MISRILALL MINES PVT. LTD.,KOLKATA vs. PCIT-2 , KOLKATA
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Income Tax Appellate Tribunal, “C” BENCH: KOLKATA
Before: Shri Rajesh Kumar & Shri Sonjoy Sarma]
आयकर अपील�य अ�धकरण, कोलकाता पीठ ‘‘सी’’, कोलकाता IN THE INCOME TAX APPELLATE TRIBUNAL “C” BENCH: KOLKATA �ी राजेश कुमार, लेखा सद�य एवं �ी संजय शमा� �या�यक सद�यके सम� [Before Shri Rajesh Kumar, Accountant Member & Shri Sonjoy Sarma, Judicial Member] I.T.A. No. 259/Kol/2022 Assessment Year: 2017-18 Misrilall Mines Pvt. Ltd. Vs. PCIT, Kolkata-2, Kolkata (PAN: AABCM 9928 P) Appellant / (अपीलाथ�) Respondent / ( !यथ�)
Date of Hearing / सुनवाई 28.03.2023 क$ �त&थ Date of Pronouncement/ 28.03.2023 आदेश उ)घोषणा क$ �त&थ For the Appellant/ Shri A.K. Tibrewal, FCA Shri Amit Agarwal, Advocate �नधा�/रती क$ ओर से For the Respondent/ Shri Subhrajyoti Bhattacharjee, CITDR राज�व क$ ओर से
ORDER / आदेश Per Rajesh Kumar, AM: This is an appeal preferred by the assessee against the order of the Ld. Principal Commissioner of Income Tax Kolkata-2, Kolkata (hereinafter referred to as the Ld. PCIT”] dated 29.03.2022 for the AY 2017-18.
Issue raised by the assessee is against the invalid exercise of jurisdiction u/s 263 of the Act and wrong order u/s 263 of the Act by the Ld. PCIT thereby wrongly setting aside the assessment framed u/s 143(3) of the Act dated 01.05.2019.
Facts in brief are that the Ld. PCIT observed that from the assessment records that the AO has wrongly allowed the setting off of long term capital loss on mutual fund (STT paid) against the long term capital gain on mutual fund (non-STT paid) and wrongly allowed the unabsorbed balance loss to be carried forward for future set off. According to Ld. PCIT, the loss on which STT was paid could not be adjusted
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against the long term capital gain on mutual fund (non-STT paid) in view of the provisions of Section 10(38) of the Act as the long term capital loss (STT paid ) is a negative income. Accordingly the Ld. PCIT issued show cause notice u/s 263 of the Act and after taking into account the reply to the show cause notice passed an order u/s 263 of the Act dated 29.03.2022 setting aside the assessment order and directing the AO to frame the assessment afresh after taking into consideration the observations as made in the order passed u/s 263 and after affording a reasonable opportunity of hearing to the assessee.
The Ld. Counsel for the assessee submitted that going into the merit of the case, the issue on which the ld PCIT has set aside and cancelled the assessment is highly debatable. The ld AR argued that it is settled law that revisionary jurisdiction u/s 263 of the Act is not available to the ld PCIT in the case of debatable issue. The Ld. A.R stated that there are several decisions of various judicial forums in favour of the assessee in which the long term loss on sale of securities on which STT is paid was allowed to be set off against the long term capital gain on securities on which no STT was paid or arising from other assets other assets. The Ld. A.R referred to a series of decisions namely M/s United Investments vs. ACT in ITA No. 511/Kol/2017 dated 01.07.2019, DCIT vs. Shri Avinash N. Bhosle in ITA No. 1436/Mum/2020 dated 05.07.2022, Raptakos Brett & Co. Ltd. vs. DCIT in [2015[ 58 taxmann.com 115 (Mum-Trib) dated 10.06.2015 and M/s Rare Investments vs. CIT in ITA No. 3409/Mum/2018 dated 11.09.2019. The Ld. A.R also referred to the decision of Hon’ble Gujarat High Court in the case of Kishorebhai Bhikhabhai Virani vs. ACIT in [2015] 55 taxmann.com 91 (Guj) dated 13.01.2014 wherein the Hon’ble High Court has taken a view against the assessee. The Ld. A.R also pointed out that the said decision of the Hon’ble High Court has been considered in the two decisions by the Tribunal as referred to above namely Raptakos Brett & Co. Ltd. vs. DCIT (supra) and M/s Rare Investments vs. CIT (supra) and after considering the decision of the High Court, the issue was decided in favour of the assessee. The Ld. A.R therefore submitted that the issue is highly debatable as the AO has taken a view in favour of
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the assessee when the decisions are available both in favour of the assessee and against the assessee. The Ld. A.R also relied on the decisions of the Hon’ble Apex Court in the case of Malabar Industrial Co Ltd.Vs CIT (2000)243 ITR 86(SC) and CIT Vs Max India Ltd (2007)295 ITR 282(SC) to defend his arguments that on debatable issue revisionary jurisdiction u/s 263 of the Act is not available. The ld AR further argued that Hon’ble Delhi High Court in the case of CIT vs. Sunil Lamba in ITA 465/2003 dated 20.03.2019after considering the above two decisions of the Honble Apex Court has held that the jurisdiction u/s 263 of the Act is not available in respect of debatable issue in question no. 2 at page no. 11 of the said decision. The Ld. A.R finally prayed that the order of Ld. PCIT may kindly be quashed in view of the above legal proposition.
