Shri Anil Krishna Kar, Kolkata V. DCIT, Circle - 52, Kolkata, Kolkata

CO 9/KOL/2012

• Counselvise Citation: [2012] 122 COUNSELVISE.COM (IT) 7214 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 12 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 28-05-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2006-2007
• Appeal Filed On: 16-02-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: T SHRI O P AGARWAL
• Assessee Lawyers: S P CHOWDHURY
• Keywords: Capital asset; Assessment record
• Section: 143(3); 142(1); 147; 148; 154

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH B, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. .!' !'!' !'. .. . , #$ SHRI C.D.RAO, ACCOUNTANT MEMBER % % % % / ITA NO . 82/KOL/2012 &' ()/ ASSESSMENT YEAR : 2006-07 (+, / APPELLANT ) D.C.I.T., CIRCLE-52, KOLKATA (-.+,/ RESPONDENT ) SHRI ANIL KRISHNA KAR, KOLKATA (PAN:AFNPK 5464 L) / 01 / 01 / 01 / 01 /C.O.NO.9/KOL/2012 % % % % / A/O ITA NO . 82/KOL/2012 &' ()/ ASSESSMENT YEAR : 2006-07 (+, / APPELLANT ) SHRI ANIL KRISHNA KAR, KOLKATA (PAN:AFNPK 5464 L) (-.+,/ RESPONDENT ) D.C.I.T., CIRCLE-52, KOLKATA +, 2 3 #/ FOR THE DEPARTMENTT: SHRI O.P.AGARWAL -.+, 2 3 #/ FOR THE ASSESSEE: SHRI S.P.CHOWDHURY 4&5 2 '$ /DATE OF HEARING : 28.05.2012. 6( 2 '$ /DATE OF PRONOUNCEMENT : 28.05.2012. #7 / ORDER . .. .!' !'!' !'. .. . , #$ PER SHRI C.D.RAO, AM THE ABOVE APPEALS ONE FILED BY REVENUE AND THE CROS S OBJECTION FILED BY ASSESSEE ARE AGAINST ORDER DATED 31.10.2011 OF THE LD. CIT-(A)-XXXIII, KOLKATA PERTAINING TO A.YR. 2006-07. 2 2. AT THE TIME OF HEARING THE BENCH PRONOUNCED AS UNDER :- THE APPEAL OF THE REVENUE IS DISALLOWED AS THE LOS S CARRIED FORWARD PERTAIN TO A.Y. 2001-02 AND IN THAT YEAR AO HIMSELF HAS ALLOWE D TO BE CARRIED FORWARD AFTER EXAMINATION. WE DISALLOW THE APPEAL OF REVENUE AND DETAILED ORDER WILL FOLLOW. THE CO OF ASSESSEE IS DISMISSED AS WITHDRAWAL AS T HE REVENUES APPEAL IS DISMISSED. NOW THE DETAILED ORDER IS AS FOLLOWS : 3. THE BRIEF FACTS OF THE ABOVE ISSUE ARE THAT WHI LE DOING THE SCRUTINY ASSESSMENT U/S 147/154/143(3) OF THE I.T.ACT, 1961 THE ASSESSI NG OFFICER HAS ADDED AND AMOUNT OF RS.23,74,000/- ON ACCOUNT OF CAPITAL LOSS INCURR ED IN USA BY OBSERVING AS UNDER :- THE REGULAR ASSESSMENT IN THE CASE OF THE ASSESSEE FOR ASSESSMENT YEAR 2006-07 WAS COMPLETED U/S 143(3) ON 31.12.2008 ON A TOTAL INCOM E OF RS 19,52,020/- . LATER THE SAID ORDER