2022 (6) TMI 740 - AT - Income Tax

Assessee cannot carry forward capital loss: Tribunal decision upheld. Appeal dismissed. Order pronounced 14/06/2022.

Chalet Hotels Limited Versus Dy. Commissioner of Income Tax, Central Circle-4 (2), Mumbai

Chalet Hotels Limited Versus Dy. Commissioner of Income Tax, Central Circle-4 (2), Mumbai - TMI Issues Involved:1. Whether the assessee can carry forward a short-term capital loss claimed in a return filed under section 153A of the Income-Tax Act, 1961.Issue-Wise Detailed Analysis:1. Carry Forward of Short-Term Capital Loss Claimed in Return Filed under Section 153A:The primary issue in this case revolves around whether the assessee is entitled to carry forward a short-term capital loss claimed in a return filed under section 153A of the Income-Tax Act, 1961.Facts of the Case:- The assessee filed its regular return of income under section 139(1) on 17/10/2016, declaring a loss of Rs. 1,89,90,32,020.- A search and seizure action was conducted on 30/11/2017, leading to the issuance of a notice under section 153A on 04/07/2018.- In response, the assessee filed a return on 14/07/2018, declaring a revised loss of Rs. 1,54,21,64,359, which was further revised to Rs. 1,49,75,40,455.- The assessee explained that an inadvertent mistake in computing the loss under 'income from capital gain' led to the revised figures. The shares of 'Intime Properties Private Limited' were sold at a short-term capital loss, but were mistakenly reported as a long-term capital loss in the original return.Assessing Officer's Decision:- The Assessing Officer disallowed the carry forward of the short-term capital loss, stating that it was not claimed in the return filed under section 139(1).- Citing judicial precedents, the AO emphasized that an assessment under section 153A is not a de novo assessment, and new claims of deduction or allowance cannot be made during such proceedings.CIT(A)'s Decision:- The CIT(A) upheld the AO's decision, stating that section 153A does not override the computational sections of the Act.- Section 80 explicitly prohibits the carry forward of any loss not determined in a return filed under section 139(3).Tribunal's Analysis:- The Tribunal examined whether the short-term capital loss claimed in the return filed under section 153A can be carried forward.- The Tribunal referred to section 139(3) and section 80, which mandate that losses must be claimed in a return filed under section 139(1) to be carried forward.- The Tribunal noted that the assessee's reliance on the decision in BE Billimoria & Co. Ltd was misplaced, as the facts differed significantly. In BE Billimoria, the original return was considered valid despite a technical defect, which was later rectified. However, in the present case, the revised return was filed in response to a notice under section 153A, and no such defect in the original return was addressed.Conclusion:- The Tribunal upheld the CIT(A)'s decision, agreeing that the short-term capital loss could not be carried forward as it was not claimed in the return filed under section 139(1).- The appeal by the assessee was dismissed.Final Judgment:The Tribunal concluded that the assessee cannot carry forward the short-term capital loss claimed in the return filed under section 153A, as it was not included in the return filed under section 139(1). The appeal was dismissed, and the order was pronounced in open court on 14/06/2022.