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Income Tax Appellate Tribunal, PUNE BENCH “A”, PUNE
Before: SHRI R. K. PANDA & SHRI VINAY BHAMORE
Assessment Year: 2022-23 Jaynt Vasudeo Aradhye, Vs. DCIT, Circle-1, Solapur. Villa No.25, Indradhanu, Laxmi Peth, Vishnu Mill Compound, Solapur- 413001. PAN : AAPPA8903M Appellant Respondent Assessee by : Shri Deepak Chintaman Gadgil Revenue by Shri Ramnath P. Murkunde : Date of hearing 06.08.2024 : Date of pronouncement : 21.10.2024 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 07.02.2024 passed by LD. Addl./JCIT(A)-1, Coimbatore for the assessment year 2022-23 2. The appellant has raised the following grounds of appeal :- “I. The CPC was not correct both factually & legally in not considering the claim of brought forwarded short term capital loss of Rs 27,78,028/-.
11. Section 143(1) as it stands on the statute books as on today, does not permit either CPC or the AO to make such adjustments as they are beyond the scope of the said section.
III. Hon'ble CIT-A, with due respect, was also not legally correct in holding that the scheme of section 115BAC does not permit setting off of carried forward Short Term Capital Loss against the Income under the head Capital Gains during the present AY i.e. 2022-23. IV. The Appellant craves leave of Your Honor to add/alter/delete any of the above cited grounds on or before the date of hearing of this appeal. V. The Appellant also reserves his right to ask for a personal hearing on the matter at appropriate point of time in case he feels the same is absolutely essential to the case.”
The facts of the case, in brief, are that the assessee is a retired engineer and super senior citizen and also high net worth individual having income from capital gains and income from various types of investments. Since last 4 decades, the assessee is regularly assessed to income tax and is paying his taxes continuously. The return of income was e-filed timely i.e. on 30.06.2022 declaring taxable income of Rs.1,11,85,790/-. The return of income was processed by CPC and intimation u/s 143(1) dated 03.03.2023 was issued wherein additional demand of Rs.9,96,750/- was raised. On verification of the intimation, it was discovered that brought forward short term capital loss of Rs.27,78,028/- was not allowed by the CPC while processing the return, without any valid reason. The assessee preferred first appeal before the ld. Addl./JCIT(A)-1, Coimbatore and furnished written submissions before him wherein it was submitted that the 2021-22 which was accepted by CPC while processing the return for assessment year 2021-22. After considering the reply of the assessee, ld. Addl./JCIT(A)-1, Coimbatore dismissed the appeal vide order dated 07.02.2024 by observing as under :- “OBSERVATION AND DECISION: The only issue raised by the appellant in appeal is that CPC was not correct both factually & legally in not considering the claim of brought forwarded short term capital loss of Rs 27,78,028/-. The appellant has opted for taxation u/s 155BAC in the ITR filed as under (12) Ave you opting for new tax regime u/s 115BAC? Yes No 5.2 The CPC has worked out the tax under section 115BAC. Section 115BAC (2) and (3) are as under. (2) For the purposes of sub-section (1), the total income of the individual or Hindu undivided family shall be computed.- (i) without any exemption or deduction under the provisions of clause (5) or clause (13A) or prescribed under clause (14) (other than those as may be prescribed for this purpose) or clause (17) or clause (32), of section 10 or section 10AA or section 16 or clause (b) of section 24 (in respect of the property referred to in sub-section (2) of section 23) or clause (iia) of sub- section (1) of section 32 or section 32AD or section 33AB or section 33ABA or sub-clause (ii) or sub-clause (iia) or sub- clause (iii) of sub-section (1) or sub- section (2AA) of section 35 or section 35AD or section 35CCC or clause (iia) of section 57 or under any of the provisions of Chapter VI-A other than the provisions of sub-section (2) of section 80CCD or section 80JJAA; (ii) without set off of any loss, - (a) carried forward or depreciation from any earlier assessment year, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); (b) under the head "Income from house property” with any other head of income: (iii) by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed; and (iv) without any exemption or deduction for allowances or perquisite, by whatever name called, provided under any other law for the time being in force. (3) The loss and depreciation referred to in clause (ii) of sub- section (2) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year. Provided that where there is a depreciation allowance in respect of a block of assets which has not been given full effect to prior to the assessment year beginning on the 1st day of April, 2021, corresponding adjustment shall be made to the written down value of such block of assets as on the 1st day of April, 2020 in the prescribed manner, if the option under sub- section (5) is exercised for a previous year relevant to the assessment year beginning on the 1st day of April, 2021. 5.3 Section 115BAC (2) (ii) states without set off of any loss and the CPC has only followed this. The income chargeable at normal rates u/s 115BAC is to be taxed without any set off of losses and, the income taxed at special rates is to be worked out with set off of loss. The LTCG is taxed at special rates and added to the tax worked out u/s 115BAC and the CPC has allowed set off of carried forward LTCG loss. STCG is taxed at normal rates u/s 115BAC is to be taxed without any set off of losses. The working of the CPC is correct and as per law. The CPC has corrected the arithmetical mistake in totalling income as per section 115BAC and this is within the powers u/s 143(1). The grounds raised
by the appellant are not valid and are dismissed.
