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Income Tax Appellate Tribunal, MUMBAI BENCHES, ‘I’ MUMBAI
Before: Shri Joginder Singh, & Shri Manoj Kumar Aggarwal
आदेश / O R D E R Per Joginder Singh(Judicial Member) The Revenue is aggrieved by the impugned order dated 07/04/2015 of the Ld. First Appellate Authority, Mumbai. The grudge of the Department is with respect to direction to the Assessing Officer to re-compute the LTC loss on account of sale/transfer of shares of IL & FS during the year by taking into account the provisions of section 45(2A) of the Act and circular No.768 dated 24/06/1998 without appreciating the fact that IL & FS sold during the year, were not listed in the stock exchange, therefore, the FIFO method adopted by the assessee for working the capital gain is not correct.
2. During hearing, at the outset, the ld. counsel for the assessee, Shri Dilip V. Lakhani, contended that the issue is covered by the decision of the Tribunal in the case of assessee itself for Assessment Year 2009-10 (ITA No.5235/Mum/2014 and 5223/Mum/2014) order dated 30/09/2016 and also for Assessment Year 2010-11 (ITA No.5485/Mum/2014). This factual matrix was consented to be correct by Shri Airiju Jai Karan, ld. DR, 2.1. We have considered the rival submissions and perused the material available on record. In view of the above, we are reproducing hereunder the relevant portion from the order of the Tribunal dated 30/09/2016 (Supra) for IL & FS Employees Welfare Trust Assessment Year 2010-11, in the case of assessee itself, for ready reference and analysis:-
Instant appeal by the Revenue is directed against the order dated 27th June 2014, passed by the learned Commissioner (Appeals)– 30, Mumbai, for the assessment year 2010–11. The only effective ground raised by the Department reads as under:– “On the facts and in the circumstances of the case and in law, the learned Commissioner (Appeals) erred in directing the Assessing Officer to compute the long term capital gain on account of sale / transfer of shares of IL & FS during the year by determining cost of acquisition under section 45(2A) of the Act r/w circular no.768 dated 24.06.1998 to the CBDT instead of average cost method adopted by the A.O. whereby disallowed long term capital gain of ` 12,76,44,285.
Brief facts are, the assessee trust is engaged in the activities of investment in shares and securities, dealing in shares, debenture and other securities. For the assessment year under consideration, the assessee filed its return of income declaring income of ` 57,73,28,600 on 22nd July 2010. During the assessment proceedings, it was noticed by the Assessing Officer that the assessee had claimed long term capital loss of ` 29,30,17,200. On verifying the details of assessee’s claim, the Assessing Officer found that the assessee had taken the cost of acquisition of shares @ by applying “FIFO” method as per section 45(2A) of the Act. The Assessing Officer, however, rejected assessee’s claim and invoking the provisions of section 55(2)(aa) of the Act computed the long term capital loss at ` 16,53,72,915. Being aggrieved of the aforesaid decision of the Assessing Officer, assessee preferred appeal before the first appellate authority.
During the course of appeal proceedings, the learned Commissioner (Appeals) having noted that in assessment year 2009– 10, while deciding similar nature of dispute in assessee’s
IL & FS Employees Welfare Trust own case, he has allowed assessee’s claim by deleting the addition made by the Assessing Officer, followed the same and accepted assessee’s claim of long term capital loss. Being aggrieved, the Department is in appeal before us.
We have considered the submissions of the parties and perused the material available on record. The learned Counsels appearing for both the parties agreed before us that the issue in dispute is squarely covered by the decision of the Tribunal in assessee’s own case for assessment year 2009–10. On a perusal of the order passed by the Tribunal in ITA no.5235/Mum./2014, etc., dated 26th August 2016, in assessee’s own case for the assessment year 2009–10, it is noticed that the Tribunal while deciding the issue has upheld the claim of the assessee with the following observations:– “10. The revenue has challenged the direction given by the CIT(A) on this issue to the Assessing Officer to compute the Long Term Capital Loss on account of IL & FS during the year by determining cost of acquisition u/s.45(2A) of the Act read with Circular No.768 dated 24.06.1998. However, the revenue is of the view that the average cost method adopted by the Assessing Officer is liable to be implemented whereas the Assessing Officer disallowed the Long Term Capital Loss to the tune of Rs.7,50,92,618/-. Before going further it is necessary to advert the finding of the learned CIT(A) in the regard.
