TaxTMI 
TaxTMI 
2025 (11) TMI 720
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....hout appreciating / considering the explanations /details furnished by the appellant company in its submission dated 25.03.2025 in response to notice issued u/s. 263 of the Act during the revisional proceedings. 3. In law and in the facts and circumstances of the Appellant's case, the Hon'ble PCIT has erred in setting aside the assessment order passed u/s. 143(3) r.w.s. 144B of the Act dated 22.09.2022 and directing the Ld. Assessing Officer to pass a fresh assessment order in accordance with law. 4. In law and in the facts and circumstances of the Appellant's case, the Hon'ble PCIT has failed to appreciate that the twin conditions for assuming jurisdiction u/s. 263 of the Act are not satisfied in the case of appellant company as issue which has been relied upon for passing the order u/s. 263 does not show any error or prejudice to the interest of the revenue. 5. In law and in the facts and circumstances of the Appellant's case, the Hon'ble PCIT has erred in holding that the appellant company has not followed the principle of FIFO method while selling the shares of Puro Wellness Private Limited and thereby claimed the loss of Rs. 1....
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....e on the following counts: (i) Allowing claim of Short Term Capital Loss (STCL) of Rs. 1,59,36,465/- which as per the Ld. PCIT was actually in the nature of Long Term Capital Loss (LTCL). The assessee while treating the loss as Short Term in nature had set off the loss against Short Term Capital Gains (STCG), thus returning net Short Term Capital Gain of 14,35,43,906/-. Since as per the Ld. PCIT the loss was in the nature of Long Term Capital Loss, the assessee was not entitled to claim set off of the same against Short Term Capital Gain and in effect, therefore, the Short Term Capital Gain returned by the assessee was short assessed to the extent of Short Term Capital Loss so set off by the assessee amounting to Rs. 1,59,36,465/-. (ii) The assessee having claimed disallowance of expenses under Section 14A of the Act amounting to Rs. 4,92,537/- which was allowed by the Assessing Officer while as per the Ld. PCIT as per the records itself the disallowance ought to have Rs. 42,82,354/-. Thus, in effect, as per the Ld. PCIT the disallowance made of expenses under Section 14A of the Act was short to the extent of Rs. 37,89,817/-. (iii) The assessee was noted ....
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....laimed as STCG, ought to have been considered against the shares purchased on 21.10.2016 i.e. the shares purchased first in time following the FIFO method and accordingly, the loss on the sale of shares on 01.08.2019 was to be treated as LTCL. And consequently therefore, the assessee was not entitled to set off of any loss against the STCG earned by it. That therefore, the STCG returned by the assessee was short to the extent of STCL wrongly set off against the same amounting to Rs. 1,59,36,465/- which had resulted in under assessment of income of the assessee to this extent and short levy of tax. 7. During the course of hearing before us, Ld. Counsel for the assessee pointed out from the submissions made to the Ld. PCIT during revisionary proceedings placed before us at Paper Book Page No. 4 to 77, dated 22-03- 25 & 11-01-2024, that it had been pointed out to the Ld. PCIT that this issue had been examined by the AO during assessment proceedings and it had been pointed out to him that the assessee had sold 1,61,50,121 shares of Puro Wellness Pvt. Ltd. during the year all on the same date 28.11.2019 and that in the computation of income for the year under consideration the date o....
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....Act. 1961 (hereinafter referred to as "the Act") for AY 2020-21 Ref: Notice bearing DIN no. ITBA/REV/F/REV1/2024-25/1074793602(1) dated 20.03.2025 With reference to the captioned subject, the assessee company is in receipt of the above referred notice dated 20.03.2025, wherein your good honor has asked it to furnish accounts / documents / information with respect to the ongoing revisional proceedings in its case for the year under consideration. Your good honor has proposed to make additions / disallowances to the total income of the assessee company on account of certain issues. Relevant para of the above referred notice is reproduced as under: 3. On examination of case records during the year under consideration, on perusal of the Profit & Loss account. Balance sheet and ITR, it is observed that in the computation of income you have computed net STCG of Rs 14,35,43,906/ -. White computing the STCG you have shown a short-term Capital Loss of Rs 1,59.36,465/- towards sale of 45,10,121 shares of Puro Wellness Pvt Ltd [Sale date 01.08.2019, Sale value Rs 2,55,64,745/- & Purchase value Rs 4,15,01,210/-]. Further, on perusal of LTCG/LTCL computation table, it....
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....,00,000/-) from income on account of donation made of Rs.2,00,00,000/- u/s 80G. You may furnish details of the payments made for CSR expenditure and reason why S. 80G deduction has been claimed on the same. 6. CSR expenditure, being an application of income, is not incurred wholly and exclusively for the purposes of carrying on business. As the application of income is not allowed as deduction for the purposes of computing taxable income of a company, amount spent on CSR cannot be allowed as deduction for computing the taxable income of the company. Moreover, the objective of CSR is to share burden of the Government in providing social services by companies having net worth/turnover/profit above a threshold. If such expenses are allowed as tax deduction, this would result in subsidizing of around one third of such expenses by the Government by way of tax expenditure. 6.1. Since, you have claimed 80G deductions out of CSR expenses; It is pertinent to mention here that CSR is a legal liability on your part and is mandated out of the profits earned during the year. 6.2 Therefore, the amount of donation as per the P&L A/c. is Rs.1,00,00,000/-(50% of Rs. 2,00,....
