M/s CD Equipfinance Pvt. Ltd., Kolkata V. DCIT, CIR-7(1), Kolkata

ITA 126/KOL/2021

• Counselvise Citation: [2021] 108 COUNSELVISE.COM (IT) 1220 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 09-07-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2016-2017
• Appeal Filed On: 09-04-2021
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Revision of order; Assessment record; Tax effect; Set aside
• Section: 263; 154; 143(3); 20

Judgement Text

ITA NO. 126/KOL/2021 A.Y. 20 16-2017 CD EQUIFINANCE PVT. LIMITED 1 IN THE INCOME TAX APPELLATE TRIBUNAL, KOLKATA C BENCH, KOLKATA [VIRTUAL COURT HEARING] BEFORE SHRI P.M. JAGTAP, VICE-PRESIDENT & SHRI A.T. VARKEY, JUDICIAL MEMBER I.T.A. NO. 126/KOL/2021 ASSESSMENT YEAR: 2016-2017 CD EQUIFINANCE PVT. LIMITED,....................... ................................APPELLANT SB TOWER, 37, SHAKESPEARE SARANI, KOLKATA-700017 [PAN:AACCP7333A] -VS.- PRINCIPAL COMMISSIONER OF INCOME TAX-1,,........... .....................RESPONDENT KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 \ APPEARANCES BY: SHRI AKKAL DUDHWEWALA, FCA, APPEARED ON BEHALF OF T HE ASSESSEE SHRI PRAVEEN KISHORE, CIT (DR) , APPEARED ON BEHALF OF THE REVENUE DATE OF CONCLUDING THE HEARING : JULY 01, 2021 DATE OF PRONOUNCING THE ORDER : JULY 09, 2021 O R D E R PER SHRI P.M. JAGTAP, VICE-PRESIDENT :- THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAI NST THE ORDER OF THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX (APPEALS)- 1, KOLKATA DATED 27.03.2021 PASSED UNDER SECTION 263 OF THE INCOME T AX ACT, 1961. 2. THE ASSESSEE IN THE PRESENT CASE IS A COMPANY. T HE RETURN OF INCOME FILED BY IT FOR THE YEAR UNDER CONSIDERATION WAS SELECTED FOR COMPLETE SCRUTINY AND THE ASSESSMENT WAS COMPLETED BY THE ASSESSING ITA NO. 126/KOL/2021 A.Y. 20 16-2017 CD EQUIFINANCE PVT. LIMITED 2 OFFICER UNDER SECTION 143(3) OF THE ACT VIDE AN ORD ER DATED 28.12.2018. THE RECORDS OF THE SAID ASSESSMENT SUBSEQUENTLY CAM E TO BE EXAMINED BY THE LD. PRINCIPAL CIT AND ON SUCH EXAMINATION HE FO UND THE FOLLOWING ERROR IN THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3):- IT WAS NOTICED THAT THE ASSESSEE CLAIMED CARRY FOR WARD OF LONG-TERM CAPITAL LOSS OF RS.4,41,60,604/- IN HI S RETURN OF INCOME. DURING ASSESSMENT THE LONG-TERM CAPITAL LOSS (NON-STT PAID) OF RS.3,22,30,814/- WAS DISALLOWED BY THE ASSESSING OFFICER DUE TO SUCH LOS S HAD BEEN ARISEN FROM LISTED SECURITIES. HOWEVER, S PER ITBA CFL SCHEDULE THE WHOLE LONG-TERM CAPITAL LOSS I.E. RS.4,41,60,604/- AS CLAIMED BY THE ASSESSEE WAS ALL OWED TO BE CARRIED FORWARD FOR THE FUTURE YEARS INSTEAD OF ONLY RS.1,19,29,790/- (RS.4,41,60,604/- MINUS RS.3,22,30,814/-). HENCE EXCESS CARRIED FORWARD OF LONG TERM CAPITAL LOSS OF RS.3,22,30,814/- HAS RESULTED IN POTENTIAL TAX EFFECT OF RS.70,90,779/-. 