U/S 143(3) WAS AMENDED U/S 154 OF ON 30.04.20 09 PURSUANT TO THE ASSESSEES PETITION. SUBSEQUENTLY, ON VERIFICATION OF THE ASSE SSMENT RECORD IT WAS DETECTED THAT THE ASSESSEE SET OFF A BROUGHT FORWARD CAPITAL LOSS OF RS 23,74,000/- CLAIMED TO HAVE BEEN INCURRED IN THE ASSESSMENT YEAR 2001-02 ON ACCOUNT OF SALE OF LAND IN TEXAS, U.S.A., AGAINST THE CAPITAL GAIN MADE BY THE ASSESSEE IN IN DIA IN THE ASSESSMENT YEAR 2006- 07 . THE SAID CAPITAL LOSS WAS COMPUTED BY THE ASSESSEE AFTER AVAILING HIMSELF OF THE INDEXATION BENEFIT AS PER INDIAN TAX LAWS. THIS ADJ USTMENT MADE BY THE ASSESSEE IS NOT PERMISSIBLE UNDER INDIAN INCOME TAX ACT. SINCE CAPITAL LOSS INCURRED ABROAD AND COMPUTED ON THE BASIS OF INDEXATION AS PER INDIA TAX LAWS IS NOT ALLOWED TO BE SET OFF AGA INST CAPITAL GAIN MADE IN INDIA IN ANY ASSESSMENT YEAR, THE AMOUNT INCOME OF RS 23,74,000/ - HAD ESCAPED ASSESSMENT WITHIN THE MEANING OF SECTION 147 OF THE I. T. ACT, 1961. ACCORDINGLY, THE PROCEEDING U/S 147 WAS INITIATED IN THE CASE. THE STATUTORY NOTICE U/S 148 OF I. T. ACT 1961 WAS DULY SERVED UPON THE ASSESSEE ON 26.11.2009. IN COMPLIANCE WIT H THE SAID NOTICE THE ASSESSEE FILED HIS RETURN OF INCOME ON 23.03.2010. LATER, A LETTER DATED 21.10.2010 ACCOMPANYING THE NOTICE U/S 142(1) WAS ISSUED TO THE ASSESSEE. THE S AID LETTER CONTAINED THE REASON IN DETAIL AS TO WHY THE PROCEEDING UNDER SECTION 147 W AS INITIATED IN THE CASE. IN RESPONSE TO THAT NOTICE SHRI S. P. CHOSE, APPEARED ON BEHALF OF THE ASSESSEE AS A. R. ON 02.11.2010 AND FILED A WRITTEN SUBMISSION. THE ISSU E OF CAPITAL LOSS WAS DISCUSSED WITH HIM. IN HIS SUBMISSION THE A. R. CONTENDED THAT THE ASSE SSEE HAD NOT ERRED IN SETTING OFF THE CAPITAL LOSS OF RS 23,74,000/- SUFFERED IN TEXAS, U. S. A. WITH THE CAPITAL GAIN EARNED IN INDIA SINCE THERE WAS NO BAR IN THE INCOM E TAX ACT IN DOING SO. 3.1. ON APPEAL AFTER TAKING INTO CONSIDERATION OF T HE VARIOUS SUBMISSIONS, THE LD. CIT(A) HAS DELETED THE SAME BY OBSERVING AS UNDER : - 7. I HAVE CONSIDERED FACTS. THE PROVISION REGARDIN G SET OFF FOR BROUGHT FORWARD CAPITAL LOSSES ARE GIVEN IN SECTION 74 OF IT ACT, WHICH ARE AS UNDER: 3 WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NET R ESULT OF THE COMPUTATION UNDER THE HEAD CAPITAL GAINS IS A LOSS TO THE ASSESSEE, THE WHOLE LOSS SHALL, SUBJECT TO THE OTHER PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO T HE FOLLOWING ASSESSMENT