TATA MOTORS LTD,MUMBAI vs. DCIT LTU 2, MUMBAI

आदेश / O R D E R PER M. BALAGANESH (A.M):

This appeal in ITA No.3425/Mum/2019 preferred by the order against the revision order of Commissioner of Income Tax(LTU), Mumbai u/s.263 of the Act dated 25/03/2019 for the A.Y.2012-13.

2 ITA No.3425/Mum/2019 M/s. Tata Motors Ltd.,

The appellant is in receipt of the order passed by the learned Commissioner of Income-tax (Large Tax Payer Unit), Mumbai ["CIT"] u/s. 263 of the Income-tax Act, 1961 ("the Act"). The appellant being aggrieved by the order passed by the learned CIT has preferred this appeal on the following grounds, which are independent and without prejudice to each other: 1. Proceedings u/s 263 of the Act is invalid and bad in law 1.1 The learned CIT has erred in law and on facts in holding that order passed by the Assessing Officer ("AO") u/s. 143(3) r.w.s. 144C(13) of the Act dated 27.02.2017 is erroneous and prejudicial to the interest of the revenue, without appreciating that the assessment order cannot be said to be erroneous where the AO has taken one of the permissible views. The learned CIT ought to have appreciated that if two views are possible, revision u/s. 263 of the Act is not permissible. 1.2 The learned CIT has erred in law and on facts in holding that the order passed by the AO is not correct without appreciating that the AO has passed the order after enquiring and verifying the facts and documents on record, duly supported by various precedents including the judgements of the Hon'ble Supreme Court and Jurisdictional High Court which were available at the time of the assessment. 1.3 The learned CIT failed to appreciate and ought to have held that the action of the AO in allowing set-off of loss of current year against the dividend income received from specified foreign companies u/s. 115BBD of the Act is neither erroneous nor prejudicial to the interest of the Revenue inasmuch as if such dividend income is taxed in current year without allowing set-off u/s. 71 of the Act, assessee would be entitled to carry forward and set-off losses (to the extent of dividend income) against business income of subsequent years which otherwise would have been taxable at maximum marginal rate of tax. 1.4 The learned CIT failed to appreciate and ought to have held that the action of the AO in allowing capital loss on redemption of preference shares is neither erroneous nor prejudicial to the interest of the Revenue inasmuch as if the redemption of preference shares is treated as 'conversion’ then the said loss which would be determined in subsequent years, i.e. in the year of sale of such alleged converted preference shares, would get a fresh validity as well as higher indexed loss benefits for further years which otherwise could have expired earlier. 1.5 The learned CIT has erred in law and on facts in ignoring the reasons given by the appellant on the proceedings u/s. 263 of the Act being invalid and bad in law. 2. Treatment of redemption of preference shares as conversion of preference shares and disallowance of capital loss thereon: Rs. 367,93,42,008/-

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2.1 The learned CIT erred in treating the 'redemption' of Preference shares as 'conversion' of Preference shares thereby disallowing the capital loss incurred on such redemption inasmuch as the redemption of Preference shares is distinct and independent transactions as compared with the subsequent purchase of preference shares and thus, the same cannot be assumed to be 'conversion' of preference shares. 2.2 The learned CIT failed to appreciate and ought to have held that it is a settled legal position that redemption of preference shares is covered under the definition of 'transfer1 as per section 2(47) of the Act and hence, the loss incurred on such redemption of preference shares is a capital loss allowed to be carried forward. 3. Taxation of Dividend income received from specified foreign companies u/s.115BBDof the Act: Rs. 21,99,53,589/- 3.1 The learned CIT erred in separately taxing the foreign dividend income at the specified rate as per section 115BBD of the Act inasmuch as in the absence of any positive income after set-off of loss from one head of income against another head of income u/s. 71 of the Act, the chargeability provision as per section 115BBD of the Act fails to apply; 3.2 The learned CIT ought to have appreciated the fact that provisions of section 115BBD(2) of the Act which begins with non-obstante clause restricts allowability of only 'expenditure' or 'allowance' and thus, in the absence of any express provision for restriction on allowability of 'loss', the said business loss of current year is allowable to be set-off against such foreign dividend income as per provisions of section 71 of the Act; 3.3 The learned CIT ought to have appreciated that it is settled legal position that the term 'expenditure' and 'loss' are conceptually different and cannot be used interchangeably and thus, merely because restriction on allowability of 'expenditure' is provided u/s. 115BBD(2) of the Act, the same cannot be interpreted as loss' to be disallowed set off as provided under section 71 of the Act.”

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30/11/2012 declaring total loss of Rs.3264,66,84,184/- under normal provisions of the Act and book profits of Rs.1136,72,59,738/- u/s.115JB of the Act. Various details were called for from time to time by the ld. AO and the detailed questionnaire issued by the ld. AO alongwith notice u/s.142(1) of the Act was duly replied by the assessee. After going through the said replies, the ld. AO passed an order u/s.143(3) r.w.s. 144C(13) of the Act on 27/02/2017 determining total loss of Rs.2116,16,60,203/- under normal provisions of the Act and book profit of Rs.1481,02,48,459/- u/s.115JB of the Act. We find that the ld. AO while determining the total loss of Rs.2116,16,60,203/- under normal provisions of the Act had specifically mentioned in the computation that the sum of Rs.10,15,16,08,586/- representing long term capital loss to be carried forward. This assessment was sought to be revised by the ld. PCIT by invoking revisionary jurisdiction u/s.263 of the Act on the ground that order passed by the ld. AO is erroneous in as much as prejudicial to the interest of the Revenue in respect of the following two issues:-

(a) Long term loss arising of transfer of preference shares on redemption at par due to indexation and further purchase on preference shares of the same company which tantamount to conversion – Rs.367,93,42,008/- (b) Taxability of dividend received from specified foreign companies u/s.115BBD of the Act – Rs.21,99,53,589/-. 3.1. Accordingly, a show-cause notice was issued to the assessee by the ld. PCIT to bring to tax the aforesaid two items. The assessee gave a detailed reply by stating that the ld. PCIT had alleged that the ld. AO had in respect of the aforesaid two issues had not made proper enquiries. We find that the assessee brought to the specific knowledge of the ld. PCIT about the detailed questionnaire issued by the ld. AO along with notice

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u/s.142(1) of the Act dated 21/04/2015 during the course of assessment proceedings wherein 64 queries were raised. The relevant questions raised by the ld. AO relating to above mentioned disputed issues are as under:-

Q.No.4. Details of dividend income earned and expenses incurred as per provisions of section 14A and Rule 8D on earning this income. Q.No.30. Furnish details of Long term capital gains. Q.No.38. Furnish details of loss incurred on redeeming preference shares.

