TaxTMI 
TaxTMI 
TaxTMI 
2018 (7) TMI 1753
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....th the appeals of assessee is interconnected and is arising out of the same facts i.e. enhancement of assessment without issuing statutory notice by the CIT(A) on account of not allowing carry forward and set off of long term capital gains incurred on sale of property at Netherland and to allow adjustment of the same against long term capital gains. For this assessee has raised the following grounds in ITA No. 2099/Mum/2017:- "1. The learned CIT(A) has erred in law in making an enhancement of the Assessment done by the Assessing Officer without issuing statutory notice upon the Appellant and has therefore violated the principles of Natural Justice by not providing the Appellant with a proper opportunity of being heard. 2. The learned CIT(A) has erred in law and in facts erred in not allowing the Appellant to carry forward and set off of the long term capital loss incurred on sale of the property in Netherlands and to adjust the same against Long term capital gains. 3. The learned CIT(A) has erred in law and in facts in making arbitrary ad-hoc disallowance of 50% of Professional fees, 25% of Business promotion expenses and 25% of other expenses (Car expenses. mobile expenses etc.....
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..../or read with article 4(2) of DTAA between and the USA. Prima facie this is a mistake in law which is apparent front records crystal clear and there is no ambiguity about it and since the AO appears to have also not allowed the same in the assessment order since no mention is made in the assessment order and even the assessee has not taken tip any ground of appeal. Even if it is assumed to have been allowed, it is held that this is mistake of law which is apparent from the records and hence assessee's claim for carry forward of long term capital loss of Rs.2,56,43,744/- in respect of flat in Netherlands is not allowable since it was patently erroneous under section 80 read with section 139(1) of l.T. Act, 1961." 4. The assessee has challenged the very findings and the learned Counsel for the assessee argued that these comments are made for practically making enhancement of assessment framed by the AO under section 143(3) of the Act dated 31.12.2013. According to the learned Counsel for the assessee, who took us through the appeal field by assessee in ITA No. 6048/Mum/2017 against the order of CIT(A) passing rectification order under section 154 of the Act dated 10.07.2017. The lea....
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....the case of Asst. CIT 20(2), Mumbai vs. Ramesh R. Shah in the ITAT Mumbai Bench 'D' once the original return is filed in time, any claim arising from revised return filed under section 139(4) has not to be allowed. Decision on objection mentioned at Sr. No. A. The appellant has pointed out that in the Assessment order, the AO has mentioned on page 8 in Para 11 that cared forward of Long Term Capital Los of Rs. 2,56,43749/-.was allowed. This long term capital loss was on account of transactions of property in the Netherlands. The appellant has also pointed out that the issue was not raised in the appeal, as he was not aggrieved on the finding given by the AO. However, while passing the appellate order the undersigned mentioned that the loss should not have been allowed to be carried forward by the Assessing Officer. The assessee objected to this comment of the undersigned while passing the appellate order. The objection of the assessee has been considered therefore, it is hereby clarified that the comment in the appellate order has been made in the context of ineligibility of the assessee to carry forward of loss sustained in the transaction in the Netherland Property, as the sam....
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....hat the Assessing officer also seemed to have not allowed the same as there was no mention in the Assessment Ordered since the Assessee had not taken up as a ground of Appeal, even though the Assessing officer had explicitly allowed the same. He further observed that even it was assumed to be allowed, it was a mistake of law apparent from the records. He therefore disallowed the claim for carry forward of long term capital loss relying on 80 r.w.s. 139(1) of the Act. the learned Counsel for the assessee argued that no show cause notice was issued with respect to the enhancement in the form of disallowance of carry forward of the long term loss to the Assessee. Accordingly, he framed the following legal propositions. a) As the said issue was in favour of the Assessee as held by the Assessing officer, not taken up in ground of appeal and no enhancement / show cause notice was issued on the Assessee, the rules of natural justice have been violated as the Assessee had no opportunity to be heard on the said issue. b) Enhancement carried out without the issue of show cause notice and giving sufficient opportunity of being heard is in violation of Sec. 251(2) of the Act and principles....
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....ime limit prescribed under section 139(5) of the Act and the AO accepted the return of income as it is. The AO has accepted the loss on sale of capital asset and along the same to be carried forward or to be adjusted against gain arising out of sale of capital asset. Further, the learned Counsel for the assessee also argued that as regards to appeal no. 6048/Mum/2017, the order of CIT(A) rectifying the mistake under section 154 of the Act and disallowing the carry forward and set off of the long term capital loss incurred on sale of the property in Netherlands by observing that the assessee is not entitled to claim for carry forward of long term capital loss relying on section 80 r.w.s 139(1) of the Act. The learned counsel stated that neither incurring of loss nor the computation thereof have been doubted either by the AO or the CIT(A). It was claimed that in section 154 of the Act, proceedings before the CIT(A), he concluded that loss sustain in sale of property in Netherlands though allowed to be carried forward cannot be set off against long term capital gains arising from properties in India. The learned Counsel for the assessee relied on the proposition that where the assesse....
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....he right of the assessee, when the assessee claims that he has no taxable income but only a loss but does not file the return of income declaring the said loss as provided in sub-section (3) of section 139. It is pertinent to note here that Legislature has dealt with two specific situations (i ) under section 139(1), if the assessee has a taxable income chargeable to tax then it is a statutory obligation to file the return of income within the time allowed under section 139(1). So far as section 139(3) is concerned, it only provides for filing the return of loss if the assessee desires that the same should be carried forward and set off in future. As per the language used in sub-section (3) to section 139, it is contemplated that when the assessee files the original return, at that time, there should be loss and the assessee desires to claim said loss to be carried forward and set off in future assessment years. Sub-section (1) of section 139 cast statutory obligation on the assessee when there is positive income. In the present case, admittedly, the assessee filed the return of income declaring the positive income and even in the revised return, the assessee has declared the posit....
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....adhoc disallowance confirmed by CIT(A). For this assessee has raised the following ground NO. 3: - "3. The learned CIT(A) has erred in law and in facts in making arbitrary ad-hoc disallowance of 50% of Professional fees, 25% of Business promotion expenses and 25% of other expenses (Car expenses, mobile expenses, etc.). on presumption and conjuncture under section 37(1) of the Income Tax Act without rejection books of accounts." 13. We have heard the rival contentions on this issue and gone through the facts and circumstances of the case. The AO made the following disallowances:- Nature of expenses Amount claimed (Rs.) Details of disallowance made by AO Professional 10,00,000 Not business fees paid ot Mr. Sarbpal Singh Anand Professional fees paid to Niktek Solutions 2,00,000 expenses; 50% disallowed Business promotions expenses 1,08,582 Not business expenses 50% disallowed Car expenses Conveyance expenses Mobile charges 1,87,027 56,580 73,730 Personal expenses 25% disallowed The CIT(A) restricted the disallowance of professional fee paid to Mr. Sarbpal Singh Anand at Rs. 5,00,000/- as made by AO. As regards to professional fee paid to Niktek Solutions, he reta....