TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 218
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..../2021 for A.Y.2012-13 arise out of the order by the ld. Commissioner of Income Tax (Appeals)-48, Mumbai in appeal No. CIT(A)-48/I.T.71/DCCC-2(3)/2019-20 dated 25/11/2020 (ld. CIT(A) in short) against the order of assessment passed u/s.153A r.w.s. 143(3) of the Income Tax Act, 1961 (hereinafter referred to as Act) dated 29/05/2019 by the ld. Dy. Commissioner of Income Tax, Central Circle-2(3), Mumbai (hereinafter referred to as ld. AO). Identical issues are involved in all these appeals and hence they are taken up together and disposed of by this common order for the sake of convenience. ITA No.634/Mum/2021 (A.Y.2011-12) 2. The only effective issue to be decided in this appeal is as to whether the ld. CIT(A) was justified in allowing the claim of carry forward of longterm capital loss of Rs. 8,37,59,368/- arising on sale of listed company shares on which STT was paid with the long term capital gain arising there from is exempt tax u/s.10(38) of the Act. The Revenue has raised the following grounds:- "(i) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the assessee's claim to set off Long Term Capital Gains of Rs. 23,11,....
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....Y.2011-12. 3.1. In response assessee filed return of income on 14.11.2018 declaring total income of Rs. 24,63,64,940/-. During assessment proceedings, the ld. AO observed that assessee has claimed long term capital loss of Rs. 8,37,59,368/-, he observed that the above capital loss was arising from sale of equity shares of listed company and this transaction is subject to Security Transaction Tax (STT). According to ld. AO, long term capital gain on listed shares which is covered u/s. 10(38) of the Act where STT has been paid being exempt from income tax, does not form part of total income chargeable to tax, and any loss on such sale of STT paid shares also cannot form part of the total income and is a dead loss. The assessee had sold equity shares of M/s. Core Projects Ltd which was listed in recognized stock exchange and had suffered STT. In this transaction of sale of equity shares, the assessee incurred long term capital loss of Rs. 8,37,59,368/-. During the same F.Y.2010-11 relevant to A.Y.2011-12, the assessee had earned long term capital gains of Rs. 23,11,153/- on sale of unlisted shares on which STT was not paid. The assessee sought to set off the long term capital loss on....
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....curred by making investment in M/s. Core Projects Limited and this transaction involves the STT which assessee has paid at the time of transfer of the above shares. No doubt, the profit which assessee would have earned will be exempt from tax u/s. 10(38) of the Act. However, we observe from the submissions of both the parties and in our considered view, the facts in the case relied by the Ld.CIT(A) in ACIT v. Smt Gauri Avinash Bhosale (supra) and M/s. Raptakos Brett & Co. Ltd, Mumbai v. DCIT (supra) are exactly same. For the sake of convenience, the relevant operative portion of the decision of Mumbai Tribunal in the case of M/s. Raptakos Brett & Co. Ltd, Mumbai v. DCIT (supra) is reproduced hereunder: - "7. We have heard rival submissions and perused the relevant findings given in the impugned orders. The main issue before us is, whether Long term capital loss on sale of equity shares can be set off against Long term capital gain arising on sale of land or not, as the income from Long term capital gain on sale of such shares are exempt u/s. 10(38). The nature of income here in this case is from sale of Long term capital asset, which are equity shares in a company and unit of an ....
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....not be held that the entire source will not enter into computation of total income. In our view, the concept of income including loss will apply only when the entire source is exempt and not in the cases where only one particular stream of income falling within a source is falling within exempt provisions. Section 10(38) provides exemption of income only from transfer of Long term equity shares and equity oriented fund and not only that, there are certain conditions stipulated for exempting such income i.e. payment of security transaction tax and whether the transaction on sale of such equity share or unit is entered into on or after the date on which chapter VII of Finance (No.2) Act 2004 comes into force. If such conditions are not fulfilled then exemption is not given. Thus, the income contemplated in section 10(38) is only a part of the source of capital gain on shares and only a limited portion of source is treated as exempt and not the entire capital gain (on sale of shares). If an equity share is sold within the period of twelve months then it is chargeable to tax and only if it falls within the definition of Long term capital asset and, further fulfils the conditions mentio....
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....s of section 70 and section 10(27) observed in the following manner: "In this case it is important to bear in mind that set-off is being claimed under Section 70 of the 1961 Act which permits set off of any income falling under any head of income other than the capital gain which is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head. We have noticed that in the instant case the exclusion has been conceded in computing the business income or the source of income from the head of business and in computing that business income, the loss from one particular source, that is, broodmares account and the pig account, had been excluded contrary to the submission of the assessee. The assessee wanted these losses to be set off. The Revenue contends that as the sources of the income are not to be included in view of the provisions of Clause (27) of s. 10 of the 1961 Act, the loss suffered from this source could also not merit the exclusion. Under the I.T. Act, there are certain incomes which do not enter into the computation of the total income at all. In this connection we have to bear in mind the schem....
