2022 (6) TMI 740 - AT - Income Tax

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

The Tribunal upheld the decision that the assessee cannot carry forward the short-term capital loss claimed in the return filed under section 153A as it ... Carry forward of the short term capital loss - Addition on the ground that same has not been claimed in the return of income filed under section 139(1) - whether the ‘short-term capital loss’ claimed in the return of income filed in response to notice issued under section 153A of the Act can be allowed to carry forward to the assessee for subsequent years? - HELD THAT:- As assessee has referred to the decision of the Tribunal in the case of BE Billimotrai & Co Ltd. [2020 (2) TMI 485 - ITAT MUMBAI] wherein the assessee filed regular return of income on 27/09/2013 i.e. within the due date prescribed under section 139(1) of the Act, but same was not accompanied by the audit report as required under section 44AB of the Act. Subsequently the assessee filed revised return of income on 31/03/2014, where the assessee filed the audit report. Assessing Officer completed the assessment under section 143(3) of the Act, allowing carry forward of the loss as shown in the revised return of income. The Ld. CIT invoked proceeding under section 263 of the Act on the ground that the Assessing Officer has erroneously allowed carry forward of the business loss. The Tribunal held that the Assessing Officer had not issued any defective memo in terms of section 139(9) of the Act and therefore defect in the original return of income stood removed by way of filing voluntarily revised return by the assessee. In the circumstances, the Tribunal (supra) held the original return of income filed by the assessee was valid return and holding the assessee eligible for carry forward of the business loss. Thus, in our opinion the ratio of the above decision of the Tribunal is not applicable of the facts of the instant case, as in this case there was no issue of any defect in the original return of income filed under section 139(1) and the revised return of income has only been filed in response to notice under section 153A of the Act, wherein the assessee has claimed the short-term capital loss. - Decided against assessee. 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.