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Facts
The assessee, a media conglomerate, appealed against the CIT(A)'s order upholding the AO's disallowance of Rs. 2,13,17,875/- under Section 14A, addition of Rs. 17,46,440/- under Section 43CA, disallowance of foreign exchange fluctuation loss of Rs. 37,64,61,452/-, and disallowance of carry forward of long-term capital loss of Rs. 28,16,96,948/-.
Held
The Tribunal held that the AO failed to record requisite dissatisfaction before invoking Rule 8D for disallowance under Section 14A, thus deleting the addition. It also deleted the addition under Section 43CA as the difference between sale consideration and fair market value was within the 10% tolerance limit. The foreign currency translation difference was directed to be remitted back to the AO for verification. The Tribunal allowed the carry forward of long-term capital loss, distinguishing the case from the AO's reasoning and relying on precedent.
Key Issues
Whether the Assessing Officer properly invoked Rule 8D for disallowance under Section 14A without recording dissatisfaction? Whether addition under Section 43CA is justified when sale consideration is within tolerance limit of fair market value? Whether foreign exchange fluctuation amount is a book entry or taxable gain? Whether long-term capital loss on STT-paid shares can be carried forward?
Sections Cited
14A, 143(3), 250, 43CA, 50C, 10(38), 70(3), 48, 10(35)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, MUMBAI BENCH “B”, MUMBAI
Before: SHRI. NARENDRA KUMAR BILLAIYA & SHRI ANIKESH BANERJEE
O R D E R Per Anikesh Banerjee (JM):
The instant appeals of the assessee were filed against the order of the National Faceless Appeal Centre (NFAC), Delhi [hereinafter called, ‘the Ld.CIT(A)] passed under section 250 of the Income-tax Act, 1961 (in short, ‘the Act’) for the assessment years 2015-16 & 2016-17, date of orders 22/11/2024. The impugned orders emanated from the order of the Learned DCIT, Circle 1(1)(1), Mumbai [ in short, the “Ld. AO”] passed under section 143(3), date of order 30/12/2018 for A.Y. 2015-16 & 27/12/2019 for A.Y. 2016-17.
2 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd 2. Both the appeals have same nature of facts and common issues. Therefore, these appeals were heard together and are disposed of by this common order. is taken as lead case.
3. The grounds raised
by the assessee are extracted below: - No.189/Mum/2025
1. Whether in the facts and circumstances of the case and in law, the Ld. CIT(A) was justified in passing an order without granting any personal hearing to the Appellant?
Whether in the facts and circumstances of the case and in law. the Ld. CIT(A) was justified in upholding the disallowance of Rs. 21,31,87,825- made by the Ld. Assessing Officer ("AO" under Section 14A of the Income Tax Act, 1961 (Act) read with Rule 8D of the Income Tax Rules, 1962 (Rules)?
Whether in the facts and circumstances of the case and in law, the Ld. CTT(A) was justified in invoking Rule 8D of the Rules in the absence of any objective satisfaction recorded by the Assessing Officer, in terms of Section 144(2) of the Act, having regard to the accounts of the Appellant?
4. Whether in the facts and circumstance of the case and in law, the Learned CIT (A) was bound to accept the Appellant's working of disallowance especially in light of the consistent past practice and earlier orders of this Hon'ble Tribunal for prior assessment years upholding such practice of the Appellant and has rendered Section 14A(2) otiose by sustaining disallowance by the leaned AO?
Whether in the facts and circumstances of the case and in law, the Learned CIT(A) was justified in upholding the addition of Rs. 17,46,440/- u/s 43CA being difference of stamp duty value amounting to Rs. 2,07,46,440/- and actual sale consideration amounting to Rs. 1,90,00,000/-?
3 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd 6. Whether in the facts and circumstances of the case and in law, the Learned CIT(A) was justified in upholding the addition of Rs. 37,64,61,452- being the foreign currency translation difference written back to the Statement of Profit and Loss, along with the profit on redemption of preference shares disregarding the fact that the said gain was only a book entry and in the years in which a provision of foreign exchange fluctuation notional loss was debited to Profit & Loss Account, the said loss was added back to income by the Appellant and not claimed as an expenditure?
7. Whether in the facts and circumstances of the case and in law, the Learned CIT (A) was justified in upholding the disallowance of carry forward of Long-Term Capital Loss of Rs. 28,16,96,948/-suffered on sale of shares on which Securities Transaction Tax ("STT") was paid and merely relied on the reasoning recorded by the Learned AO without considering the detailed submissions made by the Appellant?