3.2. We find that assessee had duly replied to these questionnaires vide its letter dated 28/10/2015 responding to various queries raised by the assessee more particularly the specific queries in respect of Question No.4,30 & 38 which are reproduced hereunder:-

Details of Dividend Received Sr. Particulars No. Amount in Rs. Exempt Dividend 1 Automobile Corporation of Goa Ltd. 4,37,64,738 2 Concorde Motors (I) Ltd. 24,48,120 94,79,365 3 Concorde Motors (I) Ltd.-Preference Shares 4 HV Axles Ltd. 22,95,00,000 20,40,00,000 5 HV Transmissions Ltd. 6 MetaJ Scrap Trading Corporation Ltd. 4,50,000

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7 TAL Manufacturing Solutions Ltd. 4,87,50,000 8 Tata AutoComp Systems Ltd.-Preference Shares 1,68,00,000 9 Tata Chemicals Ltd. 7,02,490 10 Tata Cummins Ltd. 27,00,00,000 11 Tata Projects Ltd. 1,35,00,000 9,90,00,000 12 Tata Sons Ltd. 13 Tata Sons Ltd.-Preference shares 70,00,000 14 Tata Steel Ltd 5,31,89,964 15 Telco Construction Equipment Company Ltd. 14,90,62,500 16 Tata Technologies Ltd. 42,42,08,400 17 Dividend from Mutual Funds 1,18,44,960

Total(A) 1,58,37,00,537

Taxable Dividend 1 NTA Co. Ltd. 20,86,463 2 Tata Daewoo Commercial Vehicle Co. Ltd., 21,99,53,589

Total (B) 22,20,40,053 Total (A+B) 1,80,57,40,589 Details of Long Term Capital Loss Name of the No. of Cost of acquisition Cost of Capital Gain / Company Shares Rs. Insulation Indexed Cost Rs. Sale Price (loss) Index Factor Rs. Rs.

TML Holdings Pic Lid - Preference 1 shares 20,48,999 8,36,19,21,837 785/532 11,27,85,37,185 9,15,76,21,933 (2,12,09,15,252) TML Holdings Pte Lid - Preference 2 shares 5,00,000 2,43,18,62,500 785/582 3,28,00,89,454 2,23,46,57,492 (1,04,54,31,962) TML Holdings Pic Ltd - Preference 3 shares 45,06,001 22.11.06,36,520 785/582 29,82,27,65,753 20,13,87,37,787 (9,68,40,27,967) TML Holdings Pte Lid - Equity 5,00,00,00 4 shares 0 1,99,81,75,000 785/582 2,69,51,32,947 5,43,95,00,000 2,74,43,67,053

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TML Holdings Pte Ltd - Equity 4,16,66,70 5 shares 0 1,77,75,59,755 785/582 2,39,75,67,711 4,53,29,20,293 2,13,53,52,582 Sale of Magna Dies (Capital 6 Item) 1,21,72.11,603 785/426 2,24,29,83,822 6,20,30,784 (2,18,09,53,039) Capital Gain /(Loss) (10,15,16,08,586)

3.3. We find that assessee had further made submissions before the ld. AO on 24/02/2016 pursuant to further clarification sought by the ld. AO in respect of Point No.30 comprising of details of long term capital loss, to which the assessee replied as under:-

“8. Details of Long term capital gains/(losses) In connection with information requested by your good self at point no. (f) of the Order Sheet and point no. 30 of the questionnaire, we draw your goodselfs kind attention to the details of long term capital gains/(loss) submitted earlier vide our letter dated 28.10.2015. Further to the said details of the long term capital gains/floss we enclose herewith the supporting documents for redemption of preference shares at far as Annexure 7, the documents for buy back of equity shares as Annexure 8 and sample documents for sale of Magna Dies being capital item as Annexure 9.”

3.4. We find that assessee had filed all the supporting documents relating to redemption of preference shares of TML Holdings Pte Ltd., and further subscription of 2020000 cumulative preference shares of TML Holdings Singapore which are enclosed from pages 108 to 124 of the paper book filed before us. We find that the ld. AO on going through all these relevant documents had (a) allowed carry forward of long term capital loss of Rs.1015,16,08,586/- to be carried forward under normal provisions of the Act by duly appreciating the fact that the loss of redemption of preference shares had occurred during the year only because of indexation benefit which is a statutory deduction available to the assessee; (b) setting off business loss with the foreign

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dividend income u/s.71 of the Act while computing income under normal provisions of the Act.

3.5. This order was sought to be revised by the ld. PCIT u/s.263 on the ground that the ld. AO had not made any enquiries regarding the aforesaid two issues in the original assessment proceedings. We find that the assessee before the ld. PCIT in reply to show-cause notice u/s.263 of the Act had duly brought all these facts before him by pointing out that the ld.AO had made adequate enquiries with regard to the subject mentioned dispute issues during the course of assessment proceedings and on due appreciation of those submissions, the ld. AO had framed the assessment without disturbing claim thereon. It was specifically pointed out before the ld. PCIT that the order passed by the ld. AO was not in violation of any order, direction or instruction issued by CBDT u/s.119 of the Act. Rather it was specifically pointed out that in respect of taxability of foreign dividend u/s.115BBD of the Act, the order was passed by the ld. AO in conformity with the decision of the Hon‟ble Jurisdictional High Court in the case of British Insulated Calendar Ltd., reported in 202 ITR 354.

3.6. We find that the assessee had duly pointed out before the ld. PCIT that the twin conditions which are Sine-Qua-Non for invoking revisionary jurisdiction u/s.263 of the Act i.e. (a) the order passed by the ld. AO must be erroneous AND b) The said order should be prejudicial to the interest of the Revenue, are not satisfied in the instant case. Unless the aforesaid two conditions are satisfied cumulatively, the ld. PCIT could not invoke revisionary jurisdiction u/s.263 of the Act. Reliance in this regard was placed by the assessee before the ld. PCIT on the following decisions:-

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a) Decision of Hon‟ble Supreme Court in the case of the Malbar Industrial Company Ltd., reported in 243 ITR 83 b) Decision of Hon‟ble Gauhati High Court in the case of Smt. Lila Choudhury reported in 167 Taxmann 1 c) Decision of Hon‟ble Jurisdictional High Court in the case of Gabriel India Ltd., reported in 203 ITR 108. d) Decision of Hon‟ble Jurisdictional High Court in the case of CIT vs. Development Credit Bank Ltd., reported in 323 ITR 206. e) Decision of Hon‟ble Delhi High Court in the case of Vodafone Essar South Ltd., reported in 28 Taxmann.com 273.

