TaxTMI 
TaxTMI 
TaxTMI 
2009 (2) TMI 42
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....ng different from the loss as claimed by the assessee in the return, can be carried forward in view of the provisions of Section 80 read with Section 139(3) of the Income Tax Act, 1961? (ii) Whether in the facts and circumstances of the present case, the tribunal has erred in law in holding that the Assessing Officer had exceeded its jurisdiction in not allowing the carrying forward of the loss after the tribunal had issued directions in the earlier round?" 2. In order to adjudicate upon the appeal the following facts require to be noted:- 2.1 The assessee is an investment company holding shares amongst others in Jindal Iron & Steel Co. Ltd. (hereinafter referred to as "JISCO"). There are four other companies including M/s Abhinandan Investments Ltd, (which is the appellant before us in ITA No. 480/07) which also holds a stake in JISCO. Together with the present appellant the four investment companies hold 34% of the shares in JISCO. It is also admitted that these investment companies, as stated above, have also made investments in other public limited companies. 2.2 In 1994, JISCO which was desirous of making a rights issue of Secured Redeemable Non-Convertible Debentures (....
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....rred to as "UTI‟) whereby UTI agreed to pay the balance sum of Rs 389/- per SRNCD on behalf of the allottees to JISCO. The assessee being an existing stake-holder applied to the rights issue made by JISCO. In accordance with the conditions of the issue, the assessee paid an application money of Rs 111/- per debenture. As arranged UTI paid the balance sum of Rs 389/- to JISCO whereupon JISCO issued a DW in favour of the assessee as well as other investees including Abhinandan Investment Ltd. (i.e. appellant in ITA No. 480/07). 4.1 It is also admitted that the assessee as well as other investors (which includes Abhinandan Investments Ltd) transferred the said SRNCD having a face value of Rs 500 to UTI. This transfer was carried out in the background of the arrangement between JISCO and UTI whereby UTI had agreed to invest a sum of Rs 350 crores in JISCO by agreeing to purchase the SRNCDs at a value of Rs 389/- per debenture. 5. It is in this background that the assessee had filed a return for assessment year 1995-96. The said return was filed on 29.11.1995. In the said return the assessee had initially claimed a short-term capital loss of Rs 91/- per DW on the ground that i....
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....rnished the details. The Assessing Officer by an order dated 27.10.2000 gave effect to the order of the Tribunal dated 05.06.2000 by observing as under:- "In view of the directions of the ITAT the loss on NCDs is allowed as follow:- Income as per order u/s 143(3) dated 27.3.1998 7,01,96,195 Less: Loss on sale 11,98,000 NCDs @ 111/- each 13,29,78,000 Assessed Loss: 6,27,81,805" By the very same order the Assessing Officer observed that since the loss on the SRNCD had been determined by him pursuant to an order of the Tribunal, it was not a loss determined in pursuance of a return filed under Section 139(3) of the Act and hence, the said assessed loss on Rs 6,27,81,805/- shall not be allowed to be carried forward and set off against future income of the assessee. It is important to note that the order passed by the Assessing Officer dated 27.10.2000 is captioned as one having been passed under Section 254 of the Act. 9. Aggrieved by the observation of the Assessing Officer that the said assessed loss could not be carried forward and set off against its future income the assessee preferred an appeal to the CIT(A). The CIT(A) by an order dated 22.02.2002 rejected the appeal both on th....
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.... Court in case of Kooka Sidhwa & Co. Vs. CIT-54 ITR 54 wherein it was held that when the Income Tax Officer revises the assessment pursuant to the directions of the Appellate Tribunal in an order u/s 33 of the Indian Income Tax Act 1922 (which is analogous to section 254 of the Indian Income Tax Act 1961), the order passed by the Assessing Officer partakes the character of the fresh assessment order referable only to section 23 of the 1922 Act (which is pari-materia with Section 143(3) of the 1961 Act) and an appeal against the said order would lie to the Appellate Assistant Commissioner u/s 30 of the 1922 Act which is similar to Section 246A of the 1961 Act. In another case of Gopi Lal Vs. CIT - 65 ITR 477, Hon'ble Punjab High Court at Delhi held that an appeal lies to the appellant (appellate) Assistant Commissioner against the order of ITO made in pursuance of directions of the Appellate Tribunal contained in its appellate order passed u/s 33 and from the order of Appellate Tribunal. Keeping in view this proposition propounded by the Hon'ble Punjab High Court as well as the facts of the present case, we are of the view that the order passed by the Assessing Officer giving effect....
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....he learned CIT(A) was not justified in upholding the same." 11. Having heard the learned counsel for the Revenue as well as the assessee we are of the view that the answers to the questions framed has to be found in favour of the assessee and against Revenue for the reasons given hereinafter. It is clear upon perusal of the facts and circumstances quoted by us hereinabove that if JISCO had to have a successful rights issue it was incumbent that it received a subscription equivalent to at least 90% of the issue. The condition with respect to the same imposed by SEBI while approving the rights issue was quite explicit in that regard. The fact that there was an arrangement between JISCO and UTI as also the fact that upon receipt of the face value of Rs 500/- per debenture JISCO would issue DW which would enable the holder to acquire one equity share in the JISCO, was clearly part and parcel of the terms and conditions of the issue. The arrangement between a public financial institution-UTI and JISCO for part financing the investment had been examined by the Tribunal in the first round. The Tribunal after noting the benefit which had accrued both to the assessee, and UTI, that is, whi....
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....ion (1) of Section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A." 12.1 In the instant case, there is no doubt that the assessee had filed a return under Section 139 of the Act within the prescribed time. It is also not disputed that a loss had been claimed even though the same had been claimed to the extent of Rs 90/- and that too as a capital loss with respect to DWs issued to the assessee, on the assessee investing in the rights issue of JISCO. The assessee carried out a course correction by claiming a loss on sale of SRNCDs to UTI at Rs 111/- per SRNCD as they had sold SRNCDs of a face value of Rs 500/- to UTI at Rs 389/- per SRNCD. The Tribunal in the first round in its order dated 05.06.2000 came to a conclusion based on the judgments of the Supreme Court as well as those of various High Courts that what was important and relevant was the true legal effect of a transaction and in coming to the said conclusion the view that the assessee may take in the return of income or the treatment that is meted out in the books of accounts or the method of accounting that an assessee uses are not relevant in cons....
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....th one hand what was given by the other, that is, even while adjusting loss in assessment year 1995-96, deprive the assessee of a consequent benefit of carry forward and set off of the balance loss in the subsequent year(s). Such an approach would in our view be completely contrary to the directions issued by the Tribunal. We are here reminded of the observations of the Supreme Court in the case of CIT vs J.H. Gotla; (1985) 156 ITR 323 where the Court in respect of a income tax matter has observed that while equity and taxes are strangers an attempt should be made to bring them nearer. The observations of the case are apposite and extracted hereinbelow:- "Though equity and taxation are often strangers, attempts should be made that these do not remain always so and if a construction results in equity rather than in injustice, then such construction should be preferred to the literal construction." 14. At this stage, it would be pertinent to note the observations of the Supreme Court with respect to the approach that the Income Tax Authorities are required to adopt while assessing the income of an assessee. The relevant observations being apposite are extracted hereinbelow:-....