3. THE LD. PRINCIPAL CIT ACCORDINGLY ISSUED A NOTIC E UNDER SECTION 263 REQUIRING THE ASSESSEE TO SHOW-CAUSE AS TO WHY THE ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) SHOULD NOT B E TREATED AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE AND SHOULD NOT BE REVISED/SET ASIDE BY EXERCISING HIS REVISION ARY POWERS. 4. IN REPLY TO THE SHOW-CAUSE NOTICE ISSUED BY THE LD. PRINCIPAL CIT UNDER SECTION 263, THE FOLLOWING SUBMISSION WAS FIL ED BY THE ASSESSEE IN WRITING:- ..... 2. AT THE OUTSET IT IS SUBMITTED THAT THE I MPUGNED DISALLOWANCE OF LONG TERM CAPITAL LOSS HAS BEEN DIS PUTED BY THE COMPANY BEFORE THE LD. CIT(A) AND COPY OF THE ACKNOWLEDGEMENT EVIDENCING THE FILING OF SUCH APPEA L IS ENCLOSED AND MARKED AS ANNEXURE-1. IT IS THUS SUBMI TTED THAT SINCE THIS ISSUE IS THE SUBJECT MATTER OF APPEAL, I N TERMS OF THE PROVISIONS CONTAINED IN CLAUSE (C) OF EXPLANATION 1 TO SECTION 263, SUCH MATTER CANNOT BE NOW CONSIDERED BY EXERCI SE OF REVISIONARY JURISDICTION U/S 263 OF THE ACT. IT IS THUS SUBMITTED THAT THE IMPUGNED NOTICE BEING BAD IN LAW AND IN EX CESS OF JURISDICTION DESERVES TO BE SET ASIDE AND/OR DROPPE D. 3. EVEN OTHERWISE, AND ON THE MERITS IT IS SUBMITT ED THAT YOUR ALLEGATION THAT THE AO INSPITE OF DISALLOWING THE LONG TERM CAPITAL LOSS TO THE EXTENT OF RS.3,22,30,814/- ERRO NEOUSLY ITA NO. 126/KOL/2021 A.Y. 20 16-2017 CD EQUIFINANCE PVT. LIMITED 3 ALLOWED THE WHOLE LONG TERM CAPITAL LOSS OF RS.4,14 ,60,604/- IS ALSO FACTUALLY INCORRECT. ON PERUSAL OF PAGES 11 & 12 OF THE ASSESSMENT ORDER, IT SHALL BE NOTED THAT THE A 0 HA D DENIED THE CARRY FORWARD OF LONG TERM CAPITAL LOSS TO THE EXTE NT OF RS.3,22,30,814/- AND HAD ALLOWED THE CARRY FORWARD OF SHORT TERM CAPITAL LOSS OF RS.2,82,23,130/-. REFERENCE IS INVITED TO SI. NO. 18 OF THE ITNS ANNEXED TO THE ASSESSMENT ORDER [ANNEXURE- 2], WHEREIN THE AO HAS SPECIFIED AND ALLOWED ONLY T HE CARRY FORWARD OF SHORT TERM CAPITAL LOSS OF RS.2,82,23,13 0/-. IN FACT THE AO DENIED THE CARRY FORWARD OF THE ENTIRE LONG TERM CAPITAL LOSS AND FAILED TO GRANT THE CARRY FORWARD OF THE A SSESSED LTCL OF RS.1,19,29,790/- (RS.4,41,60,604 - RS.3,22,30,81 4). THE COMPANY HAD FILED AN APPLICATION U/S 154 DATED 3101 .2019 SEEKING CARRY FORWARD OF THE SUCH ASSESSED LOSS OF RS.1,19,29,790/-, COPY OF WHICH IS ENCLOSED AND MAR KED AS ANNEXURE-3. THE SAID APPLICATION IS STILL PENDING A ND THE AO IS YET TO ALLOW THE CARRY FORWARD OF THE SAME. IN VIEW OF THE FOREGOING THEREFORE, IT SHALL THEREFORE BE NOTED TH AT THE AO NEVER ALLOWED THE CARRY FORWARD OF THE RETURNED LON G TERM CAPITAL LOSS. IN FACT, EVEN THE CARRY FORWARD OF AS SESSED LOSS WAS DENIED TO THE COMPANY. ACCORDINGLY, THE ORDER PASSE D BY THE AO U/S 143(3) IS NEITHER ERRONEOUS NOR PREJUDICIAL TO THE INTERESTS OF THE REVENUE. 4. FOR THE FOREGOING REASONS THEREFORE IT IS SUBMI TTED THAT IT IS A FIT CASE WHERE PROCEEDINGS U/S 263 SHOULD B E DROPPED. 