DY CIT CC-2(3), MUMBAI vs. GAURI AVINASH BHOSALE, MUMBAI

Appeal in ITA 122/Mum/2021 is filed by Dy. Commissioner of income-tax, Central Circle-2(3), Mumbai (the learned Assessing Officer), for Assessment Year 2012-13 against the order passed by

The learned Assessing Officer has raised the following grounds of appeal:-

Brief facts of the case shows that assessee is an individual engaged in the business of promoters and builders, Filed her return of income on 31st July, 2012 at Rs. 31,33,218/-, which was assessed under section 143(3) of the income-tax Act, 1961 (the Act) on 26th March, 2015, where an addition of Rs. 2,99,94,793/- was made on account of set off of brought forward loss of Assessment Year 2011-12 and thereby the total income was assessed at Rs. 3,31,28,011/-.

Subsequently, search under section 132 of the Act was conducted on 21st July 2017 and consequently notice under section 153A of the Act was issued to the assessee on 4th September, 2018. Consequently assessment order under section 153A read with section 143(3) of the

Both these additions were contested before the learned CIT (A), who granted the relief to the assessee and therefore Revenue is in appeal.

The learned Departmental Representative supported the order of the learned Assessing Officer

Learned authorised representative referred to his application filed on 31st of December 2021 under rule 27 of the ITAT rules 1963 for the reason that both the additions made by the learned assessing officer are without any incriminating material found during the course of search in concluded assessment. It was submitted that assessment order passed u/s 143 (3) of the act was passed on 26th of March 2015 wherein the search to place on 21st of July 2017.

Learned Authorized Representative submitted that the disallowance made by the learned Assessing Officer of set off of losses were already the part of proceedings under section 143(3) of the Act which are repeated in assessment order passed under section 153A of the Act without any incriminating material. Even otherwise, he submitted that the addition made originally in the order passed under section 143(3) of the Act by the learned Assessing Officer travelled up to the co-ordinate Bench where relief was allowed to the assessee therefore these additions/ disallowances could not have been made in order passed under section 153A of the Act.

We have carefully considered the rival contentions and find that in the original assessment order passed under section 143(3) of the

Though the learned CIT – A, on merits of the case has allowed the claim of the appellant for set off of Long term capital gain of Rs 2 99,94,793/– on sale of flat against the brought forward long-term capital loss of Rs 2 67,51,997/- for assessment year 2011 – 12 on sale of shares on which STT is paid. The learned CIT – A followed decision of Pune bench of ITAT in assessee’s own case for assessment year 2012 – 13 and 2013 – 14 dated 25/11/2019, wherein Pune bench relied on the decision of the coordinate bench in case of Raptakosh Brett & co Limited in ITA number 3317/2009 dated 10/6/2015. Now in view of the decision of honourable Kerala High Court in case of Apollo tyres Ltd versus Deputy Commissioner Of Income Tax (2021) 130 taxmann.com 295/[2022] 284 taxmann 229, the order of the learned CIT – A is not sustainable.

However we find that learned assessing officer has repeated the disallowance made in the original assessment order, we find that the ground taken by the Revenue describing the loss of Rs. 2,99,94,793/- is in fact short term capital loss. However, for the reason that disallowance is repeated in 153A order, which was already part of 143(3) proceedings could not have been made by the learned Assessing Officer in 153A proceeding. Same are the facts with respect to the disallowance under section 14A of the Act.

In the result ITA 122/M/2021 assessment year 2012 – 13 filed by the learned assessing officer is dismissed.

ITA 136/Mum/2021 is filed by the learned Assessing Officer against the order passed by the learned CIT (A)-48, Mumbai dated 25 November 2020 for assessment year 2016 – 17.

The learned Assessing Officer has raised following grounds of appeal:-

The brief facts of the case shows that assessee filed her return of income on 4th August, 2016 at Rs. 90,71,190/-. The return was processed under section 143(1) of the Act. Consequent to search under section 132 of the Act on 21st July 2017, notice under section 153A of the Act was issued on 4th September 2018. Assessment

The assessee preferred an appeal before the learned CIT (A), who allowed the claim of the assessee. Thus, the set off of long term capital gain of Rs. 6,12,93,609/- was set off against the long term capital loss of Rs. 81,20,956/- on account of loss arising in sale of shares on which STT is paid and short term capital loss of Rs. 5,31,72,653/- brought forward from Assessment Year 2010-11. Therefore, the learned Assessing Officer is aggrieved and preferred this appeal.