3.7. It was specifically pointed out that the order passed by the ld. AO was not passed on incorrect assumption of fact or incorrect application of law on the impugned subject. It was also pointed out that provisions of Section 263 of the Act could not be invoked for “inadequate enquiry”.

3.8. We find that the ld. PCIT brushed aside all these technical contentions raised by the assessee and proceeded to set aside the order passed by the ld. AO by treating it as erroneous and prejudicial to the interest of the revenue with a direction to disallow the excess carry forward of long term capital loss and further direction to tax the foreign dividend income of Rs.21,99,53,589/- separately @ 15%.

3.9. At the outset from the perusal of various pages in the paper book as narrated hereinabove, we find that assessee had duly furnished all the relevant documents on the impugned two issues before the ld. AO during the course of assessment proceedings

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together with the supporting documents. Admittedly, these replies were filed by the assessee before the ld. AO pursuant to specific queries raised by the ld. AO during the course of original assessment proceedings. Hence, it could be safely concluded that the ld. AO had carried out adequate enquiries on the impugned two issues before framing the assessment u/s.143(3) of the Act dated 27/02/2017. Infact, the ld. PCIT also accepts to the primary fact that the ld. AO had indeed carried out enquiries. In this regard, the ld. PCIT had observed in page 19 of her order by stating that mere fact that the documents were available to the AO cannot provide immunity to the tax payer because the AO has, in this, made an erroneous interpretation of facts and law in this regard and has consequently made an order prejudicial to the Revenue. We find that there is absolutely no basis for arriving at this conclusion by the ld. PCIT. What could be expected from the side of the assessee is only furnishing of necessary and requisite details before the ld. AO in response to queries raised by him. Once that onus is discharged by the assessee, the assessee cannot be expected to step into the shoes and minds of the Assessing Officer by providing him assistance in the manner in which the impugned issues are to be addressed by the ld. AO in the assessment order and reach relevant conclusions thereon. This is apparently the job of the ld. AO. Hence, the assessee can in no way be faulted for the same. Even otherwise, we find that the ld. AO had duly appreciated all these facts and materials with evidence available on record and had accepted to the contentions of the assessee by making proper examination and enquiries thereon. Hence, it is not a case of lack of enquiry on the part of the ld. AO which would enable the ld. PCIT to invoke revisionary jurisdiction u/s.263 of the Act. We hold accordingly that Explanation 2 to Section 263 which has been heavily relied upon by the ld. PCIT for

11 ITA No.3425/Mum/2019 M/s. Tata Motors Ltd.,

invoking revisionary jurisdiction u/s.263 of the Act, is bad in law in the facts and circumstances of the instant case. Once adequate enquiries were made by the ld. AO and the assessment has been framed accordingly, merely because no mention about those impugned issues has been recorded in the assessment order by the ld. AO, the said assessment order cannot be termed as erroneous even if it is found to be prejudicial to the interest of the revenue. Reliance in this regard has been rightly placed by the ld. AR on the decision of the Hon‟ble Jurisdictional High Court in the case of Nirav Modi reported in 390 ITR 292 (Bom) wherein the Hon‟ble Bombay High Court placed reliance on its earlier decision in the case of Idea Cellular Ltd., vs. DCIT reported in 301 ITR 407 (Bom) by holding that if during the assessment proceedings, queries were raised and the assessee responded to the same, then even if the assessment order does not mention the same, it does not mean that the Assessing Officer has not applied his mind to the issue. Moreover, it is now very well settled that for invoking revisionary jurisdiction u/s.263 of the Act, the twin conditions should be cumulatively satisfied i.e. (a) the order of the ld. AO should be erroneous and (b) it should be prejudicial to the interest of the revenue. In the instant case, admittedly both the cumulative conditions are not satisfied at all. We hold that the order passed by the ld. AO - (a) was not based on an incorrect assumption of facts (b) was not based on an incorrect application of law on the impugned subject (c) was not in violation of any order circular, directions, instructions issued by the CBDT u/s.119 of the Act. Hence, in the peculiar facts and circumstances of the instant case, the order of the ld. AO could not be termed as erroneous at all. Reliance in

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this regard is placed on the decision of the Hon‟ble Supreme Court in the case of Malabar Industrial Company Ltd., vs. CIT reported in 243 ITR 83.

3.10. Moreover, we also find that the fact of redemption of preference shares during the year and purchase of fresh preference shares of the Singapore company during the year had been duly disclosed by the assessee in its annual report separately which are under the head „investment schedule‟ which are enclosed in pages 24,25 and 27 of the paper book together with the notes thereon.

3.11. We also find that the assessee had duly responded before the ld. PCIT also by way of making detailed submissions on merits on the first issue regarding the loss of redemption of preference shares due to indexation benefit by specifically stating that the said loss of redemption of preference shares is distinguished from fresh purchase of preference shares during the year and the same does not amount to “conversion”. The relevant submissions made by the assessee before the ld. PCIT are reproduced as under:-

6.1. Your Honour has in Para 3 to 3.2 of the captioned notice has stated as under :- "3. Section 2(47) of the Income Tax Act defines the term transfer and transfer includes sale, exchange, relinquishment, compulsory acquisition etc. further, under section 55{2)(b)(v). the cast of acquisition for conversion of one kind of shares of the company into another kind will be the cost of acquisition of the original share. It has been held by ITAT, Mumbai in ClT vs. ABC Bearings Ltd. 44 SOT 338 (Mum) that conversion is not covered by section 2(4 7) hence, the loss arising out of such transaction would result in notional losses onlv.