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....636, the details of which are as under: Sr. No. Quantity Date of sale Date of purchase Sale value (in Rs.) Indexed Purchase cost (in Rs.) Gain/(Loss) (in Rs.) 1. 50,00,000 28.11.2019 21.10.2016 3,08,00,000 5,47,34,848 (2,39,34,848) 70,00,000 28.11.2019 20.01.2017 4,31,20,000 7,66,28,788 (3,35,08,788) Total LTCL 5,74,43,636 From the above information, your honor has stated that the assessee company has wrongly claimed short term capita! loss of Rs. 1, 59,36, 465/- on sale of shares of Puro Wellness Pvt Ltd on 01.08.2019, based on the ground that considering the FIFO method in view of Section 45(2A) of Act, the cost of such shares should have been taken from the shares purchased on 21.10.2016 and 20,10.2017 and accordingly, the said loss should be long-term capital loss instead of the short-term capital loss. 1.2 In this connection, at the outset, the assessee company submits that your honor has considered the date of sale of 45,10,121 shares of Puro Wellness Pvt Ltd as 01 .08.2019 instead of 28.11.2019. 1.3 The said date of 01 .08.2019 might have been considered by ....
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....and that this issue had been duly examined and verified by the AO during the assessment proceedings who had taken a correct view on the same. 9. Having stated so, Ld. Counsel for the assessee pointed that the Ld. PCIT noted all the submissions of the assessee but without pointing any infirmity in the same he held that the issue was required to be properly examined by the AO and no inquiry was apparently done during assessment proceedings and therefore, the assessment order was erroneous. He drew our attention to Para 4.1.1. and 4.1.2 of the order of the Ld. PCIT in this regard. Ld. Counsel for the assessee, therefore, contented that the Ld. PCIT finding error in the assessment order on the issue of alleged incorrect claim of STCL was arbitrary and without dealing with the explanation of the assessee before him or without pointing out any error in the said explanation. That there was clearly no finding of error in the order of the Ld. AO on this issue. 10. The Ld. DR, however, supported the order of the Ld. PCIT. 11. We have considered the contention of both the sides and have gone through the order of the Ld. PCIT on the issue of alleged incorrect claim of STCL on the sale....
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....t is abundantly clear therefore that there is no infirmity or incorrectness found by the Ld. PCIT in the claim of the assessee to STCL to the tune of Rs. 1.54 Crs. 14. The assessee, we have noted, had demonstrated to the Ld. PCIT that all these facts and evidences were furnished to the AO also during assessment proceedings. Therefore, we hold, it stands that issue was duly examined by the AO during assessment proceedings who had taken a correct view by allowing assesses claim of STCL of Rs. 1,54 Crs. 15. In view of the above, the Ld. PCIT having given no reason for holding the claim of the assessee to be incorrect despite the detailed explanation furnished by the assessee, the AO we hold had rightly allowed the said claim to the assessee and there is no question of the assessment order being erroneous for having allowed the claim of STCL of Rs. 1.54 crores to the assessee. 16. In light of the same the findings of the Ld. PCIT of the assessment order being erroneous on account of allowing of STCL of Rs. 1.54 crores on the sale of shares on Puro Wellness Pvt. Ltd. is held to be an incorrect and not sustainable. Taking up the next issue of disallowance of expenses under Se....
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....he assessee. However, 50% of the said amount was claimed as deduction on account of donation made, under Section 80G of the Act. The case of the Ld. PCIT was that CSR expenses were not allowable in any manner either as expense under Section 37(1) of the Act or as donation u/s 80G of the Act. Ld. Counsel for the assessee pointed that it was brought to the notice of the Ld. PCIT that the ITAT in a number of cases had held that CSR expenses were allowable for claim of deduction as donation under Section 80G of the Act. He pointed out from the submissions made to the Ld. PCIT that the following decisions were brought to his notice holding so; ● M/s. FNF India Pvt. Ltd. vs. ACIT in ITA No. 1565/Bang/2019, ● Advik Hi Tech (P.) Ltd. vs. DCIT 168 taxmann.com 587 (Pune-Trib.) (09.10.2024), ● Goldman Sachs Services Pvt. Ltd. vs. JCIT in IT(TP)A No. 2355/Bang/2019 ● JMS Mining (P.) Ltd. vs. PCIT (2021) 130 taxmann.com 118. 21. He contended that despite the Ld. PCIT being made aware of the position of law in this regard and demonstrating clearly that the assessee's claim of CSR Expenses as donation u/s 80G of the Act was in acc....