SRI TOBBY SIMON,BANGALORE vs. DEPUTY COMMISSIONER OF INCOME TAX, CIRCLE- 6(1)(2), BANGALORE
In favour of the Revenue: the assessee's appeal was dismissed. From the AI summary of this appeal.
What did the Tribunal hold?
The Tribunal held that the disallowance of Rs. 16,13,525 was correct as it represented a capital loss. Regarding the double disallowance claim, the Tribunal upheld the CIT(A)'s order to restore the matter to the AO for verification.
What were the facts?
The assessee claimed a provision for diminution in the value of investments amounting to Rs. 16,13,525. While computing total income, the assessee voluntarily disallowed Rs. 3,97,189 of this amount. The AO disallowed the entire Rs. 16,13,525, invoking Section 115JB, which the CIT(A) later accepted as not applicable to the individual assessee.
What were the issues?
Whether the provision for diminution in investment value constitutes a capital loss, and whether there was a double disallowance of income.
Which sections of the Income-tax Act were involved?
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, “C’’BENCH: BANGALORE
Before: SHRI GEORGE GEORGE KAND SHRI B. R. BASKARANShri. Tobby Simon, Shri. V. Srinivasan, Advocate
O R D E R PER B.R.BASKARAN, ACCOUNTANT MEMBER:
The assessee has filed this appeal challenging the order dated 23.07.2020 passed by learned CIT(A)-6, Bangalore, for Assessment Year 2014-15.
The only issue urged by the assessee related to disallowance of Rs.16,13,525/- relating to provision for diminution of value of investment.
The learned AR submitted that the assessee is deriving income from salary from business and other sources. The assessee had held certain investments and he found that some of them have become worthless with Nil value. Accordingly, he made provision for diminution in the value of investments to the tune of Rs.16,13,525/- during the year under consideration. The Ld A.R further submitted that the assessee, while computing the total income, voluntarily disallowed a sum of Rs.3,97,189/- out of the above said amount. The AO, however, disallowed the entire amount of Rs.16,13,525/- by invoking the provisions of section 115JB of the Income Tax Act, 1961 (hereafter called ‘the Act’) and the same resulted in double disallowance to the extent of Rs.3,97,189/-.
In the appellate proceedings, the assessee submitted before Ld CIT(A) that the provisions of section 115JB of the Act are not applicable to him, as he is an individual. The assessee also submitted that he has voluntarily disallowed a sum of Rs.3,97,189/- while computing total income. The learned CIT(A) accepted the contentions of the assessee with regard to non- applicability of provisions of section 115JB of the Act. However, he upheld the disallowance of Rs.16,13,525/- made by the AO. With regard to claim of the assessee that there was double disallowance to the extent of Rs.3,97,189/- , the learned CIT(A) restored the same to the file of AO for examining the same.
Still aggrieved, the assessee has filed this appeal before us.
We heard learned DR and perused the record. Admittedly, investment held by the assessee constitute capital assets in his hand. Hence, any loss arising either on transfer of investment or by making provision for diminution in value would constitute capital loss in the hands of the assessee. Hence, we are of the view that the disallowance of Rs.16,13,525/- made by the AO was rightly upheld learned CIT(A).
With regard to the claim of double disallowance to the extent of Rs.3,97,189/-, we have noticed that the learned CIT(A) has already restored the matter to the file of AO for verifying the same. There is merit in the submission of Ld A.R that the Income tax Act does not permit taxing the same income twice. According to the assessee, he has already disallowed a sum of Rs.3,97,189/- out of Rs.16,13,525/-. If the AO finds out the same to be correct after examining the relevant details, then the disallowance should be restricted to the balance amount only. We have noticed that the Ld CIT(A) has already restored the matter to the file of AO for examining the claim of the assessee, Accordingly, we uphold the order of Ld CIT(A) on this issue also.
In the result, appeal filed by the assessee is dismissed.
Pronounced in the open court on the date mentioned on the caption page.
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