THE JT.COMMISSIONER OF INCOME TAX (OSD)(IT) CIRCLE 3(3) (2), MUMBAI vs. M/S. PUBLIC EMPLOYEES RETIREMENT SYSTEM OF OHIO, MUMBAI

This appeal is filed by the Jt. Commissioner of Income–tax (OSD), International Taxation, (the learned Assessing Officer) Circle 3(2)(2), Mumbai against the appellate order of the Commissioner of Income Tax– 57, Mumbai [the learned CIT(A)] dated 10th March, 2022 for A.Y. 2015–16, raising solitary ground of appeal that appellate order is erroneous in allowing the carry forward of short term capital loss of ₹6,66,454/–, wherein the assessee was

The learned Assessing Officer found that assessee has incurred a loss under the head Short Term Capital Gain of ₹6,66,454/– in purchase and sale of shares of M/s Kailash Auto Finance Limited. The assessee provided the confirmation of the brokers note. However, the learned Assessing Officer found that one of the reason for selection of scrutiny is suspicious sale transaction in shares and exempt Long Term Capital Gain in penny stock, he disallowed the short term capital loss of Rs.6,66,454/-. Accordingly, the assessment order under Section 143(3) r.w.s. 144C(1) of the Act was passed on 20th November, 2017. As the assessee did not prefer any objection before the learned DRP but decided to go before the learned CIT(A), assessment order u/s 143(3) r.w.s. 144C(3) of the Act was passed on 26th December, 2017

Assessee aggrieved with the same preferred the appeal before the learned CIT(A) contesting the disallowance of carry forward of short term capital loss of ₹6,66,454/-. The learned CIT(A) passed an order on 10th March, 2022. The learned CIT(A) found that the assessee has furnished the complete details of the capital gain and there is no evidence against the assessee that the above loss is fraudulent, he allowed the appeal of the assessee. Thus, learned Assessing Officer is aggrieved with the deletion of disallowance of carry forward of short term capital loss and preferred this appeal before us.

The learned DR supported the order of the learned Assessing Officer, whereas learned AR supported the order of the learned CIT(A).

We have carefully considered the rival contentions and perused the orders of the lower authorities. The assessee is a statutory authority in the state of Ohio, United States of America and is a tax resident of USA. It is engaged in providing retirement benefit to certain public employees of that state. It is also registered with SEBI as a foreign portfolio investor and is regularly investing in Indian market earning capital gain, dividend and interest income. During the year, the assessee incurred a loss of ₹6,66,454/- in the shares of Kailash Auto Finance Limited which is flagged as penny stock by the Revenue authorities and therefore, the above loss was disallowed.

In the result, appeal filed by the learned Assessing Officer is dismissed.