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Facts
The assessee, a partnership firm, invested Rs. 5 crores in a mutual fund and received bonus units. Upon redemption of original units, the assessee claimed a short-term capital loss, but the AO worked out a short-term capital gain of Rs. 5,86,888/-, which was confirmed by the CIT(A). However, the AO later deleted this addition in the order giving effect.
Held
The Tribunal noted that the AO had already deleted the addition made by him in the order giving effect, making the appeal infructuous. The assessee was therefore not aggrieved by the CIT(A)'s order. The levy of interest under sections 234A and 234B was also not made in the order giving effect.
Key Issues
Whether the appeal is maintainable when the addition made by the AO has been deleted in the order giving effect, rendering the assessee not aggrieved by the order of the CIT(A).
Sections Cited
250, 143(3), 55(2), 2(h)(id), 94(8), 234A, 234B
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, ‘B’ BENCH, BANGALORE
Before: SHRI WASEEM AHMED & SHRI KESHAV DUBEY
PER WASEEM AHMED, ACCOUNTANT MEMBER:
This is an appeal filed by the assessee against the order passed by the NFAC, Delhi vide order dated 06/02/2025 in DIN No. ITBA/NFAC/S/250/2024-25/1072985667(1) for the assessment year 2014-15.
The assessee has raised the following grounds of appeal:
1. The order passed by the Learned Commissioner of Income Tax (Appeals), NFAC, Delhi, passed under section 250 of the Income Tax Act, 1961 (hereafter "the Act") is in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
2. The order passed by the Learned Assessing Officer passed under section 143(3) of the Act is in so far as it is against the appellant is opposed to law, equity, weight of evidence, probabilities, facts and circumstances of the case.
3. The learned Assessing Officer erred in making an addition of Rs.5,86,888/- in the scrutiny order and the learned CIT (A) erred in confirming the addition, by imputing a cost to the bonus shares when section 55(2) (iiia) r.w.s. 2(h)(id) of the Securities Contracts (Regulation) Act, 1956, which provides that in the case of bonus shares, cost should be considered as NIL but the learned AO has erred in attributing proportionate cost to the bonus units which is contrary to the provisions of section 55(2)(iiia).
4. The Ld. Commissioner(AppeaIs) while referring the definition of securities, instead of referring to the section 2(h)(id) of Securities Contracts (Regulation) Act, 1956 wherein the Mutual Fund has been included as 'Securities' erroneously referred to section 2(h)(i) and hence concluded erroneously that the Mutual Fund is not Securities. D. The Officers below erred under the principles of double taxation as they have taxed the same income of Rs.5,86,888/- twice over. 6. The addition sustained in the order is contrary to the facts and the provisions of the Act and the Judicial decisions and hence deserve to be deleted in full. 7. The Officers below has erred in demanding the interest u/s 234A and also u/s 234B on a mechanical basis, disregarding the fact that the Appellant filed the Income Tax Return (ITR) on 28.11.2014 and Central Board of Direct Taxes vide Order [F.NO.133/24/2014-TPL], dated 20-8- 2014 extended the due date for filing the ITR from 30.09.2014 to 30.11.2014. 8. The Appellant submits that each of the above grounds are mutually exclusive. 9. The appellant craves permission to add, delete, alter, amend, vary, omit or substitute any of the grounds at the time of hearing. 10. Prayer: i. For these and other grounds that may be urged at the time of hearing, the appellant prays that the Hon'ble Income Tax Appellate Tribunal may kindly delete the addition sustained of Rs. 5,86,888/- in case of sale of Units. ii. Delete the demand made u/s 234A and 234B of the Act. iii. Each grounds of appeal is mutually exclusive. The appellant craves leave to, alter, add, modify or rescind any grounds of the appeal at the time of hearing.”
The effective issue raised by the assessee through ground Nos. 1 to 6 of the appeal is that the learned CIT(A) erred in confirming the addition of short-term capital gain of Rs. 5,86,888/- on sale of unit of mutual fund.
The facts in brief are that the assessee is partnership firm and made an investment of Rs. 5 crores in Deutche Mutual Fund as on 12th July 2013 and allotted 23,07,294 units of such mutual fund. Thereafter the assessee got allotted 11,53,647 units as bonus share as on 25th October 2013. Hence the assessee got a total of 34,60,941 units of Deutche Mutual Fund for initial investment of Rs. 5 crores.
Subsequently, the assessee as on 30th October 2013 redeemed 5. 23,07,294 units for a consideration of Rs. 3,39,20,232/- only. In other words, the assessee retained the bonus units and redeemed the original units allotted for a sum of Rs. 3,39,20,232/- only. The assessee in the return of income claimed short-term capital loss of Rs. 1,60,79,768/- (Rs. 5 crore - Rs. 3,39,20,232/-) on account of redemption of impugned units of mutual fund.
The AO found that after allotment of bonus units, the proportionate cost of redeemed units stood at Rs. 3,33,33,333/- [(Rs. 5 crore/34,60,941 units) * 23,07,294 units]. As the units were redeemed at Rs. 3,39,20,232/-, the AO worked out short term capital gain of Rs. 5,86,888/- instead of short-term capital loss claimed by the assessee.
The aggrieved assessee preferred an appeal before the learned CIT(A) who has held that the provisions of section 55(2) are not . applicable in the case of mutual fund and therefore the learned CIT-A upheld the finding of the AO. However, the learned CIT-A further held that the provisions of section 94(8) is not applicable as the mutual funds were purchased by the assessee 3 months prior to the record date. Hence, the learned CIT-A deleted the addition made by the AO.
Being aggrieved by the order of learned CIT-A, the assessee is in appeal before us.
The learned AR before us filed a paper book running from pages 1 to 17 and contended that the AO in order giving effect in pursuance to the finding of the learned CIT-A has deleted the addition of ₹ 5,86,888.00 as made by the AO in the original assessment order. The order giving effect dated 30 May 2025 is placed on pages 12 to 14 of the paper book. Accordingly, the learned AR contended that the assessee is not aggrieved by the order of the learned CIT-A.
On the other hand, the learned DR could not controvert the arguments advanced by the learned AR for the assessee.
We have heard the rival contentions of both the parties and perused the materials available on record. At the outset, we note that the addition made by the AO has already been deleted by the AO in order giving effect dated 30 May 2025 which evidences that the assessee is not aggrieved by the order of the learned CIT-A.
11.1 It is also noted that the assessee in ground No. 7 has challenged the levy of interest under section 234A and 234B of the Act. In this . regard, we note that the AO in the order giving effect has not levied such interest as stated in the ground of appeal by the assessee which evidences that the assessee is not aggrieved by the order of the learned CIT-A. Hence, in view of the above, we hold that the appeal filed by the assessee is not maintainable on the ground that the assessee is not aggrieved by the order of the learned CIT-A. It is because the assessee has got the relief in the order giving effect passed by the AO dated
30. May 2025 which is placed on pages 12 to 14 of the paper book. Hence, the appeal filed by the assessee is dismissed as infructuous.
In the result, the appeal of the assessee is hereby dismissed as infructuous.
Order pronounced in court on 4th day of August, 2025