6. In the result the appeal is dismissed.”
4. It is this order against which the assessee is in appeal before this Tribunal.
5. The ld. AR submitted before us that the order passed by the ld. Addl./JCIT(A)-1, Coimbatore is not correct. It was submitted that in the return of income brought forward short capital loss of Rs.27,78,028/- was claimed and the same was set-off against the short term capital gain income of Rs.43,03,555/-. It was further Rs.27,78,028/- was arrived in last year i.e. during the assessment year 2021-22 and was carried forward from assessment year 2021-22. This short term capital gain loss of Rs.27,78,028/- was accepted by CPC by issuing an intimation u/s 143(1) of the IT Act and accordingly it was carried forward to assessment year 2022-23 i.e. the period under consideration and it was set-off against the short capital gain income of Rs.43,03,555/- of assessment year 2022-23. It was submitted that when CPC has accepted the short term capital loss of Rs.27,78,028/- in assessment year 2021-22 & carried forward the same, then there was no occasion for disallowing the same for getting set-off against the short term capital gain income of Rs.43,03,555/- arising in assessment year 2022-23. It was submitted by the counsel of the assessee that the assessee has opted for taxation u/s 115BAC of the IT Act and the above section does not prohibit set-off of short term capital loss. It was further submitted that B/F long term capital loss has already been allowed by CPC but has disallowed set off of B/F short term capital loss, without any valid reason. Accordingly, it was prayed before the Bench that when CPC has accepted the amount of short term capital loss arising in assessment year 2021-22 by issuing an 143(1) dated 21.06.2022, the same should be allowed to be brought forward to assessment year 2022-23 and set- off be given against the short term capital gain income of assessment year 2022-23, when all other conditions are also fulfilled.
The ld. DR relied on the orders passed by the subordinate authorities and requested to confirm the same.
We have heard the ld. Counsels form both the sides and perused the material available on record. We find that the CPC has already accepted the figure of short capital loss of Rs.27,78,028/- in assessment year 2021-22 and allowed the same to be carried forward to assessment year 2022-23. In support of this contention, ld. Counsel of the assessee submitted intimation u/s 143(1) dated 21.06.2022 issued by CPC for assessment year 2021-22. On the basis of this intimation, the assessee is certainly entitled to carry forward this short term capital loss to next year i.e. for assessment year 2022-23 which is the period under consideration. During the assessment year 2022-23, the assessee has earned short term capital gain income of Rs.43,03,555/- and while filing the return the above short term capital loss brought forward from assessment year 2021-22 was set-off against this short term capital gain CPC while processing the return did not allow set-off of this brought forward loss of Rs.27,78,028/-, which resulted in additional demand of income tax of Rs.9,96,750/-. In first appeal proceedings, ld. Addl./JCIT(A)-1, Coimbatore has dismissed the appeal of the assessee by referring to section 115BAC(2)&(3) wherein it has been mentioned that which loss cannot be set-off while computing the income. We find that the ld. Addl./JCIT(A)- 1, Coimbatore has already reproduced the section 115BAC in his order and from perusal of the same, it is found that long term capital loss & short term capital loss is not specifically barred and accordingly short term capital loss was required to be allowed by CPC. We also find that while processing the return of income of assessee, CPC allowed set-off of brought forward Long Term Capital Loss but at the same time not allowed/set-off of brought forward short term capital loss. The ld. Counsel of the assessee produced before us Annexure Schedule BFLA as provided by the assessee and as computed u/s 143(1) by CPC. It is observed that there are different columns for disclosing short term capital gain. For example, short term capital gain taxable at the rate of 15% or 30% and another column is short term capital gain taxable at applicable rates but it appears that the assessee has not filled in 15% or 30% but has filled in the column short term capital gain taxable at applicable rates and according to us this is the error committed by the assessee. As we know that the return processing is computerized one and no manual interference is there and if any figure or claim is not entered in appropriate column the computer disallows the same. We find that in section 115BAC neither brought forward long term capital loss nor brought forward short term capital loss is required to be disallowed but due to the fact that the assessee has entered the figure of brought forward long term capital loss in correct column the same was allowed by CPC. But the brought forward short term capital loss was not filled in proper column, the same was disallowed by CPC. Considering the totality of the facts, we deem it proper to set-aside the order passed by the ld. Addl./JCIT(A)-1, Coimbatore and remand the matter back to his file with a direction to pass a fresh order in the light of our observations after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to comply with the notices issued by the ld. Addl./JCIT(A)-1, Coimbatore and bring this fact to the knowledge of the ld. Addl./JCIT(A)-1, Coimbatore that brought forward long term capital loss was allowed by CPC