2013 (7) TMI 953 - AT - Income Tax

Appeal allowed for carrying forward losses denied in original return for assessment year 2008-09

Sachin N. Morakhia Versus ITO 4 (2) (1), Mumbai

The appeal was filed against the denial of carrying forward short term capital loss and speculation loss for the assessment year 2008-09. The Assessing ... Denial of benefit of carry forward of short term capital loss and denial of carry forward of speculation loss - AO did not allow the carry forward losses by observing that the assessee has not claimed in the return filed originally - Held that:- In this case though in the return filed originally the claim of loss was not claimed, however, during the assessment proceeding a letter was filed before the AO to consider the same. As stated above, in view of the decision of the Hon’ble Apex Court in Goetz (India) Ltd. Vs. CIT [2006 (3) TMI 75 - SUPREME Court ], the AO has not considered the claim of the assessee. CIT(A) also did not consider the claim of the assessee and confirmed the action of the AO. In my considered view, the learned CIT(A) should have considered the issue on merit as before the appellate authority a legal claim can be made. Issues:1. Denial of benefit of carry forward of short term capital loss2. Denial of carry forward of speculation lossAnalysis:1. The appeal was filed against the order of CIT(A)-9, Mumbai for the assessment year 2008-09. Grounds 1A & 1B were dismissed as not pressed. Grounds 1C & 1D related to the denial of carrying forward short term capital loss and speculation loss. The Assessing Officer (AO) denied the carry forward losses as they were not claimed in the original return, citing the decision of Goetz (India) Ltd. Vs. CIT. The CIT(A) upheld the AO's decision.2. Upon review, it was found that the matter needed to be reconsidered by the AO on merit. Referring to the Goetz (India) Ltd. case, it was highlighted that while a revised return is necessary for the AO to allow a claim, the appellate authority can entertain such claims. In this case, although the loss claim was not in the original return, a letter was submitted during assessment proceedings. The ITAT directed the AO to reconsider the claim of loss on carry forward under short term capital loss and speculation loss, emphasizing that the CIT(A) should have considered the issue on merit.3. The ITAT noted that charging of interest was consequential and did not require separate adjudication. Consequently, the appeal of the assessee was allowed in part for statistical purposes. The order was pronounced in an open court on July 10, 2013.