8. Whether in the facts and circumstances of the case and in law, the Learned CIT(A) was justified in upholding the disallowance of carry forward of Long-Term Capital Loss on the ground that the Long-Term Capital Gain on STT-paid shares is exempted under Section 10(38) of the Act and held that the term "income” appearing in Section 10(38) of the Act includes the term "loss" and thus, Section 10(38) of the Act also covers Long-Term Capital Loss in respect of shares on which STT is paid?
Whether in the facts and circumstance of case and in law, the learned CIT (A) erred in not following binding precedent of this Hon'ble Tribunal in Raptakos Brett & Co Ltd v. DCIT (ITA Nos. 3317/Mum/2009 and 1692/Mum/2010]?
10. Whether in the facts and circumstances of the case and in law, the learned CTT (A) has erred in upholding the findings of the Ld. AO recording purported satisfaction for initiation of penalty proceedings against the Appellant?
The assessee is the flagship company of the ‘Times Group’, India’s largest media conglomerate, with operations spanning across various media platforms
4 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd including print, internet, television, radio, and outdoor media, either directly or through its subsidiaries. The assessee is primarily engaged in the business of publishing and printing newspapers and operating multimedia platforms. The assessee has also invested its own funds and temporary surplus arising from treasury operations in shares, debentures, and mutual funds. During the relevant assessment year, the assessee earned dividend income amounting to Rs.19.73 crores from such investments. Additionally, it reported exempt long-term capital gains of Rs.50.95 crores from the sale of equity shares and earned tax-free interest income of Rs.65.43 crores from tax-free bonds. The aforesaid income was claimed exempt under section 10(35) of the Act. While filing the return of income, the assessee, on a suo motu basis, computed the disallowance of expenditure incurred in relation to the earning of exempt income under section 14A of the Act at Rs.35,01,925/-. However, the Ld. AO did not accept the assessee’s computation and proceeded to determine the disallowance under section 14A read with Rule 8D of the Income Tax Rules, 1963 [in short, the “Rule”] at Rs.2,16,68,975/-. Consequently, after deducting the amount disallowed by the assessee, the balance disallowance of Rs.1,81,67,050/- was added back to the total income. Further, the AO made an addition of Rs.17,46,440/- under section 43CA of the Act on account of sale of immovable property. In addition, the Ld. AO disallowed the claim of deduction of Rs.37,64,61,452/- relating to foreign exchange fluctuation loss on disposal of investment. The assessee had also claimed carry forward of capital loss of Rs.28,16,96,948/- on sale of capital assets, which was similarly disallowed by the Ld. AO. Aggrieved by the assessment order, the assessee preferred an appeal before the Ld. CIT(A). The Ld. CIT(A), however, upheld the order of the Assessing Officer. Being
5 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd dissatisfied with the order of the Ld. CIT(A), the assessee has now filed the present appeal before this Tribunal.
Grounds 1 to 4 related to disallowance under section 14A:
5. The Ld. AR advanced arguments and filed a paper book in two sets, comprising pages 1 to 671, which have been placed on record. The Ld. AR submitted that the assessee had suo motu disallowed an amount of Rs.35,01,925/- towards expenditure incurred in relation to earning exempt dividend income. However, the Ld. AO, without duly considering the assessee’s submissions, rejected the said disallowance and computed the disallowance under Section 14A by applying the average investment method. Consequently, the balance amount of Rs.2,13,17,875/- was added back to the total income. The Ld. AR further contended that the Assessing Officer failed to examine the nexus between the expenditure and the exempt income. It was submitted that up to the AY 2007-08, the assessee had made investments out of its own funds for the purpose of earning exempt income. Therefore, in the absence of any express dissatisfaction recorded by the Assessing Officer with respect to the assessee’s computation, the rejection of the same is unjustified. The Ld. AR further relied upon the decision of the Coordinate Bench of the ITAT, Mumbai Bench “B” in the assessee’s own case for Assessment Years 2012-13 to 2014-15, in to 2168/Mum/2024, order dated 30/09/2024, wherein the Bench made the following observations: 14. In the present case the Appellant had not claimed that no expenses were incurred for earning exempt income. To the contrary, the Appellant had made