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Facts
The assessee, an LLP, filed its return for AY 2020-21, declaring total income. The CPC processed the return and made an addition under business income, which the assessee claimed was already offered as capital gains. The CIT(A) dismissed the appeal.
Held
The Tribunal noted that the assessee had declared income under capital gains. To verify the correctness of transactions and the amount deducted from business income, the Tribunal remitted the file back to the AO.
Key Issues
Whether the addition made by the CPC under business income was correctly treated as such, or if it should have been considered as capital gains offered by the assessee.
Sections Cited
143(1)
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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI GEORGE GEORGE K, HON’BLE & SHRI S.R. RAGHUNATHA, HON’BLE
PER S. R. RAGHUNATHA, ACCOUNTANT MEMBER:
This appeal filed by the assessee is directed against the order passed by the learned Commissioner of Income Tax (Appeals), Kolkata dated 07.11.2024 and pertains to assessment year 2020- 21.
The sole issue raised by the assessee before us is that the CPC, Bengaluru has processed Return of Income u/s. 143(1) of the :-2-: ITA. No: 3179/Chny/2024 Act and erred by making an addition of Rs.12,80,21,206/- under the head business income, even though the same has been offered for the taxes under the head of income from capital gains.
The brief facts of the case are that the assessee is a LLP filed its return of income for the A.Y.2020-21 on 29.12.2020 by declaring total income of Rs.1,10,95,580/-. The return was processed by CPC, Bengaluru and issued an intimation u/s.143(1) dated 25.12.2021 by recomputing the total income at Rs.13,87,44,800/- with a demand of Rs.5,75,89,800/-. Aggrieved by the order of the CPC, Bengaluru the assessee preferred an appeal before the Ld. CIT(A).
The Ld. CIT(A) after perusal of submissions of the assessee dismissed the appeal of the assessee by passing an order dated 07.11.2024 by holding that the business income of the assessee was reduced by Rs.12,80,21,206/- and the same has not been offered under the head capital gains. Aggrieved by the order of the Ld. CIT(A) the assessee preferred an appeal before us.
:-3-: ITA. No: 3179/Chny/2024 5. The Ld. AR for the assessee submitted the Ld. CIT(A) has erred in dismissing the appeal without considering the details of return of income filed, wherein the computation of capital gain has considered the impugned addition as income. In support of the said claim, the assessee filed a paper book of 133 pages consisting of entire set of form filed for return of income, acknowledgement, copy of intimation, rectification petition, rectification order, audited financials along with the computation of total income and taxes thereon for the AY 2020-21.
The ld. AR took us through the schedule of capital gain in the form filed for return of income (Paper Book page Nos.32 to 41) and shown that the Capital gain details have been filled. Further, the entire computation of total income and taxes thereon (Paper Book page Nos.32 to 41) for the A.Y. 2020-21 was brought to our attention and shown that the income has been offered to tax in the return of income after reducing from the business income to the tune of Rs.12,80,21,206/- on account profit on sale of investments. In light of the above, the ld.AR prayed for deleting the addition by setting aside the order of the ld.CIT(A).
:-4-: ITA. No: 3179/Chny/2024 7. Per contra the ld.DR relied on the order of the lower authorities.
We have heard the rival contentions perused the material available on records and gone through the orders of the authorities below. The assessee has filed its return of income for the A.Y. 2020- 21 and the same was processed u/s.143(1) of the Act by the CPC, Bengaluru and issued an intimation by making an addition of Rs.12,76,49,218/- under the head business income. The rectification sought by the assessee was also rejected by the CPC, stating that the deduction from the net profit of the assessee to the tune of Rs.12,80,21,206/- on account profit on sale of investments had not been shown under the head income from capital gain. The issue was confirmed by the ld.CIT(A) also.
On perusal of submissions, we note that the assessee has declared income under the head “Capital gains” (Paper Book page Nos.32 to 41) by showing the sale of listed shares and the gain / loss thereon. Since, the details need to be verified by the AO in respect of the correctness of the transactions, we are remitting the file back to AO with a direction to verify the correctness of the amount deducted from the business income and income
:-5-: ITA. No: 3179/Chny/2024 corresponding to such transactions offered under the head capital gain. Thus we set aside the order of ld.CIT(A) and remit the file to AO for verification of capital gain declared by the assessee and delete the addition made to the business income, if assessee has already offered the same under the head capital gain and allow all the related grounds raised by the assessee.