3.1 It is seen that the assessee had claimed and was allowed a loss of Rs. 12,85,03,75,181 on sale of 70,55,000 6.25% Cumulative

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Redeemable Preference Shares of TML Holdings Pie Ltd (Singapore). Further, it is seen from the Standalone Financials for AY 2012-13 (p.149) under current Investments that the assessee has disclosed that it redeemed 70,55,000 6.25% Cumulative Redeemable Preference Shares of TML Holdings Pie ltd (Singapore) and acquired 20,20,000 6.25% Cumulative Redeemable Preference Shares of TML Holdings Pte Ltd (Singapore). 3.2 Thus, the assessee acquired the same 6.25% Cumulative Redeemable Preference Shares of TML Holdings Pte Ltd (Singapore) which it had redeemed earlier. Thus, the .said exercise was a clear case of conversion of one kind of shares into another kind. It seems that only the allotment numbers of shares were changed in respect of 20,20,0000 shares. Ax the- said conversion was not covered under transfer in light of the provisions quoted above, the loss claimed in respect of 20,20,000 shares was notional only and required to be disallowed. This resulted in excess carry forward of Long Term Capital Losses to future years for set off from future LTC'G resulted in underassessment of income of Rs. 367,93,42,008/-. 6.2. In this connection we have to submit that during the year under consideration, the assessee Company, has made various investments and sale of investments in the ordinary course of its business which includes the following separate and distinct transactions :- a) On 19'h May 2011 - Redemption of 40,75,000 number of CRPS of US$ 100 each at Par which were invested in TML Holdings Pte Ltd Singapore (TMLHS') during the FY 2008-09 for an aggregate consideration of US$ 407.50 million (INR 1,832.90 crores) b) On 3r" August 2011 - Redemption of 29,80,000 number of CRPS of US$ 100 each at Par which were invested in TMLHS during FY 2008-09 for an aggregate consideration of US$ 298 million (INR 1.320.20 crores) c) On 26"' September 2011 - Purchase of 20,20,000 number of CRPS of US$ 100 each at Par. i.e. for a consideration of US$ 202 million (INR 1,006.09 crores).

In the captioned notice, the above three distinct and independent transactions incurred on different point of time during the captioned assessment year have been alleged to be merged together into a single transaction of conversion to the extent of 20,20.000 number of new series of CRPS purchased on 26'" September, 2011.

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Ignoring the factual matrix of the case which was duly examined and verified by the Ld. AO during the course of the assessment proceedings, in the captioned notice, the above separate transactions of sale through redemption and thereafter purchase of new series of 20,20.000 CRPS of US$ 100 each have been proposed to be merged together to consider as conversion of 20,20,000 CRPS and the LTCL incurred on transfer of the CRPS through redemption on 19"' May 201 I is proposed to withdrawn. To evident the two different set of transactions of sell and purchase and that there was no conversion of CRPS. we have to submit the following factual matrix separately for transfer through redemption of 70,55.000 number of CRPS and the purchase of new series of 20,20.000 number of CRPS in the ensuring paras: LTCL on redemption of 40,75,000 and 29,80,000 numbers of CRPS (aggregating to 70,75,000 number of CRPS): 6.3. During the year under consideration the assesses company claimed LTCL of Rs. 1285,03,75,182/- on the aggregate redemption of the aforesaid 70.55,000 number of CRPS of TMLHS of USS 100 each, redeemed at par. The indexed cost of acquisition of the CRPS was Rs. 4438,13,92,393/- and the consideration received from TMLHS on the redemption of the CRPS was Rs. 3153,10,17,211/-. Accordingly, a LTCL of Rs. 1285,03,75,182/- was claimed by the assessee company. During the course of assessment, the assessee company furnished the statement of computation of LTCL of Rs. 1285,03,75,1827- as per Annexure 16 to letter dated 28.10.2015 which is enclosed in Annexure 4 above (refer Page No, 83 of the factual paper book. Below is the summary of the computation of long term capital loss on redemption of the aforesaid CRPS: No. of shares Cost of Cost of Indexed Cost of Sale Long Term Acquisition Acquisition in Acquisition in INR Consideration in Capital Loss in !NR INR IN'R 5,00,000 5,00,00,000 2,43,18,62,500 3,28,00,89,454 2,23,46,57,492 1,04,54,31,962 20,48,999 20,48,99,900 8,36,19,21,837 11,27,85,37,185 9,15,76,21,933 2,12,09,15,252 45,06,001 45,06,00,100 22,11,06,36,520 29,82,27,65,754 20,13,87,37,787 9,68,40,27,967 70,55,000 70,55,00,000 32,90,44,20,857 44,38,13,92,393 31,53,10,17,212 1285,03,75,181

6.4. During the course of the assessment proceeding, after examination of the aforesaid details submitted vide letter dated 28.10.2015. the Ld. AO vide Order Sheet Entry, further called for evidences in support of the above redemption of the CRPS and the proof of the receipt of the proceeds on the redemption'' transfer of CRPS. In support of the same the assessee company vide its letter dated 24.02.2016 (enclosed in Annexure 5 above)

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furnished the copy of the relevant Payment Authority and Discharge Form relating to the CRPS submitted to TMI.RS along with copy of the relevant share certificate and the Certificate of Foreign Inward Remittance issued by Citibank N'.A. evidencing (he receipt of the proceeds on redemption of of the factual paper book. The same is also summarized in the below table:

Sr. No. Discharge Certificate No. of FIRC in US$ FIRC in INR Value Date From Date No. Shares 1 19.05.11 CRPS 40,75,000 40,75,00,000 18,32,89,75,916 19.05.2011 3,4 & 7 2 2.08.11 CRPS8 29,80,000 29,80,00,000 13,20,20,41,296 03.08.2011 Purchase of 20,20,000 n urn hereof preference shares: 6.5. During the year under consideration, the assessee company purchased new series of 20,20,000 CRPS of TMLHS. In support of the same the following documents are collectively enclosed in Annexure 1 and 6 above: a) Relevant extract of the annual report evidencing purchase of 20,20,000 number of preference shares distinct and separate from redemption of 70,55,000 number of preference shares - refer Page No. 27 & 29 of the factual paper book. b) Certified true copy of the Board Resolution dated 26.09.2011 approving the subscription of 20,20,000 CRPS - refer Page No. 98 of the factual paper book. c) Certificate No. RK.B/8903 issued by the statutory auditors of the assessee company for Overseas Direct Investment (ODI) under the RBI's Automatic Route for USS 202 million (INR 1,006.09 crores) - refer Page No. 99 of the factual paper book. d) RBI's duly filled ODI Form dated 23.09.20!! evidencing the separate and distinct purchase of new series of 20.20,000 CRPS - refer Page No. 99 to 103 of the factual paper book. e) Letter dated 26.09.2011 to Authorised Dealer for remittance towards purchase of new series of 20,20,000 CRPS - refer Page No. 103 of the factual paper book. 6.6. Based on the above documents, it is pertinent to note that both the transactions of redemption and subsequent acquisition are separate transactions, mutually exclusive and thus, cannot be merged into one transaction and treated to be "conversion" of CRPS. Your Honour will appreciate that had it been a case of conversion of 70,55,000 CRPS into 20.20,000 CRPS. the assessee company would not have received any