suo-moto disallowance under Section 6 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd 14A of the Act and had furnished the computation and the basis of making such computation during the assessment proceedings. The Appellant disallowed the Securities Transaction Tax Expenses of INR 1,26,808/- as expenses directly connected to earning of exempt income. In addition, the Appellant had claimed that only common expenses aggregating to INR 86,88,906/- could be said to have been incurred for earning both exempt and taxable income; and in respect of the same the quantum of disallowance under Section 14A was computed at INR.4,16,898/- on proportionate basis (Exempt Income/Total Revenue). While rejecting the suo-moto disallowance made by the Appellant under Section 14A of the Act, the Assessing Officer neither made reference to nor alluded to either the accounts of the Appellant or the expenditure debited by the Appellant to the Profit & Loss Account for the relevant previous year. On perusal of paragraph 3.3 to 3.7 of the Assessment Order, we find merit in the contention advanced on behalf of the Appellant that the Assessing Officer has failed to record requisite dissatisfaction before invoking Rule 8D of IT Rules. During the course of hearing it was contended on behalf of the Revenue that the Assessing Officer has recorded that the voluntary disallowance computed by the Appellant was not as per provision of Rule 8D of the IT Rules and the same constituted requisite satisfaction. We note that the aforesaid contention of the Revenue was rejected by the Hon’ble Bombay High Court in the case of Principal Commissioner of Income Tax-2 Vs. Bombay Stock Exchange Ltd: [2020] 113 taxmann.com 303 (Bombay)[15-10-2019] holding as under: “9. We note that it is evident from the extracted part of the assessment order referred to hereinabove that the Assessing Officer has come to the conclusion that the disallowance claimed by the Respondent was not consistent with Rule 8D of the said Rules. It is only in view of the disallowances not being worked out as per Rule 8D of the Rules, that the Assessing Officer is not satisfied with the disallowance offered by the Respondent. This, to our mind, is putting the cart before the horse. The Assessing Officer must first record a conclusion that having regard to the accounts of the assessee, he is not satisfied with the disallowance offered by the Respondent in terms of section 14A(2) of the Act. It only on being dissatisfied with the above, does Rule 8D of the Rules can be invoked to compute the disallowance. xx xx 11. Non-satisfaction with the disallowance offered by the assessee has to be arrived at on the basis of the accounts submitted by the assessee. In this case, the Assessing Officer had not carried out the aforesaid exercise but rejected the disallowance claimed by the 7 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd assessee only on the ground that it was not in accordance with Rule 8D of the Rules. The application of Rule 8D of the Rules would only arise once the Assessing Officer is not satisfied on an objective criteria in the context of its accounts, that suo motu disallowance claimed by the assessee is not proper.
12. In fact, the Supreme Court in the case of Maxopp Investment Ltd. v. CIT [2018] 91 taxmann.com 154/254 Taxman 325/402 ITR 640 while upholding the view of the Delhi High Court has held that the Assessing Officer needs to record his nonsatisfaction having regard to the sou motu disallowances claimed by the assessee in the context of its accounts. It is only thereafter, the occasion to apply rule 8D of the Rules for apportionment of expenses can arise 13. In the present facts, the Tribunal has correctly come to the conclusion that non- satisfaction as recorded by the Assessing Officer for rejecting the sou motu disallowances claimed by the assessee is not done as required under section 14A(2) of the Act. On facts, the view taken by the Tribunal is a possible view and calls for no interference.
14. In the above view, the question as proposed does not give rise to any substantial question of law. Thus, not entertained.
15. Accordingly, appeal is dismissed.” (Emphasis Supplied)
15. In view of the above, we hold that the Assessing Officer has failed to record requisite dissatisfaction in terms of Section 14A(2) of the Act before invoking the provisions contained in Rule 8D of the IT Rules. Therefore, the additional disallowance of INR.1,43,83,306/- made by the Assessing Officer as per Section 14A of the Act read with Rule 8D of the IT Rules cannot be sustained and is, therefore, deleted. Thus, Ground No. 2.1, 2.2 and 2.5 raised by the Appellant are allowed while Ground 2.3, 2.4 and 3 are dismissed as being infructuous.”