5. THE LD. PRINCIPAL CIT DID NOT ACCEPT THE ABOVE S UBMISSION MADE ON BEHALF OF THE ASSESSEE-COMPANY FOR THE FOLLOWING RE ASONS GIVEN IN PARAGRAPH NO. 5 OF HIS IMPUGNED ORDER:- 5. I HAVE CONSIDERED THE FACTS OF THE CASE AND AL SO THE SUBMISSION OF THE ASSESSEE. SCRUTINY OF ASSESSMENT RECORDS REVEALED THAT THE ASSESSEE CLAIMED FOR CARRY FORWAR D OF LONG TERM CAPITAL LOSS OF RS.4,41,60,604/- IN HIS RETURN OF INCOME. DURING ASSESSMENT THE LONG TERM CAPITAL LOSS OF RS.3,22,30,814/-WAS DISALLOWED BY THE ASSESSING OFF ICER DUE TO SUCH LOSS HAD BEEN ARISEN FROM LISTED SECURITIES. F ROM ITBA CFL SCHEDULE IT IS SEEN THAT THE WHOLE LONG TERM CAPITA L LOSS I.E. RS.4,41,60,6041- AS CLAIMED BY THE ASSESSEE WAS ALL OWED TO BE CARRIED FORWARD FOR THE FUTURE YEARS INSTEAD OF ONL Y RS. 1,19,29,7901- (RS.4,41,60,604 - RS.3,22,30,814). TH E A.O. HAS PASSED THE ASSESSMENT ORDER WITHOUT MAKING ENQUIRIE S OR VERIFICATION WHICH SHOULD HAVE BEEN MADE IN THE INS TANT CASE. CLAUSE (A) AND (B) OF EXPLANATION-2 TO SECTION 263( 1) IS ATTRACTED IN THIS CASE. ACCORDINGLY, IT IS HELD THA T THE ASSESSMENT ORDER IS ERRONEOUS IN SO FAR AS IT IS PR EJUDICIAL TO THE INTEREST OF REVENUE. ITA NO. 126/KOL/2021 A.Y. 20 16-2017 CD EQUIFINANCE PVT. LIMITED 4 6. FOR THE REASONS GIVEN ABOVE AND BY RELYING ON TH E VARIOUS JUDICIAL PRONOUNCEMENTS REFERRED TO IN HIS IMPUGNED ORDER, T HE LD. PRINCIPAL CIT SET ASIDE THE ORDER DATED 28.12.2018 PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) BY TREATING THE SAME AS ERRONE OUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE BY AN OR DER DATED 27.03.2021 PASSED UNDER SECTION 263 WITH A DIRECTION TO THE AS SESSING OFFICER TO FRAME THE ASSESSMENT AFRESH AFTER CONSIDERING THE O BSERVATIONS RECORDED BY HIM. AGGRIEVED BY THE ORDER OF THE LD. PRINCIPAL CIT PASSED UNDER SECTION 263, THE ASSESSEE HAS PREFERRED THIS APPEAL BEFORE THE TRIBUNAL. 7. THE LD. COUNSEL FOR THE ASSESSEE, AT THE OUTSET, INVITED OUR ATTENTION TO THE ASSESSMENT ORDER DATED 28.12.2018 PASSED UND ER SECTION 143(3) OF THE ACT TO SHOW THAT THE CLAIM OF THE ASSESSEE-COMP ANY FOR CAPITAL LOSS OF RS.4,41,60,604/- WAS DISALLOWED BY THE ASSESSING O FFICER TO THE EXTENT OF RS.3,22,30,814/-. HE THEN INVITED OUR ATTENTION TO THE COMPUTATION SHEET ANNEXED TO THE ASSESSMENT ORDER TO SHOW THAT EVEN T HE BALANCE LONG-TERM CAPITAL LOSS OF RS.1,19,29,790/- WAS NOT ALLOWED TO BE CARRIED FORWARD BY THE ASSESSING OFFICER. HE CONTENDED THAT AN APPLICA TION THEREFORE WAS MOVED BY THE ASSESSEE-COMPANY BEFORE THE ASSESSING OFFICER UNDER SECTION 154 ON 31.01.2019 SEEKING RECTIFICATION OF THE SAID MISTAKE APPARENT FROM RECORD. HE INVITED OUR ATTENTION TO T HE COPY OF THE SAID APPLICATION PLACED AT PAGE NOS. 33-34 OF THE PAPER BOOK AND SUBMITTED THAT THE SAID APPLICATION HAS NOT BEEN DISPOSED OF BY THE ASSESSING OFFICER TILL DATE AND IT IS STILL PENDING WITH THE ASSESSING OFFICER. HE ALSO CONTENDED THAT EVEN THE DISALLOWANCE MADE BY THE AS SESSING OFFICER