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amount of consideration on safe of 70,55,000 CRPS. Thus, redemption/sale of 70.55,000 CRPS by TMLHS amounts to 'transfer' u/s. 2(47) of the Act and is covered within the provisions of section 45 of the Act. 6.7. Your Honour would appreciate that it is also a settled law laid by the Hon'ble Apex Court in the case of Amirkali Sarabhai v. CIT (224 ITR 422) (enclosed as Exhibit L of Case Laws Compilation) that redemption of preference shares squarely comes within the phrase "sale, exchange, or relinquishment of the asset" and is hence, liable for capital gains tax u/s. 45 r.w.s 2(47) of the Act. 6.8. Considering the above facts of the case, it is respectfully submitted to your Honour that the in the captioned notice, reliance placed upon the decision of the Hon'ble Mumbai Tribunal in the case of ACIT v. ABC Bearings Ltd. (44 SOT 338) (enclosed as Exhibit (VI of Case Laws Compilation) is purely distinguishable on facts. The said judgement specifically deals with conversion of the units of Unit Trust of India into 6.75% US 64 tax-free bonds as per the option given by the Government to the existing unit holders, whereas in assessee's case it is a clear-cut case of redemption/sale of shares for which consideration is received by the assessee company. 6.9. Therefore, it is submitted that as per the facts of the assessee company, the LTCL claimed on sale of 70.55,000 CRPS had been correctly allowed by the Ld AO in the assessment order dated 27.02.2017 and accordingly no adjustment by way of revision of the order is warranted.

3.12. Similarly, we find that assessee had made its submissions on merits with regard to taxability of dividend received from specified foreign companies before the ld. PCIT which are reproduced as under:-

7.1. Your Honour has in Para 4 of the captioned notice has stated as under :- "4. further. the assessee company had shown an amount of Rs. 22,20,40,053/~ as dividend from foreign companies under (he head "Income from other sources ". The detailed submission made by the assessee on the dividend received showed that this included dividend of Rs. 21,99,53,589/-from M/s Tata Daewoo Commercial Vehicle Co. Ltd. As per the balance sheet of the assessee, M/s Tata Daewoo Commercial Vehicle Co Ltd. was a wholly owned subsidiary of the company and therefore was a specified foreign

17 ITA No.3425/Mum/2019 M/s. Tata Motors Ltd.,

company as defined under section 115BBD. Therefore as per the provisions of the said section the dividend amount of Rs.21,99.53,589/- needed to be taxed separately @ 15% which was done resulting in short levy of tax of Rs. 3.29.93.038/- and interest of Rs.39.59.165/- under section 2348. Further, the interest of Rs. 20,65,86,403/-under section 244A already provided and MAT credit also needed to be withdrawn. 7.2. In this connection, we have to submit that during the earlier year, the assessee company has earned dividend income from specified foreign companies amounting to Rs. 21,99.53,5907-from M/s Tata Daewoo Commercial Vehicle Co. Ltd. (Korea)., Singapore and Rs. 20,86,4637- from Nita Co. Ltd., Bangladesh. The assessee company was holding more than 26% in both the foreign companies and hence the aggregate amount of dividend income received from specified foreign companies as referred in section 115BBD of the Act is Rs. 22,20,40.0537-. We would like to submit to your Honour that in the captioned notice dated 15.03.2019 the amount proposed to be considered u/s 1 15BBD of the Act for separately being taxed at 15% is Rs. 21,99,53,5907-as against Rs. 22,20,40,053/-. 7.3. The assessee company has in its computation of Total Income offered this foreign dividend income aggregating to Rs. 22,20.40.0537- under 'income from Other Sources'. The said dividend income has been assessed vide the order dated 27.02.2017 also under "Income from Other Sources'. The Income/ (Loss) computed under various heads of Income is tabulated herein below:- Sr.No. Heads of Income As per Return As per Order dated 27.02.2017 I Profits and Gains of (23.19,44,19.948) (21,86.10,04,552) Business or Profession 2 Income from House 4,36,42,053 4,36,42.053 Property 3. Capital Gains (STCG) 29,77,8 1,355 29,77,81,355 4 Income from Other 35.79.20,941 35,79,20,941 Sources (including foreign dividend income of Rs. 22.20 crores) Gross Total Income (22,49,50,75,599) (21,16,16,60,203) Total Income (22,49,50,75,599) (21,16,16,60,203)

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7.4. There being Total Loss, the assessee company has not claimed any deduction under Chapter VI-A of the Act. The total assessed Loss of Rs. 21,16,16,60.203/- comprises of the following: a. Assessed Unabsorbed Depreciation - Rs. 13,16,80,13,056/- b. Assessed Unabsorbed Business Loss to be carry forward- Rs. 7,99,36,47, 147/- I. Set-off of loss u/s. 71 falling under Chapter Vii of the Act is a the absence of any restriction under the Act, the same cannot be ignored 7.5. In this regard, at the outset, we would like to invite your Honour's kind attention to the provisions of section 7 1 of the Act, based on which the assessee company had computed the Income for the year and filed Return of income. Section 71 of the Act as relevant for the year under reference , reads as under- "71. (1) Where in respect of any assessment year the net result of the computation under any head of income, other than "Capital gains", is a loss and. the assessee has no income under the head "Capita! gains", he shall, subject to the provisions of this Chapter, be entitled to have the amount of such loss set off against his income, if any, assessable for that assessment year under any other head. (2) Where in respect of any assessment year, the net result of the computation under any head of income, other than "Capital gains", is a loss and the assessee has income assessable under the head "Capital gains", such loss may, .subject to (he provisions of this Chapter, be set off against his income, if any, assessable for that assessment year under any head of income including the head "Capital gains" (whether relating lo short-term capital assets or any other capital assets). (2A) Notwithstanding anything contained in sub-section (1) or sub- section (2), where in respect of any assessment year, the net result of (he computation under the. head "Profits and gains of business or profession" is a loss and the assessee has income assessable under the head "Salaries", the assessee shall not be entitled to have such loss set off against such income;. (3) Where in re sped of any assessment year, the net resit// of the computation under the head "Capital gains " is a loss and the assesses has income assessable under any of her head of income, the assessee shall not he entitled to have such loss set off against income under the other head.