The Ld. DR relied solely on the orders of the revenue authorities and was respectfully relied on the order of the Hon’ble Gujrat High Court in the case of Devarsons Industries (P) Ltd. vs. ACIT(OSD) [2017] 84 taxmann.com 244 (Gujrat) held that Where Assessing Officer gave detailed reasons for making disallowance under section 14A in respect of exempt dividend income and LTCG earned by assessee discarding assessee's theory that to earn assessable income assessee incurred no expenditure whatsoever, mere fact that Assessing Officer did not arrive
8 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd at satisfaction in a particular manner while making said disallowance, would not per se destroy mandate of section 14A.
We have heard the rival submissions and perused the material available on record. The observations of the Ld. AO in the assessment order regarding the disallowance under Section 14A are extracted hereinbelow: – “7. Disallowance u/s 14A of Income Tax ACT, 1961: During assessment proceedings, following facts are observed:
a. Assessee has suo moto disallowed Rs. 35,01,925/- on ad hoc basis u/s 14A of the Act. b. Assessee has investments in equity shares, mutual funds, preference shares etc. which result in exempt income. c. Assessee has earned exempt income of Rs. 77,22,31,621/- (dividend and exempt LTCG) during AY 2015-16. d. Making and maintaining exempt income yielding investments has some administrative cost which has not been calculated by assessee In line with rule 8D of Income Tax Rules. e. Hence, I am satisfied that disallowance made by assessee is not just in this case and provisions of section 14A r.w.r BD should be attracted in this case. Calculation of average investment Investment As on 31-03-2015 (in As on 31-03-2014 Remark crore) Equity shares – 167.20 167.20 Investments which subsidiaries are capable of Equity shares – 1248.27 1295.15 yielding exempt income but have not Other investments yielded any exempt Investment in venture 26.52 26.74 income during year capital fund / trust under consideration Tax free bonds 104.39 50.59 are also to be Equity shares – 730.37 740.32 considered for subsidiaries
9 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd Equity shares – 651.52 650.16 disallowance u/s 14A others of IT Act, 1961 in view Equity shares – 60.0 36.5 of circular no.5 of 2014 dated 11-02- Joint venture 2014 of the Board. Equity shares – 10.33 8.72 Associates Equity warrants – 188.53 145.91 others Preferential shares – 1240.00 634.65 Subsidiaries Preference shares – others Total 4507.4 4260.19 Average 4333.795 Calculation of 14A disallowance 1 Direct expenses attributable 2 Interest claimed (A) average investments (B) / average of total assets (C) i.e. A*B/C 3 0.5% Of the average investments 2,16,68,975 4333.795&.5/100 Total 2,16,68,975 Since the assessee has already disallowed, Rs.35,01,925/-, a further addition of Rs.21,31,87,825/- is made in the total income returned by assesse. Total disallowance (Normal Provisions of MAT) = Rs.21,31,87,825/-.“
We find that the assessee had suo motu disallowed the expenditure incurred in relation to earning exempt income under Section 14A of the Act. Upon perusal of the impugned assessment order and in view of the decision of the Coordinate Bench in the assessee’s own case, we observe that the Ld. AO has not recorded any dissatisfaction with the assessee’s computation before proceeding to invoke Rule
10 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd 8D of the Rule. In the absence of such satisfaction, the disallowance made by the Ld. AO is not sustainable. Ld. DR relied on the order of Hon’ble Gujrat High Court is factually distinguishable. Respectfully following the decision of the Coordinate Bench in the assessee’s own case, we direct the deletion of the addition of Rs.21,31,87,825/-.
Resultantly, grounds no. 1 to 4 raised by the assessee are allowed.
Ground- 5 addition U/s 43CA of the Act
The Ld. AR submitted that during the impugned assessment year, the assessee had disposed of several immovable properties, and the resultant income was duly offered to tax under the head "Capital Gains". In connection with such transactions, the statutory auditor, in Form 3CD, has recorded specific remarks to the effect that the sale consideration received by the assessee was lower than the fair market value as adopted by the State Government or local authority, thereby attracting the provisions of Section 43CA or Section 50C of the Act. A specific observation to this effect was made by the assessee’s Chartered Accountant in the Tax Audit Report under Point No. 17, which pertains to the following details and is reproduced below: – “17. Where any land or building or both is transferred during the previous year for a consideration less than value adopted or assessed or assessable by any authority of a state government referred to in section 43CA or 50C, please furnish;”
11 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd 9. On this issue, the revenue has considered that the assessee has sold the property under the head “Income from business or profession”. The assesse sold the properties amount to Rs.1.90 crore whereas the fair market value of both these units is R.2,07,46,440/-. Since this column is utilized by the Auditor, the difference of sale price and the fair market value adopted by the State Government amount to Rs.17,46,440/- was added back for contravening provisions of section 43CA of the Act.
