Assessee gets relief as short term capital loss denial due to incorrect column entry, not legal bar under section 115BAC

ITAT Pune remanded the matter back to Addl./JCIT(A)-1, Coimbatore regarding denial of set-off of carried forward short term capital loss against capital gains income under section 115BAC. The tribunal found that while brought forward long term capital loss was allowed by CPC due to correct column entry, short term capital loss was disallowed due to incorrect column entry in the return, not due to legal prohibition. The assessee's appeal was partly allowed with directions for fresh adjudication.

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Issues:
Disallowance of brought forward short term capital loss for set-off against current year's income under section 115BAC.

Detailed Analysis:

Issue 1: Disallowance of brought forward short term capital loss

The appellant contested the disallowance of the brought forward short term capital loss of Rs. 27,78,028/- by the CPC for set-off against the current year's income under section 115BAC. The appellant argued that the short term capital loss was accepted by the CPC in the previous assessment year and should have been allowed to be carried forward and set-off against the short term capital gain income of the current assessment year. The appellant contended that the provisions of section 115BAC do not prohibit the set-off of short term capital loss.

Analysis:
The Tribunal noted that the CPC had indeed accepted the short term capital loss in the previous assessment year and allowed it to be carried forward. The appellant provided evidence in the form of the intimation under section 143(1) for the previous year, supporting the carry-forward of the loss. The Tribunal observed that the CPC had allowed the set-off of brought forward Long Term Capital Loss but disallowed the set-off of brought forward short term capital loss in the current year. It was highlighted that the disallowance was due to an error in the filling of columns in the return, leading to the computerized processing disallowing the claim.

Conclusion:
The Tribunal found that the disallowance of the brought forward short term capital loss was unjustified as the loss had been accepted in the previous year and should have been allowed to be set-off against the current year's income. The Tribunal set aside the order of the lower authority and remanded the matter back for a fresh decision, directing a proper consideration of the facts and law. The appellant's grounds of appeal were partly allowed, emphasizing the need for correct filing to ensure proper allowance of losses for set-off purposes.

Final Decision:
The appeal filed by the assessee was partly allowed for statistical purposes, with the Tribunal directing a fresh decision by the lower authority to consider the allowance of the brought forward short term capital loss for set-off against the current year's income in accordance with the law and facts presented.

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