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(4) Where the net result of the computation under the head "Income from house property" is a loss, in respect of the assessment years commencing on the 1st day of April, 1995 and the 1st day of April, 1996, such loss shall he first set off under sub-sections (I) and (2) and thereafter the loss referred to m section 71A shall be set off in the relevant assessment year in accordance with the provisions of that section. " 7.6. In view of the above provisions, your Honour will appreciate that except when there is a Joss under the head 'Capital Gains' as per sub- section (3) above and in case assessee has income under the head 'Salaries' as per sub-section (2A) above, Income under any head, say Income from House Property, Income from Capital Gains and Income from Other Sources, such income are entitled for being set-off against the loss under the head ''Profits and Gains of Business or Profession " 7.7. Accordingly, during the year, the assessee company in its return of income, set-off the loss of Rs.2,319.44 crores against Income from House Property - Rs.4.36 crores. Capital Gains - Rs.29.78 crores and Income from Other Sources Rs.35,79 crores, thereby resulting in Total Loss of Rs.2.249.51 crores which comprises of Unabsorbed Depreciation - Rs. 1.316.80 crores and Unabsorbed Business Loss- Rs.9.32.71 crores; which is carried forward for set-off" against Other Income / Business Profits in future. In the assessment order dated 27.02.2017 the same has been examined and after giving effect to the additions and disallowances the loss for the year was assessed at Rs. 2.116. i 7 crores which comprises of Unabsorbed Depreciation-Rs. 1,316.80 crores and unabsorbed Business Loss - Rs. 799.37 crores 7.8. It is submitted that even 'Long term Capital Gains' is taxable at the rate of 20% or 10%, as the case may be, whereas business income is taxable at marginal rate of 30%, however, still set-off of such loss is permissible as per the provisions of section 71 of the Act. 7.9. in this regard, we would like to draw your Honour's kind attention to the decision of the Hon'ble Bombay High Court in the case of British Insulated Calenders' Ltd. (202 FTR 354) (refer Exhibit H of Case Laws Compilation), wherein it has been held that through dividend Income was taxable at concessional rate of tax, the assessee is liable to first set off its loss under one head of income against income from other head of income u/s. 71 of the Act and only the balance loss available after set-off is allowed to be carried forward in subsequent years. 7.10. Thus, your Honour would appreciate that the law is very clear on the point that income taxable at specified rate must first be set-off against income/ (loss) taxable at higher rate. It is also a settled position that any

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income taxable at specified rate has to be set-off against Income / (loss) under any head taxable at normal rate unless there is an express provision, otherwise, u/s. 71 of the Act. 7.11. We. therefore, humbly request your Honour to kindly permit the set- off of Business Loss for the year against foreign dividend that is offered for tax by the assessee under the head 'Income from Other Sources' as provided u/s. 71 of the Act. 7.12. We have in the foregoing paras discussed at length the provisions of section 71 of the Act. which provides for set-off of Business Loss against any head of Income except "Income from Salary'. 7.13. As regards the applicability of the provisions of section 115BBD of the Act, we would at the outset first like to reproduce the provisions of section, which reads as under: "115BBD. (1) Where the Total Income of an assessee. being an Indian company, includes any income by way of dividends declared, distributed or paid by a specified foreign company, the income-tax payable shall be the aggregate of— (a) the amount of income-tax calculated on the income by way of such dividends, at the rale of fifteen per cent; and (b) the amount of income-tax wish which the assessee would have been chargeable had its Total Income been reduced by the aforesaid income by way of dividends. (2) Notwithstanding anything contained in this Act no deduction in respect of any expenditure^ or allowance shall be allowed to the assessee under any provision of this Ad in computing its income by way of dividends referred to in sub-section (I). (3) In this section,— d) "dividends " shall have the same meaning as is given to "dividend" in clause (22) of section 2 but shall not include sub-clause (e) thereof; (ii) "specified foreign company" means a foreign company in which the Indian company holds twenty-six per cent or more in nominal value of the equity share capital of the company. " 7.14. The above section clearly provides that where the Total Income of the assessee includes income by way of dividend declared, distributed or paid by a specified foreign company, then such dividend income shall be

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subject to tax at 15% (plus applicable surcharge and cess) and balance part of Total Income, i.e. as reduced by above foreign dividend income won id be subjected to the prevailing rate of tax had there been no income by way of foreign dividend income. 7.15. The term "Total Income" is defined in section 2(25) of the Act. which reads as under: "Total Income" weans the total amount of income referred to in section 5, computed in the manner laid down in this Act [Emphasis supplied] " From the above, your Honour will appreciate that here the reference to section 5 is only for inclusion of income from whatever source derived which is received or deemed to be received, accrued or arises or is deemed to accrue or arise or accrues outside India for a person who is resident/ non-resident, as the case may be. 7.16. Apart from reference to Income u/s. 5 of the Act (as discussed above), Total income is required to be computed in the manner laid down in this Act. It thus, follows that income under various heads included in Total Income are required to be computed independently, as per the provisions guiding the same as per Chapter IV of the Act. which deals with Computation of Total Income and then the aggregation of income. "The Set-off and carry forward of losses are required to be computed as provided under Chapter VI of the Act before setting off any deductions from the Total Income as provided under Chapter VI-A of the Act. 7.17. In this regard, we would like to draw your Honour's kind attention to the decision of the Hon'ble Kolkata Tribunal in the ease of Industrial Investment Bank of India Limited v. DCIT (1416/Kol/20l4) (refer Exhibit f of Case Laws Compilation) where it has been held that Chapter V of the Act deals with inclusion in the Total Income of an assessee and Chapter VI of the Act deals with aggregation of Total Income and set-off or carry forward of losses. Dividend income is chargeable to tax u/s. 56 in Chapter V of the Act, subject to the aggregation of the Total Income and set off or carry forward of losses as per Chapter VI of the Act. Section 71 tailing under Chapter VI of the Act provides for set-off of Business Loss against Income from Other Sources including dividend income. Section 71 of the Act docs not provide any restriction on set-off of Business Loss against such dividend income taxable u/s 56 of the Act. 7.18. In the case of the assessee company, the total assessed income being loss of Rs.2,116.17 crores was rightly computed by the Ld. AO as per the provisions of the Act taking into consideration the provisions of Chapter I to V! of the Act. There being a total loss, the assessee company did not lodge any claim under the provisions of Chapter VI-A of the Act.