ON ACCOUNT OF THE ASSESSEES CLAIM FOR LONG-TERM CAPIT AL LOSS TO THE EXTENT OF RS.3,22,30,814/- HAS BEEN CHALLENGED BY THE ASSESSE E-COMPANY IN THE APPEAL FILED BEFORE THE LD. CIT(APPEALS). IN THIS R EGARD, HE DREW OUR ATTENTION TO THE COPY OF RELEVANT FORM NO. 35 PLACE D AT PAGE NO.23 TO 25 OF THE PAPER BOOK. HE CONTENDED THAT THE LONG-TERM CAPITAL LOSS OF RS.4,41,60,604/- AS CLAIMED BY THE ASSESSEE THUS WA S NOT ALLOWED TO BE CARRIED FORWARD BY THE ASSESSING OFFICER VIDE HIS O RDER DATED 28.12.2018 ITA NO. 126/KOL/2021 A.Y. 20 16-2017 CD EQUIFINANCE PVT. LIMITED 5 PASSED UNDER SECTION 143(3) AND THERE WAS NO ERROR IN THE SAID ORDER AS ALLEGED BY THE LD. PRINCIPAL CIT IN HIS IMPUGNED OR DER CALLING FOR ANY REVISION. HE CONTENDED THAT THIS FACTUAL ASPECT WAS CLEARLY BROUGHT TO THE NOTICE OF THE LD. PRINCIPAL CIT ON BEHALF OF THE AS SESSEE-COMPANY DURING THE PROCEEDINGS UNDER SECTION 263, BUT WITHOUT VERI FYING OR ASCERTAINING THE ACTUAL POSITION, THE LD. PRINCIPAL CIT SIMPLY P ROCEEDED TO SET ASIDE THE ORDER OF THE ASSESSING OFFICER PASSED UNDER SECTION 143(3) BY TREATING THE SAME AS ERRONEOUS AS WELL AS PREJUDICIAL TO THE INTEREST OF THE REVENUE. HE CONTENDED THAT SINCE THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER AS ALLEGED BY THE LD. PRINCIPAL C IT IN HIS IMPUGNED ORDER PASSED UNDER SECTION 263, THE ORDER PASSED BY THE L D. PRINCIPAL CIT IS NOT SUSTAINABLE AND THE SAME IS LIABLE TO BE QUASHED. 8. THE LD. CIT(DR), ON THE OTHER HAND, RELIED ON TH E IMPUGNED ORDER PASSED BY THE LD. PRINCIPAL CIT UNDER SECTION 263 I N SUPPORT OF THE REVENUES CASE. 9. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS AND ALS O PERUSED THE RELEVANT MATERIAL AVAILABLE ON RECORD. IT IS OBSERV ED THAT THE ORDER PASSED BY THE ASSESSING OFFICER DATED 28.12.2018 UNDER SEC TION 143(3) WAS SET ASIDE BY THE LD. PRINCIPAL CIT VIDE HIS IMPUGNED OR DER PASSED UNDER SECTION 263 ALLEGING BY THAT THERE WAS AN ERROR IN THE SAID ORDER IN ALLOWING THE ENTIRE LONG-TERM CAPITAL LOSS OF RS.4, 41,60,604/- TO BE CARRIED FORWARD FOR THE SUBSEQUENT YEARS WHEN THE S AME WAS ACTUALLY ALLOWED BY THE ASSESSING OFFICER ONLY TO THE EXTENT OF RS. 1,19,29,790/-. IN THIS REGARD, THE LD. COUNSEL FOR THE ASSESSEE HA S DEMONSTRATED BEFORE US ON THE BASIS OF THE ASSESSMENT ORDER PASSED BY T HE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH THE COMPUTATION SHEE T ANNEXED THERETO THAT EVEN THOUGH THE CLAIM OF THE ASSESSEE-COMPANY FOR LONG-TERM CAPITAL LOSS OF RS. 4,41,60,604/- WAS ALLOWED BY THE ASSESS ING OFFICER ONLY TO THE EXTENT OF RS.1,19,29,790/-, NO AMOUNT OF LONG-TERM CAPITAL LOSS WAS ACTUALLY ALLOWED BY THE ASSESSING OFFICER TO BE CAR RIED FORWARD IN THE ITA NO. 126/KOL/2021 A.Y. 20 16-2017 CD EQUIFINANCE PVT. LIMITED 6 COMPUTATION SHEET. HE HAS ALSO INVITED OUR ATTENTIO N TO THE COPY OF APPLICATION FILED BY THE ASSESSEE UNDER SECTION 154 ON 31.01.2019 PLACED