2016 (1) TMI 807 - AT - Income Tax

ITAT upholds CIT(A)'s decision on capital gains set off beyond 8 years.

Income Tax Officer, Ward-8 (1), Ahmedabad Versus The Ahmedabad Advance Mills Ltd. And Vica-Versa

The ITAT Ahmedabad affirmed the CIT(A)'s decision to allow the set off of capital gains against accumulated losses beyond 8 years as directed by BIFR. The ... Set off of accumulated losses against Long Term Capital Gain (LTCG) AND Short Term Capital Gain (STCG) even beyond 8 years - CIT(A) allowed the claim - validity of orders of BIFR - Held that:- Since the order of BIFR is inconsistent with the provisions of IT Act as far as setting off of accumulated losses beyond eight years against capital gain are concerned. But still BIFR order will prevail over the inconsistent provisions of IT Act. Accordingly appellant will be eligible to set off capital gains against accumulated losses even beyond 8 years - Decided in favour of assessee. Issues:Challenge to the order allowing set off of accumulated losses against capital gains beyond 8 years.Analysis:1. The Assessing Officer challenged the order allowing set off of accumulated losses against Long Term Capital Gain (LTCG) and Short Term Capital Gain (STCG) beyond 8 years under section 143(3) of the Income Tax Act, 1961 for the assessment year 2007-08.2. The appellant, a sick unit under the Sick Industries (Companies) Act, received concessions from the Board of Industrial and Financial Reconstruction (BIFR), including exemption from capital gains tax and permission to set off capital gains against accumulated losses as per the SS-04 provision.3. The Appellate Authority for Industrial and Financial Reconstruction upheld the BIFR's decision, emphasizing the obligation of the Directorate General of Income Tax (DGIT) to implement the revival scheme sanctioned by BIFR promptly for the expeditious revival of sick industrial companies.4. The Assessing Officer, during assessment proceedings, disallowed the set off claimed by the company for short term and long term capital gains against unabsorbed business losses beyond 8 years. However, the CIT(A) allowed the set off based on BIFR's order, overriding the 8-year limitation under the Income Tax Act, as BIFR's directions prevail over inconsistent provisions of the Act.5. The ITAT Ahmedabad upheld the CIT(A)'s decision, citing the finality of the BIFR order, which binds Revenue authorities as per legal precedents. The tribunal declined to interfere with the CIT(A)'s conclusions, dismissing the Assessing Officer's appeal.6. The tribunal also dismissed the Cross Objection filed by the assessee, as it supported the relief granted by the CIT(A) without raising any specific grounds for adjudication.In conclusion, the ITAT Ahmedabad affirmed the CIT(A)'s decision to allow the set off of capital gains against accumulated losses beyond 8 years as directed by BIFR, emphasizing the binding nature of BIFR's directions on Revenue authorities and dismissing both the Assessing Officer's appeal and the Cross Objection filed by the assessee.