is exempt under Section 10(38) of the Act denied by the lower authorities.
On the first issue of disallowance u/s 14A in normal computation assessee’s claim is to restrict disallowance to the extent of expenses incurred and further book profit cannot be increased by the disallowance u/s 14 A of the Act .
The claim of Ld DR is that there is no provision of restricting disallowance to the extent of income earned or expenses incurred. In book profit he referred that section 115JB has specific clause of addition of such expenses
On the issue of long term capital loss on sale of shares gain of which is exempt u/s 10 (38) of the Act, he submits reliance on the decision of the coordinate bench in case of Raptakos Brett & Co. Ltd. Mumbai in / Mum / 2009 & 1692 / Mum / 2010 dated 10/06/2015 and several other decisions of DCIT, Central Circle - 2 (3 ) vs. Avinash Nivrutti Bhosale and Ors . ( 11 . 01 . 2022 - ITAT Mumbai )
Before us, the assessee has raised ground that in case of concluded assessment, the addition can be made only if there is any incriminating material found during the course of search belonging to that assessment year. He submits that this ground is not raised before the lower authorities and therefore, raised before the Tribunal. This is a legal ground, which can be raised at any time during the course of proceedings.
The learned CIT Departmental Representative vehemently objected and stated that this ground has not been raised before the lower authorities and therefore, should not be admitted.
We have carefully considered the rival contentions and find that the assessee has raised additional ground stating that in absence of any incriminating material found during the course of search in case of concluded assessment which shall not abate and therefore, in absence of any such material, no addition could have been made. We find that this is legal ground, which can be raised at any time during the course of appellate proceedings. Further, it is also admittedly a jurisdictional issue, as the date of search and the date of filing of the return of income as well as picking up those returns for all these assessment years for scrutiny are evident from the assessment order itself. Therefore, there is no fresh investigation of the facts
On hearing both the parties and on the merits of the additional ground and on looking at the assessment order and the order of the learned CIT (A), we find that search was conducted on 17th April, 2018, but with respect to the above two additions/ adjustments, i.e. disallowance under Section 14A and not allowing carried forward of the long term capital loss under Section 10(38) of the Act, were not based on any incriminating material found during the course of search but as such on the appreciation of the return of income originally filed by the assessee. Thus, admittedly as aggrieved by both the parties that there is no incriminating material with respect to both the above additions which are contested by the assessee. This issue has been decided by the Hon'ble Supreme Court in case of Abhisar Buildwell P. Ltd. that in absence of incriminating material, return of income of the assessee cannot result into any addition if the assessment is not pending on the date of search. The assessment order itself shows that the assessment is not pending in any of the three assessment years as on the date of search.
As all these three assessment years are concluded assessment year, there is no incriminating material found during the course of search with respect to both addition/ disallowance made, therefore, as held by the Hon'ble Supreme Court in case of Abhisar Buildwell P. Ltd., we
In the result, all these three appeals filed by the assessee are allowed.
Order pronounced in the open court on 17.11.2023.