The Ld.DR argued and fully relied on the order of revenue authorities.
In our considered view, it is evident that the assessee is neither a builder nor a trader in real estate. The assessee has offered the gains or losses arising from the sale of immovable properties under the provisions of Section 50C and Section 43CA of the Act. Column No. 17 of Form 3CD is specifically designated for the disclosure of any difference between the sale consideration and the fair market value, with express reference to Sections 43CA and 50C. Therefore, we do not find any instance of misrepresentation on the part of the assessee’s Chartered Accountant in the Tax Audit Report. Further, the assessee has placed reliance on the decision of the Coordinate Bench of the ITAT, Mumbai, in the case of John Flower India Ltd. v. DCIT, order dated 25/01/2017, wherein it was held that where the difference between the value adopted by the stamp valuation authority and the actual sale consideration is within the permissible tolerance limit of 10% of the stamp duty value, no addition under Section 50C is warranted.
12 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd In the present case, we find that the assessee had declared a sale consideration of Rs.1.90 crores, and the differential amount was Rs.17,46,440/-, which is well within the 10% tolerance threshold. Accordingly, the ratio laid down in the case of John Flower India Ltd. (supra) is squarely applicable to the facts of the present case. In view of the above, the observation of the Ld. CIT(A) is set aside, and the addition of Rs.17,46,440/- is hereby deleted. As a result, ground no. 5 raised by the assessee stands allowed.
Ground 6, addition of Rs. 37,64,61,452- being the foreign currency translation difference.
The Ld.AR argued and stated that the assessee reduced the amount of Rs.37,64,61,452/- from computation representing foreign exchange fluctuation on disposal of investments. In this regard, the Ld.AR invited our attention to APB pages 564 where the assessee submitted the details to the Ld.AO by a letter dated 17/12/2018. The relevant submission is reproduced as below:- “Point No. 3 At the very outset we respectfully submit that the amount of Rs 37.64.61.452 does not represent gain on foreign exchange fluctuation on disposal of investment. We give below the background of the said amount from which it can be seen that the sum of Rs 37.64.61.452 was only a book entry made as required by the Accounting Standard AS-11, Times Infotainment Media Ltd. (TIML), the erstwhile wholly owned subsidiary of the company (which has since merged with the Company w.e.f. 01.04.2013 pursuant to orders of the High Court) had funded its overseas subsidiary TIML Global Ltd. in foreign currency in the year ended 31.03.2009 to acquire radio business in the UK. This being in foreign currency, it was recorded in 13 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd the books of account of TIML at the exchange rate prevailing on the date of the transaction, in accordance with the Indian Accounting Standard on The Effects of Changes in Foreign Exchange Rates (AS-11). In the FY 2008-09-10 2010-11 the said Accounting Standard required monetary items denominated in foreign currency as at the Balance Sheet date to be translated at exchange rates prevailing on that day. The Accounting Standard also permitted the exchange differences (both losses and gains) on such translation, in respect of Long Term Foreign Currency monetary items to be carried to a Long Term Foreign Currency Translation Reserve in the Balance Sheet. The amount carried to the Long Term Foreign Currency Translation Reserve was to be amortized over a period in the Statement of Profit and Loss in accordance with AS-11. The preference shares held by erstwhile TIML in its overseas subsidiary being a Long Term Foreign Currency monetary item, the exchange differences that arose on translation of the said preference shares were taken by TIML to Long Term Foreign Currency Translation Reserve in FY 2011-12 to FY 2014-15 and amortized over a period in the Statement of Profit and Loss The Exchange Differences amortized (debited) to the Statement of Profit and Loss by TIMI was added hack to its income while filing its return of income in FY 2008-09 to F Y 2010-11 (AY 2009- 10 to AY 2011-12). Similarly, the exchange differences amortized (credited) to the Statement of Profit and Loss was reduced from its income by TIML while filing its return of income for FY 2011- 12 and FY 2014-15 (AY 2012-13 to AY 2015-16)
Year-wise treatment of the amortization of gain/(loss) on foreign currency translation in the income tax returns of TIML are summarized in Annexure 1.