YEAR, AND- (A) IN SO FAR AS SUCH LOSS RELATES TO A SHORT-TERM CAPITAL ASSET, IT SHALL BE SET OFF AGAINST INCOME, F ANY, UNDER THE HEAD CAPITAL GAINS ASSE SSABLE FOR THAT ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET; (B) IN SO FAR AS SUCH LOSS RELATES TO A LONG TERM C APITAL ASSET, IT SHALL BE SET OFF AGAINST INCOME, JF ANY, UNDER THE HEAD CAPITAL GAINS ASSE SSABLE FOR THAT ASSESSMENT YEAR IN RESPECT OF ANY OTHER CAPITAL ASSET NOT BEING A SHOR T-TERM CAPITAL ASSET; (C) IF THE LOSS CAN NOT BE WHOLLY SO SET OFF THE AM OUNT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AN D SO ON. FROM THE ABOVE IT IS CLEAR THAT THE AMOUNT AVAILABL E FOR SET OFF IS TO BE DETERMINED IN THE ASSESSMENT YEAR IN WHICH THE SAID CAPITAL COST ARIS ES. ONCE SUCH LOSS HAS BEEN DETERMINATION, IN THE SUBSEQUENT YEAR THE AMOUNT IS TO BE SIMPLY SET OFF AGAINST THE CAPITAL GAINS OF THAT YEAR. IN THE INSTANT CASE THE LOSS UNDER QUESTION AROSE IN ASSESSMENT YEAR 2001-02. THEREFORE, WHETHER THE COMPUTATION OF LOSS WAS CORRECT AND WHETHER THE APPELLANT WAS ENTITLED TO BE CARRIED FORWARD THE LO SS WAS REQUIRED TO BE DETERMINED IN THE ASSESSMENT ORDER OF A.Y. 2001-02 ONLY. ONCE SUC H LOSS IS DETERMINATION FOR AY. 2001-02 AND ALLOWED TO BE CARRIED FORWARD, IN SUBSE QUENT YEARS THE SAME IS TO BE SIMPLY SET OFF WITHOUT ANY REEXAMINATION. I FIND THAT IN T HE ASSESSMENT ORDER FOR A.Y. 2001-02 THE ASSESSING OFFICER HAD NOT GIVEN ANY FINDING ON THE SAID LOSS. IT IS A WELL SETTLED PRINCIPLE THAT IN CASE ANY CLAIM MADE THE RETURN IS TO BE DIS-ALLOWED, SPEAKING ORDER IS TO BE PASSED FOR THE SAME FAILING WHICH SUCH CLAIM CAN NOT BE DENIED. IN THE APPELLATE ORDER FOR A.Y. 2001-02, MY PREDECESSOR GAVE A SPECIFIC DI RECTION TO THE ASSESSING OFFICER TO PASS A SPEAKING ORDER REGARDING THE CLAIM OF LONG T ERM CAPITAL LOSS. HOWEVER, THE ASSESSING OFFICER DID NOT PASS ANY SPEAKING ORDER D ESPITE SEVERAL APPLICATIONS FROM THE APPELLANT, THOUGH EFFECT TO THE APPELLATE ORDER WAS GIVEN ON OTHER POINTS. IF THE ASSESSING OFFICER WAS OF OPINION THAT WORKING OF LONG TERM CA PITAL LOSS FOR A.Y. 2001-02 WAS NOT CORRECT DUE TO ANY REASON, THE RIGHT COURSE OF ACTI ON WAS TO PASS SPEAKING ORDER IN A.Y. 2001-02 AS DIRECTED BY THE CIT(A). BY FAILING TO DO SO, THE ASSESSING OFFICER HAS, IN EFFECT, ACCEPTED THE CLAIM OF THE ASSESSEE. AS DISC USSED ABOVE ONCE SUCH CLAIM OF CAPITAL LOSS IS ACCEPTED IN A.Y. 2001 -02, SET