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.... income, and such an argument is with reference to the decision of Hon'ble Supreme Court in the case of CIT vs. Hariprasad & Company Pvt. Ltd. (1975) 99 ITR 118. The Hon'ble Supreme Court, opined that, if loss was from the source or head of income not liable to tax or congenitally exempt from income tax, neither the assessee was required to show the same in the return nor was the Assessing Officer under any obligation to compute or assess it much less for the purpose of carry forward. Further, the Hon'ble Supreme Court observed that "From the charging provisions of the Act, it is discernible that the words ' income ' or ' profits and gains' should be understood as including losses also, so that, in one sense 'profits and gains' represent ' plus income ' whereas losses represent 'minus income'. In other words, loss is negative profit. Both positive and negative profits are of a revenue character. Both must enter into computation, wherever it becomes material, in the same mode of the taxable income of the assessee. Although Section 6 classifies income under six heads, the main charging provision is Section 3 which levies income-tax, as only one....
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....t being equity share or equity fund which is chargeable to STT and not entire source of income from capital gains arising from transfer of shares. It does not lead to exclusion of computation of capital gain of Long term capital asset or Short term capital asset being shares. Accordingly, Long term capital loss on sale of shares would be allowed to be set off against Long term capital gain on sale of land in accordance with section 70(3)." 3.7. We find that the aforesaid decision of Mumbai Tribunal in the case of Raptakos Brett & Co. Ltd. v. DCIT (supra) has attained finality as the appeal preferred by the department against the said decision has been dismissed by the Hon'ble Jurisdictional High Court, though, due to non-prosecution. Thus, we do not find any infirmity in the order of the Ld.CIT(A) in allowing the claim of carry forward of Long Term Capital Loss of Rs. 8,37,59,368/- arising from sale of equity shares. With regard to case law relied by the Ld. DR in the case of Apollo Tyres Ltd., v. DCIT (supra), the issue involved in that case was whether long term capital loss incurred on which STT paid could not be set off against long term capital gain arising out of sale of lan....
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....s leave to add to, amend or alter, the foregoing ground of appeal 5.3. We have heard the rival submissions and perused the materials available on record. We find that assessee had filed his original return of income u/s.139(1) of the Act for A.Y.2012-13 declaring total income of Rs. 10,79,70,024/-. The assessment was completed u/s.143(3) of the Act on 26/03/2015 determining total income at Rs. 15,18,79,290/-. Being aggrieved with this assessment order, the assessee preferred an appeal before the ld. CIT(A)-II, Pune. The ld. CIT(A)-II, Pune vide order dated 22/04/2015 confirmed the addition made by the ld. AO u/s.14A of the Act amounting to Rs. 54,50,000/- and restricted the disallowance of helicopter expenses to 1/7th of those expenses by following the decision given by the Pune Tribunal in ITA No.1425/PUN/2008 in the case of assessee for A.Y.2005-06. 5.4. We find that there was a search and seizure action u/s. 132 of the Income-tax Act (for short "Act") which was initiated on ABIL Group on 21.07.2017 , pursuant to which, various residences of the partners/directors of the group situated at Mumbai and Pune were covered by search action. The assessee Shri Avinash N. Bhosale is a p....
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....td., vs. CIT reported in 187 ITR 688 (SC). 5.7. From the perusal of the entire assessment order in respect of making disallowance u/s.14A of the Act and denial of set off of brought forward long term capital loss with long term capital gain, the ld. AO had not made any reference to any seized material found during the course of search to justify the said addition. Admittedly, the assessment for A.Y.2012-13 being unabated assessment, there cannot be any disturbance to the originally concluded assessment / appellate proceeding unless there is any incriminating material found during the course of search relatable to such assessment year. As stated earlier in the instant case, no such incriminating material has been referred by the ld. AO in his order for framing these two additions / disallowances. This issue is no longer res integra in view of the decision of the Hon'ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645 wherein it had been categorically held by the Hon'ble Jurisdictional High Court that no addition could be made in respect of assessments which have become final if no incriminating material is found during search. Th....
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....ed and not the assessments/reassessments already finalised for those assessment years covered under Section 153A of the Act. By a circular No. 8 of 2003 dated 18-9-2003 (See 263 ITR (St) 61 at 107) the CBDT has clarified that on initiation of proceedings under Section 153A, the proceedings pending in appeal, revision or rectification proceedings against finalised assessment/reassessment shall not abate. It is only because, the finalised assessments/reassessments do not abate, the appeal revision or rectification pending against finalised assessment/reassessments would not abate. Therefore, the argument of the revenue, that on initiation of proceedings under Section 153A, the assessments/reassessments finalised for the assessment years covered under Section 153A of the Income-tax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A (1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1). (11) In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for assessment year 1998-99 was finalised on the 29-12-2000 and search was conducted there....
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.... date of the initiation of the search under section 132 or making of requisition under section 132A, as the case may be, they abate. It is only pending proceedings that would abate and not where there are orders made of assessment or reassessment and which are in force on the date of initiation of the search or making of the requisition. As that specific argument was canvassed and dealt with by the Division Bench and that is how it was called upon to interpret section 153A of the IT Act, then, each of the above conclusions rendered by the Division Bench would bind us. 30. Even otherwise, we agree with the Division Bench when it observes as above with regard to the ambit and scope of the powers conferred under section 153A of the Act. Since we are not required to trace out the history and we can do nothing better than to reproduce the observations and conclusions as above that we are not repeating the same. Even if the exercise of power under section 153A is permissible still the provision cannot be read in the manner suggested by Mr. Pinto. Not only the finalised assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised wh....