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Income Tax Appellate Tribunal, “D” BENCH, MUMBAI
Before: SHRI PAVAN KUMAR GADALE & SHRI GAGAN GOGAL
IN THE INCOME TAX APPELLATE TRIBUNAL “D” BENCH, MUMBAI BEFORE SHRI PAVAN KUMAR GADALE, JUDICIAL MEMBER & SHRI GAGAN GOGAL, ACCOUNTANT MEMBER ITA No. 4624/Mum/2019 (A.Y: 2010-11) DSP Investment Pvt Ltd Vs DCIT, Circle – 2(1)(1) 11th Floor, Mafatlal Aaykar Bhavan Centre, Nariman Point MK Road, Mumbai – 400 021. Mumbai – 400 020. �थायी लेखा सं./जीआइआर सं./PAN/GIR No. : AAACB1574H Appellant .. Respondent
Appellant by : Mr.Madhur Agarwal.AR Respondent by : Mr.Shankar.DR Date of Hearing 12.04.2022 Date of Pronouncement 21.04.2022 आदेश / O R D E R PER PAVAN KUMAR GADALE, JM: The assessee has filed the appeal against the order of the Commissioner of Income Tax (Appeals)-4, Mumbai passed u/s 154 and 250 of the Act. The assessee has raised the following grounds of appeal:
a) On the facts and circumstances of the case and in law, the order passed by the learned C.I.T. (Appeals) is bad both in law and on facts and, hence, liable to be quashed. b) On the facts and circumstances of the case and in law the, learned C.I.T. (Appeals) has erred in confirming the
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order passed by the learned Assessing Officer u/s 154 r.w.s.143(3) holding that the original assessment order gave rise to mistake apparent from the record.
C) On the facts and in the circumstances of the case and in law, the order passed by Learned C.I.T. (Appeals) is bad in law in as much as the learned Assessing Officer at no point of time had asked for details regarding c/f losses in the original assessment proceedings, and thereby erred in concluding that the claim of set off of B/f Short Term Capital Loss of Rs.1,49,25,892/- against the Short Term Capital Gain of Rs.9,78,48,423/- is not to be allowed to the appellant in the body of the assessment order though allowed in the ultimate computation of income. d) On the facts and circumstances of the case and in law the learned C.I.T. (Appeals) has failed to appreciate that the the learned Assessing Officer was not justified 'in rectifying his earlier order passed under Section 143(3) for withdrawing the set off of brought forward short- term capital loss as the necessary details /documents were on records to substantiate the allow ability of set off Short term capital loss and thereby in accordance with the provisions of the Act the appellant was entitled to claim the benefit of carry forward and set off Short term capital loss. e) f) On the facts and circumstances of the case and in law the learned C.I.T. (Appeals) has failed to appreciate that the learned Assessing Officer was not justified in rectifying his earlier order passed under Section 143(3) inasmuch as the record for the purpose of Section 154 is not confined to the record of the previous year but would include record of the previous years as well as the record
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of the other assessment years. f) On the facts and in the circumstance of the case and in law, the Learned C.I.T. (Appeals) ought to have adjudicated the issue even on the merits of the allowability of claim of brought forward and setoff of capital loss, as the said issue had arisen pursuant to an order passed by the Assessing Officer under section 154 of the Act.
g) On the facts and circumstances of the case and in law the learned C.I.T. (Appeals) has failed to appreciate the relevant information of C/f short term capital losses were available with the learned Assessing Officer and could have been verified/ascertained from the past records. h) Without prejudice to the above, on the facts and circumstances of the case and in law the learned C.I.T. (Appeals) has failed to appreciate the Central Board of Direct Tax Circular No. 14 (XL-35) dt. 11/04/1955 directing Assessing Officer not to take advantage of assessee's ignorance and/or mistake. 2. The appellant prays for leave to add to or delete or amend any of the grounds of appeal. 3. Each of the above ground of appeal is independent of the others and without prejudice to the other grounds of appeal. 4. The appellant prays that :- the claim of Short term capital loss of Rs. 1,49,25,892/- be allowed to be set off against the Short Term Capital Gain earned during the year under appeal. to modify the assessment in accordance with the
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provisions of law. 2. The brief facts of the case are that the assessee company is a non banking financial company (NBFC) registered with RBI with main objects of making investments in various class of financial assets. The assessee has filed the return of income for the A.Y 2010-11 on 13.10.2010 with a total income of Rs. 23,88,00,599/-and the return of income was processed u/s 143(1) of the Act. Subsequently, the case was selected for scrutiny and notice u/s 143(2) and 142(1) of the Act are issued. In compliance, the Ld. AR of the assessee appeared from time to time, filed the submissions and the case was discussed. On perusal of the financial statements, the Assessing officer (A.O.) found that the assessee has disclosed a short term capital gains of Rs.4,57,61,550/- earned on the activity of sale and purchase of shares of M/s. Hindalco Industries Ltd in the open market. The assessee was called to submit the details of capital gains worked out and a show cause notice was served on the assessee.
