PAN EMAMI COSMED LIMITED,KOLKATA vs. DCIT,CPC, BANGALORE, BANGALORE

order

: November 7th, 2023 ORDER

Per Rajesh Kumar, Accountant Member:

is against the order of Ld. CIT(A) upholding the order passed by the AO thereby not allowing long term capital gain on sale of shares being exempt u/s 10(38) of the Act by Ld. CIT(A).

3. The facts in brief are that the assessee filed the return of income during the year on 09.10.2018 by claiming a loss on sale of equity shares of Rs. 2,66,49,388/- as exempt. However, while processing the return the said loss was not allowed and added to the income of the assessee by stating that by computing the income this has been reduced from the business income but has not been added as income from LTCG/other sources. It is pertinent to note that intimation u/s 143(1) of the Act was passed and the adjustment was made without giving any opportunity to the assessee. Rectification moved thereafter was also rejected summarily. Ld. CIT(A) without appreciating the facts in correct perspective directed the AO to verify genuineness of the loss claimed by the assessee and allow the same to be set off against the income from business and capital gain in accordance with law.

4. After hearing the rival contentions and perusing the material on record, we find that the assessee has genuinely effected the purchase and sale of shares on which it had earned LTCG of Rs. 2,66,49,388/- which was rightly claimed as exempt u/s 10(38) of the Act. Since the said gain was credited in the profit and loss account while computing the income, the same was reduced from Page 2 of 4 I.T.A. No.: 874/KOL/2023 Assessment Year: 2018-19 Pan Emami Cosmed Limited (Since merged with Midkot Investments Private Limited). profits in statement of total income and the correct income was filed by the assessee and the LTCG was claimed exempt accordingly. In our opinion, the AO has wrongly computed the income from business and profession at Rs. 58,67,024/- instead of loss of Rs. 2,00,50,550/- as filed in the return of income by the assessee. In our opinion, the issue needs to be examined at the level of the AO as this involves the verification of facts and issues concerning the business income and loss on sale of shares. Accordingly, we restore this issue to the file of the AO with the direction to examine the same and allow the exemption u/s 10(38) of the Act in respect of LTCG and also allow the loss resulting from the instant year to be carried forward to the subsequent years. We, therefore set aside the order of Ld. CIT(A) and allow the appeal of the assessee.