The Ld. D.R strongly relied on the order of Ld. PCIT by submitting that on merit the issue is clearly against the assessee in view of the amendment made in Section 263 of the Act w.e.f 01.06.2015 without going into the legal issue and prayed that the appeal of the assessee may kindly be dismissed.
After hearing the rival contentions and perusing the material on record, we find that the issue raised before before us is whether long term capital loss on securities (STT paid) can be adjusted against the non-STT paid long term capital gain resulting from securities or other assets and whether the carrying forward of such loss is admissible. We have perused the various decisions cited before us by the Counsel of the assessee namely M/s United Investments vs. ACIT , DCIT vs. Shri Avinash N. Bhosle, Raptakos Brett & Co. Ltd. vs. DCIT and M/s Rare Investments vs. CIT as as referred to before us by the ld AR which have been decided in favour of the assesse on merits. We have also perused the decision by Hon’ble Gujarat High Court in the case of Kishorebhai Bhikhabai Virani (supra) which has decided the issue against the assesse meaning thereby that there are two views possible on the above issue. Thus we find merit in the arguments of ld AR that AO has taken one of the tow possible view while framing the assessment u/s 143(3) dated 1.5.2019 accepting the claim of
4 I.T.A. No. 259/Kol/2022 Assessment Year: 2017-18 Misrilall Mines Pvt. Ltd. the assessee in which the long term capital loss (STT paid) has been allowed to be set off and carried forward for future set off. In our considered view, the issue is debatable one and therefore jurisdiction u/s 263 of the Act is not available to the ld PCIT in the case of debatable issue. We also note that the above decision of Hon’ble Gujarat High Court in the case of Kishorebhai Bhikhabai Virani (supra) has been referred to by the Co-ordinate Benches namely Raptakos Brett & Co. Ltd. vs. DCIT (supra) and M/s Rare Investments vs. CIT (supra) and after considering the same, the issue was decided in favour of the assessee. On the issue of non-availability of jurisdiction u/s 263 in case of debatable issue, we find support from the decision of Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd. vs. CIT (Supra) wherein it has been held that jurisdiction u/s 263 of the Act cannot be assumed in respect of a debatable issue which is reiterated in the case of CIT vs. Max India Ltd. (Supra). The case is also supported by the decision of Hon’ble Delhi High Court in Sunil Lamba (supra) where the Hon’ble Court after referring to the two decisions of the Hon’ble Apex Court in the case of Malabar Industrial Co. Ltd. (supra) and Max India Ltd. (supra) quashed the order passed u/s 263 of the Act on the ground that the issue is debatable one and ld PCIT has no jurisdiction. We therefore respectfully following the above decisions hold that the jurisdiction u/s 263 of the Act has been invalidly exercised by the Ld. PCIT . Consequently order passed u/s 263 of the Act is also wrong and nullity and accordingly the same is quashed.
In the result, the appeal of the assessee is allowed.
Order is pronounced in the open court on 28th March, 2023
Sd/- Sd/- (Sonjoy Sarma /संजय शमा�) (Rajesh Kumar/राजेश कुमार) Judicial Member/�या�यक सद�य Accountant Member/लेखा सद�य
Dated: 28th March, 2023 SB, Sr. PS
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Copy of the order forwarded to:
Appellant- Misrilall Mines Pvt. Ltd., Mineral House, 27A, Camac Street, Kolkata-700016 2. Respondent – PCIT, Kolkata-2, Kolkata 3. DR, Kolkata Benches, Kolkata (sent through e-mail)
