BHARAT ENTEPRISES,MUMBAI vs. DCIT CIR 12(2), MUMBAI

The assessee is aggrieved by decision of learned CIT(A) in confirming the order of the Assessing Officer, who had held that brought forward long term capital loss cannot be set off of against short term capital gain arising from sale of depreciable asset computed u/s. 50 of the Act.

We have heard the parties and perused the record. The assessee declared long term capital gain on sale of a flat and claimed a part of the same as deduction u/s. 54EC of the Act. Remaining amount of long term capital gain of ` 5.85 lakhs was set off of against long term capital loss brought forward from the earlier year. During the course of assessment proceedings, the Assessing Officer noticed that the flat transferred by the assessee was a depreciable asset and hence capital gain arising on its sale is required to be assessed as short term capital gain in terms of section 50 of the Act.

Subsequently, the assessee moved a petition u/s. 154 of the Act before the Assessing Officer requesting him to set off brought forward long term capital gains against the Short term capital gains computed u/s 50 of the Act. However, said computation was rejected by the Assessing Officer on the reasoning that the assessee did not contest the adverse decision rendered by learned CIT(A) against the assessee on this matter, by filing the appeal before the ITAT. Learned CIT(A) also endorsed the view expressed by the Assessing Officer and accordingly dismissed the appeal filed by the assessee against the order passed by the Assessing Officer u/s. 154 of the Act.

We have heard the parties and perused the record. It is well settled proposition that there is no estoppel against law. Accordingly we are of the view that the failure of the assessee to contest the decision of learned CIT(A) by filing the appeal before the Tribunal will not take away his rights to claim the benefits in accordance with the provisions of the Act. Accordingly we are of the view that the reasoning given by the Assessing Officer as well as learned CIT(A) for rejecting the rectification petition filed by the assessee is not sustainable in law. Accordingly, we set aside the order of learned CIT(A) and restore the matter to the file of the Assessing Officer with the direction to examine the same afresh by affording adequate opportunity of being heard to the assessee and take appropriate decision in accordance with law.

In the result, appeal filed by the assessee is treated as allowed for statistical purposes.