OFF FOR THE SAME IS TO BE ALLOWED AS PER CLAIM IN SUBSEQUENT YEAR SUCH AS THE YEAR UNDER APPEAL WITHO UT ANY RE-EXAMINATION OR RE- INVESTIGATION. WHILE MAKING ASSESSMENT FOR A.Y. 200 6-07, THE ASSESSING OFFICER CAN MADE DISALLOWANCE ONLY IN RESPECT OF DEDUCTIONS REL ATING TO THE SAME YEAR. HOWEVER, SET OFF FOR BROUGHT FORWARD LOSS CAN NOT BE DENIED UNLE SS NECESSARY ORDER IS PASSED IN THE RELEVANT EARLIER YEAR. THE OMISSION TO PASS AN ORDE R IN A.Y. 2001-02 CAN NOT BE SET RIGHT IN THE RE-ASSESSMENT FOR A. Y. 2006-2007. 8. EVEN ON MERIT, I FIND THAT THE ASSESSING OFFICE R HAS NOT CITED ANY PROVISION OF IT ACT OR ANY CASE LAW TO SUPPORT HIS VIEW THAT BEN EFIT OF INDEXATION CAN NOT BE ALLOWED IN RESPECT OF A RESIDENT ASSESSEE IF THE ASSET IS L OCATED OUT-SIDE INDIA. WHILE IT IS TRUE THAT THE COST INFLATION INDEX FOR THE PURPOSE OF INDEXAT ION IS ARRIVED AT ON THE BASIS OF CONSUMER PRICE INDEX PREVAILING IN INDIA, THE ACT N OWHERE SAYS THAT TIT SHALL NOT BE APPLIED IN RESPECT OF ASSET LOCATED OUT-SIDE INDIA. EVEN IF INTENTION BEHIND PROVISION FOR INDEXATION WAS TO COMPENSATE FOR PRICE RISE TAKING PLACE IN INDIA, THE BENEFIT CAN NOT BE DENIED TO A RESIDENT ASSESSEE IN RESPECT OF ASSET L OCATED OUTSIDE INDIA, UNLESS SOME EXPRESS PROVISION TO THIS EFFECT IS BROUGHT INTO ST ATUTE. ASSESSING AUTHORITY HAS TO MAKE ASSESSMENT IN ACCORDANCE WITH THE LAW AS IT STANDS EVEN IF IT APPEARS TO BE IN VARIOUS WITH UNDERLYING INTENTION. IT MAY ALSO BE MENTIONED HERE THAT AS PER RETURN FOR A.Y. 2001-02, THERE WAS LOSS ON SALE OF LAND AT USA EVEN WITHOUT APPLYING INDEXATION AND 4 LOSS TO THAT LOWER EXTENT WOULD HAVE BEEN ALLOWABLE EVEN IF ASSESSING OFFICERS INTERPRETATION WERE HELD AS CORRECT. 9. CONSIDERING THE ABOVE DISCUSSION, I HOLD THAT TH E ADDITION OF RS. 23,74,000/- ON ACCOUNT OF SET OFF FOR CAPITAL LOSS FOR A.Y. 2001-0 2 CAN NOT BE SUSTAINED. THE SAME IS ACCORDINGLY DELETED. 3.2. AGGRIEVED BY THIS THE REVENUE IS NOW IN APPEAL BEFORE US. 4. AT THE TIME OF HEARING THE LD. DR APPEARING ON B EHALF OF THE REVENUE HAS VEHEMENTLY SUPPORTED THE ORDERS OF THE LD. AO BY ST ATING THAT THE ACTION OF AO IS IN ACCORDANCE WITH LAW. THEREFORE, HE REQUESTED TO SET ASIDE THE ORDER OF LD. CIT(A) AND RESTORE THAT OF AO. 5. ON THE OTHER HAND THE LD. COUNSEL APPEARING ON B EHALF OF ASSESSEE REITERATED THE SUBMISSIONS MADE BEFORE LD. CIT(A) AND PLACED ON RE CORD THE COPY OF APPEAL ORDER PASSED