The disallowance under section 14A was restricted to exempt income and expenditure made. Thus, disallowance under section 14A of the Act was restricted to Rs. 3,81,968/-. This was challenged as per ground no.2.

The learned Departmental Representative firstly submitted that Revenue is aggrieved by the action of the learned CIT (A) in allowing set off of long term capital loss incurred by the assessee on sale of STT paid shares of Rs. 81,20,956/-, income from which is exempt under section 10(38) of the Act allowed to be set off against the capital gain earned by the assessee during the year. He submitted that the gain arising to the assessee on sale of shares on which

On the issue of 14A, he reiterated the findings of the learned Assessing Officer.

The learned Authorised Representative submitted that if the ground No. 1 of the Revenue is against the set off granted by the learned CIT(A) on long term capital loss earned by the assessee for Assessment Year 2011-12 shares on which STT is paid amounting to ₹ 8,120,956/– then coupled with the disallowance under section 14A of the Act deleted by the learned CIT – A of ₹ 296,208/–, the Revenue cannot file this appeal as the combined tax effect on both these grounds i.e. set-off of long-term capital loss amounting to ₹ 8,120,956 and disallowance u/s 14 A ₹ 296,208/–, is less than 50 lacs. On the issue of set off of long term capital loss earned on STT paid shares, he submitted that identical issue arose in the case of assessee in earlier years where co-ordinate Bench has allowed the claim following the decision of co-ordinate Bench.

We have carefully considered the rival contentions. In the first ground, the Assessing Officer is challenging the set off of brought forward long term capital loss of Rs. 81,20,956/- arising out of shares on which STT is paid for Assessment Year 2011-12 against long term capital gain earned during the year. On the merits of the case, the issue is squarely covered against the assessee by the decision of co-ordinate Bench in APOLLO Tyres Ltd vs DCIT 130 taxman.com 295. However, the tax effect involved in this appeal on the first ground where addition/ disallowance is Rs. 81,20,956/- and disallowance deleted in ground No.2 is Rs. 296208/- combined tax effect on these two grounds is less than Rs. 50 lacs. Therefore, the

ITA 124/Mum/2021, is filed by the learned Assessing Officer for Assessment Year 2017-18 against the order of the learned CIT(A)- 48, Mumbai dated 25.11.2020 raising the following ground of appeal:-

The assessee filed return of income on 4th August, 2017 at Rs. 17,30,74,660/-. The return was processed under section 143(1) of the Act. Search was conducted under section 132 of the Act on 21st July, 2017. Notice under section 153A of the Act was issued on 4th September, 2018. The assessment order was passed on 22nd May, 2019 determining the total income of the assessee at Rs. 23,01,60,560/-. The learned Assessing Officer disallowed the brought forward loss of Rs. 5,67,45,907/-. During the year assessee has earned long term capital gain of Rs. 21,77,41,908/-. The assessee has carried forward short term capital loss from Assessment Year 2010-11 of Rs. 5,67,45,907/-. Therefore, this short-term capital loss was set off against long term capital gain earned during the year. The learned Assessing Officer disallowed the same holding that in the earlier assessment year such disallowance was confirmed by the learned Commissioner of income tax (Appeal).

The learned Departmental Representative relied upon the order of the learned Assessing Officer.

The learned Authorized Representative submitted that the assessee has brought forward short term capital loss from Assessment Year 2010-11 and not long term capital loss as mentioned in the grounds of appeal. He submitted that at paragraph no.4 of the assessment order, the fact is clearly recorded by the learned Assessing Officer that assessee has brought forward short-term capital loss of Rs. 5,67,45,907/-. Therefore, he submitted that the ground raised by the learned Assessing Officer is erroneous.

The learned departmental representative also confirmed the same.

We have carefully considered the rival contentions and perused the orders of the lower authorities. As per page no. 2 paragraph no. 4 of the assessment order, the learned Assessing Officer has categorically noted that assessee has income from long term capital gain of Rs. 21,77,41,908/-. The assessee has brought forward short term capital loss from Assessment Year 2010-11 of Rs. 5,67,45,907/-. The ground raised before us is that above carried forward loss of Rs. 5,67,45,907/- is long term capital loss. As assessee has not claimed set off of any brought forward long term capital loss but has claimed set off of short term capital loss of Rs. 5,67,45,907/-, the ground of appeal raised by the Assessing Officer is not sustainable in view of the provisions of Section 74(1)(a) of the Act, which allows set off of loss related to short term capital asset brought forward to be set off of capital gain earned in respect of any other capital asset. Accordingly, appeal filed by the learned Assessing Officer is

In the result, all the three appeals filed by the learned Assessing Officer are dismissed.