Copies of assessment orders and/or computation of total income in the case of TIML reflecting the aforesaid adjustment for the respective years is enclosed vide Annexure 2 to 10 for your reference. In the circumstances, it may be noted that the amounts debited to the Statement of Profit and Loss were not claimed as deductions neither was the amount credited to the Statement of Profit and Loss included in the income of TIML.
14 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd On 1 April 2014 the balance lying in the Long Term Foreign Currency Translation Reserve Account as per Balance Sheet of TIML was Rs 34,08,63,292. This amount represented the unamortized exchange difference arising consequent to the translation of the said preference shares at the year end exchange rates prevailing in the FY 2008-09 to FY 2013-14. During the year ended March 31, 2015, the Preference Shares held by TIML were redeemed by the overseas subsidiary and Rs 214,32,64,000 was received on such redemption. The cost of acquisition of the preference shares as per books of TIML was Rs 210,76,65,840. This resulted in a profit on redemption of preference shares of Rs 355,98,160 (Rs 214,32,64,000-Rs 210,76,65,840) that was reflected in the Statement of Profit and Loss of erstwhile TIML. However, the preference shares being capital asset and having been allotted in FY 2011-12, were long term capital assets eligible for indexation benefit under the proviso to Section 48, of the Income Tax Act, 1961( the Act). Consequently, based on the cost inflation index prescribed, the indexed cost of acquisition was arrived at GBP 2,76,54,522, working of which has been submitted vide our letter dated 4th September 2018 in Annexure 5. Accordingly, long term capital loss on this redemption has been carried forward.
Since the preference shares had been redeemed, the opening balance of Rs 34,08,63,292 lying on 1" April 2014 in the Long Term Foreign Currency Translation Reserve was written back to the Statement of Profit & Loss, in the financial year ended 31 March 2015, relevant to A Y 2015-16. As this sum represented the unamortized exchange difference arising consequent to the translation of the said preference shares at year end exchange rates prevailing in FY 2008-09 to FY 2013-14, it was not consideration on redemption of the preference shares, and hence not includible in computing the long term capital loss on redemption of the preference shares. Section 48 of the Act only provides for the "full value of consideration received" on the transfer of a capital asset to be considered in computing the long term capital gain/ loss. The sum of Rs 34,08,63,292 was only a book entry made in compliance with the Accounting Standard AS-11. Therefore the sum of Rs 34,08,63,292 being the translation difference written back to the Statement of Profit and Loss, along with the profit on redemption of preference shares of Rs 3,55,98,160, both
15 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd aggregating Rs 37,64,61,452 (Rs 34,08,63,292 + Rs 3,55,98,160) were rightly reduced in computing the income while filing the return of income for A Y 2015-16. In the circumstances the claim of the company is in order and may be accepted.”
The Ld.DR argued and fully relied on the order of the revenue authorities.
We have heard the rival submissions and perused the material available on record. It is noted that, as on 01/04/2014, the assessee was maintaining a balance in long-term foreign currency. As per the balance sheet of TIML, the said balance stood at Rs.34,08,63,292/-. This amount represented the unamortised exchange difference arising on account of the translation of preference shares at the year- end exchange rates prevailing during the financial years 2008–09 to 2013–14. During the year ended 31/03/2015, the preference shares held by TIML were redeemed by its overseas subsidiary, and a sum of Rs.214,32,64,000/- was received upon such redemption. The cost of acquisition of these preference shares, as recorded in the books of TIML, was Rs.210,76,65,840/-. Consequently, this resulted in a profit of Rs.3,565,98,160/- (Rs.214,32,64,000/- – Rs.210,76,65,840/-), which was duly reflected in the Statement of Profit & Loss of the erstwhile TIML. The sum of Rs.34,08,63,292/- was merely a book entry made in compliance with Accounting Standard (AS-11). We find that these details were not duly examined by the Ld. AO during the assessment proceedings, and the Ld. CIT(A) also did not clarify the factual position as contended by the assessee. Accordingly, we remit the matter back to the file of the Ld. AO for verification of the said accounts as claimed by the assessee, after affording the assessee a reasonable opportunity of being heard.
16 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd In the result, ground no. 6 of the assessee’s appeal is allowed for statistical purposes. Ground 7 to 9, C/f long term capital loss.