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7.19. Basis the provisions of section 115BBD of the Act, as the Total Income in the case of the assessee, as computed in the manner laid down under the Act and as defined u/s. 2(45) of the Act is a loss, the question of applicability of specified tax rate of 15% to foreign dividend income, does not arise. II Express provision for restriction for set-off of loss whenever intended has been specifically provided in the Act. In the absence of any express provision u/s.115BBD of the Act, the set off of loss against the Dividend In come referred it/s 115BBD of the Act is allowable as per law, 7.20. It is submitted that sub-section (2) of section 115BBD of the Act begins with a non-obstante clause stating that no deduction in respect of any expenditure or allowance shall be allowed to the assessee in computing its income by way of dividend, which means that no deduction towards any expenditure or allowance in relation to that dividend will be allowed. 7.21. It is submitted that the assessee company has not claimed any expenditure or allowance in computing its foreign dividend income offered to tax under the head ''Income from Other Sources "which is sei-off against "Profits and Gains of Business or Profession" as provided u/s. 71 of the Act. 7.22. In light of the above discussion on the provisions of the Act, we submit that sub-section (2) to section 115BBD of the Act only provides that no deduction of any expenditure or allowance shall be allowed while computing foreign dividend income and working out tax thereon. While it does not prohibit set-off of losses against the said dividend income. 7.23. The provisions of sub-section (2) of section 115BBD of the Act expressly deals with non-allowability of deduction of any 'expenditure' or 'allowance" against dividend income, however the Act does not prohibit set-off of losses against the said dividend income. !t is settled legal position that the term 'expenditure* or 'allowance' is different from "loss1 and it cannot be used interchangeably. 7.24. In this regard, we would like to draw your Honour's kind attention to the decision of the Hon'ble Supreme Court in the case of CIT v. Walfort Share & Stock Brokers (P.) Ltd. (326 ITR 1) (refer Exhibit J of Case Laws Compilation) where the Hon'ble Apex Court while adjudicating on the issue relating to whether the loss arising in the course of dividend stripping transaction prior to 01.04.2002 was disallowable on the ground that it was artificial and not business transaction dealt at great length on the terms 'expenditure" and 'loss' while touching upon the provisions of section 14A and section 94(7) of the Act. The Hon'ble Apex Court categorically held

23 ITA No.3425/Mum/2019 M/s. Tata Motors Ltd.,

that the two terms are conceptually different and cannot be used interchangeably. 7.25. Without prejudice to the above, we would like to submit that had the Legislature intended that no set-off of loss would be allowed against the foreign dividend income then it would have expressly provided so in the said section itself, as is provided in section 115BBE of the Act (inserted by the Finance Act 2012, w.e.f. 01.04.2013) and section 115BBDA of the Act (inserted by the Finance Act 2016, w.e.f. 01.04.2017). 7.26. On taxation of income at specified rate, as referred to in section i I5BBE and section II5BBDA of the Act, we would like to further elaborate as under: Section 115BBE of the Act which deals with specified rate of tax on income referred to in section 68. 69, 69A, 69B, 69C or 69D was inserted vide Finance Act, 2012 (w.e.f. 01,04.2013) which read as under: - " 115BBE. [(}) Where the Total Income of an assessee,— (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-lax payable shall be the aggregate of— (1) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent: and the amount of income-tax with which the assessee would have been chargeable had his Total Income been reduced by She amount of income referred to the clause (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure ^allowance's hall _be_ allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) of sub-section (I). " (emphasis supplied) 7.27. The Legislature observed that there was uncertainty prevailing on the issue of set-off of losses against income referred in section 1 15BBE of the Act and the judicial forums and courts in some eases took a view that losses shall not be allowed to be set-off against income referred in section!

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15BBEofthe Act. Also the then prevailing language of the above section did not convey the desired intention, resulting in the matter being litigated, as can be seen in the following judicial pronouncements:  ACIT v. M/s. Rahil Agencies (ITA No. 4413/M/2014) (Mum. ITAT);  ACiTv. Sanjay Bairathi Gems Ltd, (166 ITD 445) (Jaipur ITAT);  Satish Kumar Goyal v. JCIT (JTA No. 143/Ag/20I4) 7.28. In order to avoid unnecessary' litigation, sub-section (2) of section 115BBE of the Act as amended by Taxation Laws (Second Amendment) Act, 20J6 (w.e.f. 01.04.2017) as under: (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or advance or set-off of any loss( emphasis supplied) shall be allowed to the assesseee_ under any provision of this Act in computing his income referred to in clause (a) of sub-section (I). " From the above, your Honour will observe that the Legislature suitably amended the above section in order to categorically not allow deduction in respect of set off of any loss while computing the income referred to in the above sections and this amendment was brought into effect prospectively. Drawing analogy from the above section which was introduced and subsequently amended suitably to set at rest the litigation arising therefrom, had the Legislature intended not to allow deduction for set-off of losses, it could very well have amended sub-section (2) of section 1 15BBD of the Act prospective!)' as was done in the case of section i 15BBE of the Act. 7.32. The Legislature based on experiences gathered from past enactments with regard to "Chapter XII ~ Determination of Tax in certain Special Cases', while introducing section 1 15BBDA of the Act, which deals with tax on certain dividends received from domestic companies inserted by Finance Act 2016 (w.e.f 01.04.2017), ensured that subsection (2) which deals with non-availability of any deduction, expressly provided for non deduction of set-off of loss in computing the income by way of dividends at the time of insertion of the section itself. We would like to further draw your Honour's kind attention to section 115BBF of (he Act which deals with tax on income from patent which was also inserted from Finance Act 2016 (w.e.f. 01.4.2017) wherein sub-section (2) which begins with a non-obstante clause similar to section 115BBD of the Act does not include the term 'set-off of loss' as being not available to the assessee.

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7.33.It is also submitted that whenever any income is proposed to be taxed on gross basis at specified rates without grant of any deduction towards expenditure or allowance or set-off of loss, then it is expressly provided in the body of the section or the section is suitably amended otherwise. Hence, it is submitted that since, sub-section (2) to section 115BBD of the Act does not categorically provide that no deduction would be allowed for set-off of losses, it is to be construed that set-off of loss is available as deduction while computing foreign dividend income. 7.34. We would like to draw your Honour's kind attention to the Explanatory Memorandum to Finance Act. 2011 for the rationale behind introducing section 115BBD of the Act for taxing certain dividends received from foreign companies. ''Under the existing provisions of the Income-tax Act, dividend received from foreign companies is taxable in the hands of the resident shareholder at his applicable marginal rate of tax. Therefore, in case of Indian companies which receive foreign dividend, such dividend is taxable at the rate of thirty per cent plus applicable surcharge and cess. It is proposed to insert a new section 115BBD to provide that where Total Income of an Indian company for the previous year relevant to the assessment year 2012-13 includes any income by way of dividends received from a foreign subsidiary company, (hen such dividends shall be taxable at the rate of fifteen per cent (plus applicable surcharge and cess) on the gross amount of dividends. No dividends shall be allowed under the Act. This amendment is proposed to take effect from 1st April. 2012 and will accordingly, apply in relation to the assessment year 20/2-13. " 7.35. Further, the relevant extract of the Budget speech to Finance Act, 2011, is also reproduced hereunder: "146. It has been represented that the taxation of foreign dividends in the hands of resident taxpayers at full rate is a disincentive for their repatriation to India and they continue lo remain invested abroad. For the year 2011-12, propose a lower rate of 15 per cent tax on dividends received by an Indian company from its foreign subsidiary.1 do hope these funds will now flow to India, " 7.36. In addition to the above, we also draw your Honours kind attention to the CBDT's Circular No. 02/2012 dated 22,05.2012 and Circular No. 1/20i 5, dated 21.01.2015. the relevant extract is enclosed herewith in Annexure 7 which deal with the period of applicability of the section and its subsequent extension.