In compliance, the assessee has filed the details and explanations by letter dated 24.01.2013 referred at Para 3.2 of the A.O order. The A.O dealt on the
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provisions of the Act and material information and is of the opinion that the transactions are not in the nature of investment transactions and dealt exclusively on the facts and resolutions and observed that the transactions entered have a risk bearing. The assessee was indulged in trading of shares and the entire profits on purchase and sale of shares including long term capital gains are to be treated as a business income. Similarly the A.O found that the assessee has received the dividend on shares and mutual funds and has computed the disallowance u/s 14A of the Act r.w.r 8D(2) of I T Rules of Rs. 2,02,86,828/-.The A.O found that the assessee has moved an application for allowing the claim of expenditure incurred in respect of brokerage and the same was rejected. The A.O observed that the assessee has claimed an amount of Rs.1,49,25,892/- towards short term unabsorbed capital loss and since no details were submitted the loss was not allowed.
Whereas in the computation of total income, the A.O has granted the set off of unabsorbed loss and assessed the taxable income of Rs. 25,90,87,420/- and passed the order u/s 143(3) of the Act dated
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16.02.2013. Subsequently the A.O has passed the rectification order u/s 154 dated17.11.2015 considering the fact that the short term capital loss which was carry forward and set off with current year capital gains cannot be allowed as details were not submitted and revised the total income of Rs. 25,52,25,652/- and passed the order u/s 154 of the act dated 17.11.2015.
Aggrieved by the order, the assessee has filed an appeal before the CIT(A). Whereas the CIT(A) has considered the grounds of appeal, submissions of the assessee and findings of the scrutiny proceedings has observed at Para 6.2.1 of the order and dismissed the assessee appeal. Aggrieved by the CIT(A) order, the assessee has filed an appeal before the Hon’ble Tribunal.
At the time of hearing the Ld. AR submitted that the CIT(A) has erred in confirming the action of the A.O in not allowing the set off of unabsorbed short term capital loss carry forward and set off with current year income, though the information/details were filed in the course of assessment proceedings. The A.O in the
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order u/s 154 of the Act has not given the valid reasons for denial of claim and the Ld.AR substantiated the submissions with the paper book and prayed for allowing the appeal. Contra, the ld. DR relied on the orders of the lower authorities.
We heard the rival submissions and perused the material on record. The sole crux of the disputed issue envisaged by the Ld.AR that the A.O has denied the claim of short term capital loss which has been carry forwarded from earlier years in the assessment proceedings. The Ld. AR contented that the assessee has genuinely claimed this loss from earlier assessment years and has been quantified. When a query was raised to the Ld. AR to substantiate that whether the details are field in respect of this unabsorbed short term capital loss. The Ld.AR demonstrated the copy of the assessment order for the A.Y 2009-10 passed u/s 143(3) dated 30.11.2011, where the A.O. at page 4 Para 6 in particular the total income of the assessee company is computed and has mentioned the short term capital gains/loss(In brackets) and long term capital gains.
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We find that the A.O has worked out the short term capital gains and loss, which cannot be disputed. Further the Ld. AR substantiated that the assessee has claimed the loss in the return of income filed electronically for the A.Y 2010-11 in form no. ITR-VI . On perusal of the facts in the return of income with respect to the claim of loss in the return of income at Schedule-CFL- (carry forward loss) “details of loss carry forward to future year”. The assessee has disclosed the loss of the A.Y 2009-10 in the return of income filed with the carry forward of loss of Rs. 1,49,25,892/-.
9.We are of the opinion that the loss which the assessee has set off in the computation of income for the A.Y 2010-11 was carry forward from earlier years and the claim was made in the return of income filed electronically which cannot be over looked or disputed. Further, in the A.Y 2009-10 scrutiny assessment U/sec143(3) of the Act, the A.O has quantified the loss and has been accepted. We considering the facts, circumstances and submissions of the assessee are of the opinion that the order of the CIT(A) cannot be sustained. Accordingly we direct the Assessing officer
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to grant setoff of loss as discussed above and allow the grounds of appeal in favour of the assessee.
In the result, the appeal filed by the assessee is allowed.
Order pronounced in the open court on 21.04.2022
Sd/- Sd/- (GAGAN GOYAL) (PAVAN KUMAR GADALE) ACCOUNTANT MEMBER JUDICIAL MEMBER
Mumbai, Dated 21.04.2022
KRK, PS Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A) 3. Concerned CIT 4. DR, ITAT, Mumbai 5. 6. Guard file. आदेशानुसार/ BY ORDER, //True Copy// 1. ( Asst. Registrar) ITAT, Mumbai