The assessee claimed carry forward loss on sale of long term capital asset and the loss was amount to Rs.28,16,96,948/- on which the STT has been paid. The Ld.AR argued that the said loss was claimed for carry forward to next year but the Ld.AO had rejected the same. The Ld.AR invited our attention to impugned appellate order paras 4.9.2 to 4.9.4, which are reproduced below:- “4.9.2 In the previous year relevant to A.Y 2016-17, the Appellant company had made a long term capital loss of Rs. 28,16,96,948/- on which STT has been paid and earned during the year. During Assessment proceedings the AO has denied the claim made by the appellant due to this is exempt income and not allowed to be carried forward. The AO has also mentioned in Assessment order that in assessment order for AY 2013-14 an amount of Rs. 24,89,53,716/-, in assessment order for AY 2014-15 an amount of Rs. 38.47,10,676/- and in assessment order for AY 2015-16 an amount of Rs. 28,16,96,948/- were denied to carry forward by Assessing Officer.
4.9.3 The Hon'ble ITAT Mumbai, in the decision relied upon by the Appellant Company, In the case of Raptakos Brett & Co. Ltd. v. The DCIT Cen. Cir 46, Mumbai (ITA Nos. 3317/Mum/2009), "D" Bench of Hon'ble Mumbai Income Tax Appellate Tribunal vide its order dated 10th June 2015 on identical facts held as follows:
“Thus, in our conclusion, we hold that section 10(38) excludes in expressed terms only the Income arising from transfer of long-term capital asset being equity share or equity fund which is chargeable to STT and not entire source of income from capital gains arising from transfer of shares. It does not lead to exclusion of computation of capital gain of long-term capital asset or Short term capital asset being shares. Accordingly, Long term capital loss on sale of shares would be allowed to be set off against long term capital gain on sale of land in accordance with section 70(3)"
17 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd 4.9.4 The appellant company stated that this decision relied upon the appellant case for this year and to be allowed the same. It is mentioned here that the above decision relied on the sale of listed securities on the stock exchange and on the redemption of units of mutual funds, on both of which STT has been paid by the appellant company. Since the appellant company after years be used to set off against long term capital gains even on sale of movable or immovable properties and it would not be possible for AO to verify such action of the appellant company. Therefore, disallowance made by the AO on account of long term capital loss is held to be valid.”
The Ld. DR argued and stands in favour of the order of revenue authorities.
We have considered the rival submissions and perused the orders of the authorities below, along with the judicial precedent relied upon. The assessee claimed carry forward of long-term capital loss of Rs.28,16,96,948/- arising on the sale of listed securities on which STT had been paid. The Ld. AO disallowed the claim on the ground that such income is exempt under section 10(38) of the Act and, therefore, the corresponding loss is not eligible to be carried forward. The Ld. CIT(A), after examining the facts in detail and considering the decision of the Hon’ble ITAT, Mumbai in Raptakos Brett & Co. Ltd. v. DCIT (ITA No. 3317/Mum/2009, order dated 10.06.2015), observed that section 10(38) excludes only the income arising from the transfer of a long-term capital asset, being equity shares or units, where such transfer is chargeable to STT, and does not exclude the computation of capital gains or losses altogether. The CIT(A) further noted that the said judicial view permits the set-off of such long-term capital loss against other long-term capital gains in accordance with section 70(3) of the Act. However, in the present case, the CIT(A) held that allowing such carry forward could lead to future set-off against unrelated long-term capital gains on movable or immovable property, and that the Ld. AO would not be in a position to verify the 18 ITA 189 & 190/Mum /2025 Bennet Coleman & Co. Ltd same in subsequent years. In these circumstances, the Ld. CIT(A) upheld the disallowance made by the Ld. AO. We find that the Ld. CIT(A) has rendered a reasoned and well-founded decision after considering both the facts and the applicable legal position. No infirmity has been pointed out in the findings of the Ld. CIT(A) warranting interference. Accordingly, we uphold the order of the Ld. CIT(A) and dismiss the ground raised
by the assessee. In the result, this ground-7 of appeal is dismissed.
18. In the result, grounds 7 to 9 raised by the assesse are dismissed.
(A.Y. 2016-17) 19. All the grounds raised by the assessee in this appeal are identical to grounds raised for A.Y. 2015-16; therefore, the decisions arrived at against the grounds raised in appeal for A.Y. 2015-16, shall apply mutantis mutandis to the grounds in appeal for A.Y. 2016-17 also.