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7.37. In view of the foregoing discussion, your Honour will appreciate that under Chapter XII - Determination of Tax in Certain Special Cases, section 1I5BBD of the Act has been introduced to provide for concessional rate of tax @ 15% on foreign dividend income instead of the maximum marginal rate of 30% so as to incentivize repatriation of foreign currency into the country. Being an incentive provision there was no restriction imposed with respect to any set-off of losses as per Chapter VI of the Act. Section 115BBD of the Act being a beneficial provision, to incentivize an assessee on repatriation of foreign currency into the country, cannot be interpreted to penalize the assessee Company with a tax of 15% when the assessee is otherwise in loss, 7.38. In other words, the main objective behind introducing section 115BBD of the Act was to encourage repatriation of foreign dividends by the Indian companies from its foreign subsidiary companies and to provide concessional rate of tax. if the Total Income as computed in the manner laid down under the Act includes foreign dividend income. 7.39. Thus, it is submitted that section 115BBD of the Act being an incentive provision is a beneficial legislation and is to be construed liberally to grant benefit to the taxpayer to fulfill the mandate of legislation which is to repatriate foreign dividends. Reliance in this regard is placed on the decision of the Hon'ble Supreme Court in the case of Bajaj Tempo Ltd. v. CIT (196 ITR 188). wherein it is held as under; "The provision in a taxing statute granting incentives for promoting growth and development should be construed liberally; since the provision for pro/noting economic growth has to be interpreted liberally, restrictions on it too has to be construed so as to advance the objective of the provisions and not to frustrate it." 7.40. Considering the above, we humbly submit that the said provisions of section 115BBD of the Act be interpreted liberally and the assessee company be allowed to set-off the Business Loss during the year against the foreign dividend income offered lo lax under Income from Other sources. 7.41. Thus, it is submitted that the Ld. AO in the assessment order dated 25.01.2017 has corrected taxed the dividend income received form specified foreign companies as referred in section 115BBD of the Act in conformity with section 71 of the Act. 3.13. We find that these submissions go to prove that the order passed by the ld. AO and the opinion framed thereon by him was one of the possible views taken by him while framing the assessment based on the

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laws prevailing at that relevant point in time. The law is very well settled that, once a possible view has been taken by the ld. AO while framing the assessment, the same cannot be subjected to revision u/s.263 of the Act merely because the ld., PCIT is of a different view on the impugned subject. From the elaborate factual submissions made by the assessee on merits which are reproduced hereinabove, we are in complete agreement with the contentions of the assessee that the ld. PCIT ought not to have even resorted to take a divergent view than that taken by the ld. AO in the facts and circumstances of the instant case. In any case, we hold that revision jurisdictional u/s.263 of the Act is not permissible when a possible view has been taken by the ld. AO (though this is a case where no two views are possible) while framing the assessment and further revision u/s.263 could not be made merely because the ld. PCIT is trying to substitute his view in the view already taken by the ld. AO. Reliance in this regard has been rightly placed by the ld. AR on the decision of the Hon‟ble Jurisdictional High Court in the case of CIT vs. Gabriel India Ltd., reported in 203 ITR 108. Hence, we hold that the assessee had also made out its case before the ld. PCIT as well as before the ld. AO on merits. These contentions were duly appreciated by the ld. AO while framing the assessment. However, the ld. PCIT did not appreciate the said contentions and directly concluded without giving proper reasoning thereon, that the claim of the carry forward of long term loss of the assessee need to be disallowed. This action of the ld. PCIT is unsustainable in the eyes of law as far as the first issue is concerned.

3.1.4. With regard to taxability of foreign dividend, we find that assessee had even submitted that by setting off the foreign dividend income with the business loss of the year u/s.71 of the Act, the assessee had actually set off the income taxable @15% with the loss which would have a tax

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effect of 30%. This has only caused prejudice to the interest of the assessee and it is not prejudicial to the interest of the revenue. Even this aspect has not been considered and appreciated by the ld. PCIT.

3.15. We hold that in view of the aforesaid detailed observations that assessee had also made out a case before the ld. PCIT even on merits and accordingly, the ld. PCIT ought not to have given directions to the ld. AO to disallow the claim of carry forward of long term capital loss and for taxing the foreign dividend income. Hence, the assessee succeeds on this aspect on merits also.

3.16. We also find from the final pages of the assessment order that ultimately the income has been determined only u/s.115JB of the Act. Even after giving effect to the order of the ld. PCIT u/s.263 of the Act, there would be no taxable income under normal provisions of the Act and even then, the income would ultimately get determined only u/s.115JB of the Act. Hence, there would be no prejudice that could be caused to the interest of the Revenue in this regard. While this is so, we are unable to persuade ourselves to accept to the contentions of the ld. PCIT that the order of the ld. AO is erroneous and prejudicial to the interest of the revenue. Reliance in this regard has been rightly placed by the ld. AR on the co-ordinate Bench decision of Kolkata Tribunal in the case of Luxmi Co. Ltd., vs. CIT reported in 164 ITD 173 which is directly on the point in dispute before us. For the sake of brevity, the relevant operative portion of the said order is not reproduced hereunder. Even on this ground, we hold that the revision order passed by the ld. PCIT is unsustainable in the eyes of law.

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3.17. In view of the aforesaid detailed observations and by following various judicial precedents relied upon hereinabove, we allow the grounds raised by the assessee and quash the revision order passed by the ld. PCIT u/s.263 of the Act apart from holding that the assessee deserves to succeed on merits also.

Order pronounced on 05/03/2021 by way of proper mentioning in the notice board.

Sd/- Sd/- (C.N. PRASAD) (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 05/03/2021 KARUNA, sr.ps

Copy of the Order forwarded to : The Appellant 1. The Respondent. 2. The CIT(A), Mumbai. 3. CIT 4. DR, ITAT, Mumbai 5. 6. Guard file. //True Copy//

BY ORDER,

(Asstt. Registrar) ITAT, Mumbai

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