AT PAGE NO. 33 & 34 OF THE PAPER BOOK TO SHOW THAT THIS MISTAKE COMMITTED BY THE ASSESSING OFFICER WAS POINTED OUT BY THE ASSESSEE- COMPANY SEEKING RECTIFICATION OF THE SAME. HE HAS A LSO INVITED OUR ATTENTION TO THE COPY OF APPEAL FILED BEFORE THE LD . CIT(A) IN FORM NO. 35 PLACED AT PAGE NO. 23 TO 25 OF THE PAPER BOOK TO SH OW THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER ON ACCOU NT OF LONG-TERM CAPITAL LOSS TO THE EXTENT OF RS.3,22,30,814/- WAS CHALLENGED BY THE ASSESSEE IN THE APPEAL FILED BEFORE THE LD. CIT(APP EALS). THIS DOCUMENTARY EVIDENCE PLACED ON RECORD CLEARLY ESTABLISH THAT EV EN THOUGH THE CLAIM OF THE ASSESSEE FOR LONG-TERM CAPITAL LOSS OF RS.4,41, 60,604/- WAS ALLOWED BY THE ASSESSING OFFICER ONLY TO THE EXTENT OF RS.1,19 ,29,790/-, EVEN THE SAID LOSS TO THE EXTENT ALLOWED IN THE ASSESSMENT WAS NO T ALLOWED TO BE CARRIED FORWARD BY THE ASSESSING OFFICER TO THE SUB SEQUENT YEARS AS PER THE COMPUTATION SHEET ANNEXED TO THE ASSESSMENT ORD ER. EVEN THE LD. CIT(DR) HAS NOT BEEN ABLE TO REBUT OR CONTROVERT TH IS POSITION WHICH IS CLEARLY EVIDENT FROM THE ASSESSMENT ORDER PASSED BY THE ASSESSING OFFICER UNDER SECTION 143(3) READ WITH COMPUTATION SHEET AN NEXED THERETO AND FURTHER CORROBORATED BY THE APPLICATION FILED BY TH E ASSESSEE UNDER SECTION 154 BEFORE THE ASSESSING OFFICER AND THE AP PEAL FILED BEFORE THE LD. CIT(APPEALS). WE, THEREFORE, FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE THAT THERE WAS NO ERROR IN THE ORDER OF THE ASSESSING OFFICER DATED 28.12.2018 PASSED UNDER SEC TION 143(3) IN ALLOWING TO CARRY FORWARD THE ENTIRE LONG-TERM CAPI TAL LOSS OF RS.4,41,60,604/- CLAIMED BY THE ASSESSEE INSTEAD OF RS.1,19,29,790/- ONLY ALLOWED IN THE ASSESSMENT ORDER, AS ALLEGED BY THE LD. PRINCIPAL CIT IN HIS IMPUGNED ORDER. THE ORDER PASSED BY THE ASSESSING O FFICER UNDER SECTION 143(3) THUS WAS NOT ERRONEOUS AS WELL AS PREJUDICIA L TO THE INTEREST OF THE REVENUE AND THE LD. PRINCIPAL CIT, IN OUR OPINION, WAS NOT JUSTIFIED IN REVISING THE SAME VIDE HIS IMPUGNED ORDER PASSED UN DER SECTION 263. WE, ITA NO. 126/KOL/2021 A.Y. 20 16-2017 CD EQUIFINANCE PVT. LIMITED 7 THEREFORE, SET ASIDE THE ORDER PASSED BY THE LD. PR INCIPAL CIT UNDER SECTION 263. . 10. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ORDER PRONOUNCED IN THE OPEN COURT ON JULY 09, 2021 . SD/- SD/- (A.T. VARKEY) (P.M. JAGTAP) JUDICIAL MEMBER VICE-PRESIDENT KOLKATA, THE 9 TH DAY OF JULY, 2021 COPIES TO : (1) CD EQUIFINANCE PVT. LIMITED, SB TOWER, 37, SHAKESPEARE SARANI, KOLKATA-700017 (2) PRINCIPAL COMMISSIONER OF INCOME TAX-1, KOLKATA, AAYAKAR BHAWAN, P-7, CHOWRINGHEE SQUARE, KOLKATA-700069 (3) COMMISSIONER OF INCOME TAX (APPEALS)-3, KOLKA TA, (4) COMMISSIONER OF INCOME TAX , (5) THE DEPARTMENTAL REPRESENTATIVE (6) GUARD FILE BY ORDER SENIOR PRIVATE SECRETARY/DDO, INCOME TAX APPELLATE TRIBUNAL, KOLKATA BENCHES, KOLKATA LAHA/SR. P.S.