“4. I have duly considered the submission of the appellant and in the said respect it is relevant to refer to section 45(2A) of Act, which is as follows:
“(2A) Where any person has had at any time during previous year any beneficial interest in any securities, then, any profits or gains arising from transfer made by the depository or participant of such beneficial interest in respect of securities shall be chargeable to income-tax as the income of the beneficial owner of the previous year in which such transfer took place and shall not be regarded as income of the depository who is deemed to be IL & FS Employees Welfare Trust the registered owner of securities by virtue of sub-section (1) of section 10 of the Depositories Act, 1996, and for the purpose of – (i) section 48; and (ii) (ii) proviso to clause (42A) of section 2, the cost of acquisition and the period of holding of any securities shall be determined on the basis of the first-in-first-out method. Inserted by the Depositories, Act, 1996, w.e.f from 20.09.1995, which provides as follows:
……….
The appellant’s is contention that it has domiciled IL & FS shares in two different demat accounts. In F.Y. 2008-09, 11,54,613 shares were lying as opening stock in the demat account with DP ID 11177127 and 56,09,953 IL &FS shares lying as opening stock in the demat account with DP ID 11396032 and since these shares were transferred by IEWT (the appellant) in demat form, it has applied sec. 45(2A), and, on the basis of FIFO, taken cost of 11,54,613 shares Rs.150 per share and for the balance 4,25,138 shares at Rs.85.06 per share. I, therefore, find that se.45(2A) is a specific provision under the Act, which prescribed the method to determine the cost of acquisition and the period of holding of any security, i.e. on the basis of first-in and first-out method. The AO has not disputed that the shares have been held by the depository and transferred in the demat form and FIFO method is not applicable in such cases. He has also not doubted the computation of capital gain on FIFO basis. He has merely applied the above two referred decisions without discussing as to how se.45(2A) is not applicable in the above case and how the two decisions without discussing as to how sec.45(2A) is not applicable in the above case and how the two decisions over-ride specific provisions of the Act. I further find that the decision in the case of Bombay High Court in the case of Dahiben Umedbhai (Supra) and Emerald & Co. (Supra) were rendered prior to the insertion of provision of sub-section (2A) u/s. 45 of the Act. In view of the same, the above two conditions are not applicable. I therefore, direct the AO to compute the Long Term Capital Gain / Loss on account of sale/transfer for shares of IL & FS during the year by IL & FS Employees Welfare Trust taking into account the provisions of sec.45(2A) of the Act and Circular No.768 dated 24.06.1998. Further, while computing the income / loss under the above head, he should take into account the correct figures of opening stock as also for the purpose of calculation of cost of the shares. 4.1 The above grounds of appeal taken by the appellant, thus, stand allowed.”
At the time of argument no distinguishable facts have been placed on record by the revenue to which it can be assume that the learned CIT(A) has passed the order wrongly and illegally. The specific directions has been given by the CIT(A) to determine the cost of acquisition u/s.45(2A) of the Act read with Circular No.768 dated 24.06.1998. Nothing seems unjustifiable. Since the matter of controversy has rightly been adjudicated by the CIT(A), therefore, we nowhere found any ground to interfere with this order, therefore we uphold this issue in favour of the assessee and against the revenue. Accordingly, this issue is decided in favour of the assessee and against the revenue.
Accordingly, appeal of the assessee is hereby allowed and appeal of the revenue is hereby dismissed.”
As there is no material difference in facts in the impugned assessment year nor any contrary decision has been brought to our notice, respectfully following the aforesaid decision of the co–ordinate bench of the Tribunal rendered in assessee’s own case cited supra, we uphold the order of the learned Commissioner (Appeals) by dismissing the ground raised by the Revenue.
In the result, Revenue’s appeal stands dismissed.”
We find that in the aforesaid order, while dismissing the appeal of the Revenue, the Tribunal duly considered the decision for the Tribunal for Assessment Year 2009-10 (supra) order dated 26/08/2016 and thereafter reached to a particular conclusion. There is no material difference in the facts of the year under consideration. Respectfully following IL & FS Employees Welfare Trust the decisions of the Co-ordinate Bench that too in the own case of the assessee, we uphold the impugned order, resulting into dismissal of appeal of the Revenue.
Finally, appeal of the Revenue is dismissed.
This Order was pronounced in the open court on 26/05/2017.