U/S 251 OF THE IT ACT, 1961 FOR A.YR. 2001-0 2 WHEREIN WHILE GIVING THE APPEAL EFFECT OF THE LD. CIT(A) THE AO HAS HIMSELF STATED THAT I HAVE GONE THROUGH THE ASSESSMENT RECORDS AND ASSESSEES CLAIM OF CARRY FO RWARD OF LONG TERM CAPITAL LOSS IS FOUND JUSTIFIABLE. AS SUCH THE LONG TERM CAPITAL LO SS OF RS.23,73,820/- IS TO BE CARRIED FORWARD. KEEPING IN VIEW OF THIS HE SUBMITTED THAT THE ACTION OF LD. CIT(A) IS JUSTIFIABLE IN THE FACTS AND CIRCUMSTANCES OF THE C ASE. 6. AFTER HEARING THE RIVAL SUBMISSIONS AND ON CAREF UL PERUSAL OF MATERIALS AVAILABLE ON RECORD, KEEPING IN VIEW OF THE SPECIFI C FACT THAT IN RESPECT OF CARRY FORWARD OF LONG TERM CAPITAL LOSS OF RS.23,73,820/- FOR A.YR.2001-02, THE LD. CIT(A) HAS GIVEN SPECIFIC DIRECTIONS TO VERIFY THE ENTITLE MENT OF CARRY FORWARD OF THE LOSS AND THE AO HAS CATEGORICALLY STATED THAT HE HAD GONE TH OROUGH THE ASSESSMENT RECORDS AND THE ASSESSEES CLAIM OF CARRY FORWARD OF LONG TERM CAPITAL LOSS IS FOUND JUSTIFIABLE. SINCE THE REVENUE HAS NOT CONTESTED THE ORDER OF LD . CIT(A) FOR A.YR. 2001-02 IN RESPECT OF SUCH CARRY FORWARD LOSS WHEN ONCE THE RE VENUE HAS ACCEPTED AND PASSED ORDER TO CARRY FORWARD CAPITAL LOSS OF RS.23,74,000 /- IN THE ASSESSMENT YEAR INVOLVED I.E. 2006-07 THE AO IS NOT JUSTIFIABLE TO IGNORE TH E ABOVE FACT AND MADE SUCH SORT OF ADJUSTMENTS. THEREFORE WE FIND NO INFIRMITY IN THE ORDERS OF LD. CIT(A) TO BE INTERFERED WITH. WE CONFIRM THE SAME AND DISMISS TH E APPEAL OF REVENUE. 5 7. IN RESPECT OF CROSS OBJECTION RAISED BY ASSESSEE WE ARE OF THE VIEW THAT SINCE THE CROSS OBJECTION IS IN SUPPORT OF THE ORDER OF L D. CIT(A) AND WE HAVE CONFIRMED THE ORDER OF LD.CIT(A) THE CROSS OBJECTION OF ASSES SEE BECOMES INFRACTUOUS AND THE SAME IS HEREBY DISMISSED AS BEING INFRACTUOUS. 8. IN THE RESULT THE APPEAL OF THE REVENUE AS WELL AS THE CROSS OBJECTION OF ASSESSEE ARE DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 28.05.2012. SD/- SD/- , ,, , MAHAVIR SINGH, JUDICIAL MEMBER . .. .!' !'!' !'. .. . , , , , #$ #$ #$ #$ , C.D.RAO, ACCOUNTANT MEMBER. ( (( ('$ '$ '$ '$) )) ) DATE: 28.05.2012. R.G.(P.S.) #7 2 -0 8#0(9- COPY OF THE ORDER FORWARDED TO: 1. SHRI ANIL KRISHNA KAR, 15F, KHANPUR ROAD, KOLKATA-7 00032. 2 D.C.I.T., CIRCLE-52, KOLKATA. 3. THE C.I.T. 4. CIT(A)-XXXIII, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA .0 -/ TRUE COPY, #7&4/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES