ITO, New Delhi V. M/s. Diwan Lime Co. (P) Ltd., New Delhi

ITA 1670/DEL/2012

• Counselvise Citation: [2014] 120 COUNSELVISE.COM (IT) 6360 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 1 month(s) 12 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 23-05-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 20-05-2014
• Assessment Year: 2007-2008
• Appeal Filed On: 10-04-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital asset; Tax effect

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL IN THE INCOME TAX APPELLATE TRIBUNAL DELHI DELHI DELHI DELHI BENCH BENCH BENCH BENCH B BB B : NEW DELHI : NEW DELHI : NEW DELHI : NEW DELHI BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G. BEFORE SHRI G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND VICE PRESIDENT AND SHRI SHRI SHRI SHRI A AA ABY T. VARKEY BY T. VARKEY BY T. VARKEY BY T. VARKEY, ,, , JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER JUDICIAL MEMBER ITA NO ITA NO ITA NO ITA NO. .. .1670/DEL/2012 1670/DEL/2012 1670/DEL/2012 1670/DEL/2012 ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR ASSESSMENT YEAR : : : : 2007 2007 2007 2007- -- -08 0808 08 INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -10(3), 10(3), 10(3), 10(3), NEW DELHI. NEW DELHI. NEW DELHI. NEW DELHI. VS. VS. VS. VS. M/S DIWAN M/S DIWAN M/S DIWAN M/S DIWAN LIME CO. (P) LTD., LIME CO. (P) LTD., LIME CO. (P) LTD., LIME CO. (P) LTD., A AA A- -- -7, MAHARANI BAGH, 7, MAHARANI BAGH, 7, MAHARANI BAGH, 7, MAHARANI BAGH, NEW DELHI NEW DELHI NEW DELHI NEW DELHI 110 065. 110 065. 110 065. 110 065. PAN : AABCD5727F. PAN : AABCD5727F. PAN : AABCD5727F. PAN : AABCD5727F. (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI G.H. SEMA, SR.DR. RESPONDENT BY : SHRI RAJEEV KUMAR, CA. ORDER ORDER ORDER ORDER PER G. PER G. PER G. PER G.D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, D.AGRAWAL, VP VPVP VP : : : : THIS APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF LEARNED CIT(A)-V, NEW DELHI DATED 22 ND FEBRUARY, 2011 FOR THE AY 2007- 08. 2. THE REVENUE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL:- 1. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE AND IN LAW THE LD.CIT(A) HAS ERRED IN ALLOWING CLAIM OF LONG TERM CAPITAL LOSS OF RS.75,90,452/- WHEN THE INVESTMENT IN QUESTION WAS MADE AS BUSINESS INVESTMENT AND NOT AS CAPITAL ASSET. 2. ON THE FACTS AND THE CIRCUMSTANCES OF THE CASE, THE LD.CIT(A) HAS ERRED IN ALLOWING THE CLAIM OF LOSS O N THE PRETEXT THAT THE ASSESSEE HAD NOT CLAIMED THE SET O FF THEREOF WHEREAS A PART OF THE LOSS HAS BEEN SET OFF AGAINST SHORT TERM CAPITAL GAIN IN THE YEAR ITSELF. 3. WE HAVE HEARD THE ARGUMENTS OF BOTH THE SIDES AN D PERUSED RELEVANT MATERIAL PLACED BEFORE US. WE FIND THAT T HE FACTS RELATING TO LOSS ON THE SALE OF UNQUOTED SHARES OF M/S SNS MINE RALS PVT.LTD. ARE ITA-1670/DEL/2012 2 RECORDED AT PAGES 1 & 2 OF THE ASSESSMENT ORDER. F ROM PAGE 2, THE ASSESSING OFFICER HAS NOTED THAT THE ASSESSEE HAS B OOKED THE LOSS OF ` 79,90,458/- AND, AFTER SETTING OFF PART OF IT AGAIN ST PROFIT ON SALE OF FIXED ASSETS, A LONG TERM CAPITAL LOSS OF ` 74,54,222/- WAS CLAIMED TO BE CARRIED FORWARD. THE ASSESSING OFFICER DISALLOWED THE LOSS. THE ASSESSEE FILED APPEAL BEFORE THE LEARNED CIT(A) IN WHICH THE GROUND RAISED BY THE ASSESSEE WAS AGAINST THE DISALLOWANCE OF LOSS ON SALE OF SHARES. LEARNED CIT(A) ALLOWED THIS GROUND OF THE ASSESSEE AND ALSO OBSERVED THAT THE APPELLANT HAS NOT TAKEN BENEFIT O F THIS LOSS IN THE FOLLOWING ASSESSMENT YEAR AND MOREOVER, THE APPELLA NT HAS ALSO GIVEN THE UNDERTAKING THAT THE ASSESSEE WILL NOT TAKE THE BENEFIT OF THIS LOSS IN THE SUBSEQUENT YEAR. AT THE TIME OF HEARING BEF ORE US, THE LEARNED COUNSEL REITERATED THAT THE CARRY FORWARD OF LOSS W AS NOT ALLOWED BY THE CIT(A). THAT BEFORE THE CIT(A), THE ASSESSEE ONLY DISPUTED THE DISALLOWANCE OF LOSS AND ASSESSEE HAS NOT CLAIMED T HE CARRY FORWARD OF LOSS. THEREFORE, THE CIT(A) HAS ALSO NOT GIVEN ANY DIRECTION FOR CARRY FORWARD OF LOSS. HE, THEREFORE, SUBMITTED THAT SIN CE CARRY FORWARD AND SET OFF OF LOSS IN THE SUBSEQUENT YEAR IS NOT BEING CLAIMED, THE APPEAL OF THE REVENUE IS INFRUCTUOUS BECAUSE THERE IS NO T AX EFFECT EITHER IN THIS YEAR OR NOTIONAL TAX EFFECT WHICH COULD HAVE A RISEN AGAINST THE SET OFF OF CARRY FORWARD LOSS IN THE SUBSEQUENT YEAR. 4. LEARNED DR, ON THE OTHER HAND, RELIED UPON THE O RDER OF THE ASSESSING OFFICER. 5. AFTER HEARING THE ARGUMENTS OF BOTH THE SIDES AN D PERUSING RELEVANT MATERIAL ON RECORD, WE FIND THAT THE ASSES SEE HAS BOOKED THE LOSS OF ` 79.90 LAKHS, PART OF WHICH WAS SET OFF AGAINST THE SALE OF FIXED ASSETS AND THE ASSESSEE HAS ASKED FOR CARRY FORWARD OF THE CAPITAL LOSS OF ` 74.54 LAKHS. THE ASSESSING OFFICER, IT SEEMS, HAS DISALLOWED THE LOSS TO THE EXTENT THE ASSESSEE CLAIMED THE CARRY F ORWARD AND ALSO INITIATED PENALTY PROCEEDINGS UNDER SECTION 271(1)( C) OF THE ACT. ITA-1670/DEL/2012 3 BEFORE THE CIT(A), THE ONLY GROUND RAISED BY THE AS SESSEE READS AS UNDER:- THE LEARNED ASSESSING OFFICER HAS ERRED IN LAW AND IN FACTS IN DISALLOWING THE CLAIM OF LOSS ON SALE OF SHARES AMOUNTING RS.7590452/-. 6. FROM THE ABOVE, IT IS EVIDENT THAT BEFORE THE CI T(A), THE ASSESSEE HAS ONLY DISPUTED THE DISALLOWANCE OF THE CLAIM OF LOSS BUT THE ASSESSEE HAS NOT CLAIMED THE CARRY FORWARD OF THE S AME. THE CIT(A) ALLOWED THE ASSESSEES GROUND OF APPEAL AND ALSO OB SERVED THAT THE ASSESSEE HAS STATED BEFORE HIM THAT IT WILL NOT TAK E THE BENEFIT OF THIS LOSS IN THE SUBSEQUENT YEAR. HE, THEREFORE, ALLOWE D THE ASSESSEES GROUND OF APPEAL. AFTER CONSIDERING THE FACTS OF T HE CASE, WE AGREE WITH THE CONTENTION OF THE LEARNED COUNSEL THAT THI S APPEAL IS ACADEMIC AND IT INVOLVES NO TAX EFFECT. THE DISALLOWANCE OF THE LOSS WHICH IS CLAIMED TO BE CARRIED FORWARD WILL HAVE A TAX EFFEC T ONLY IN THE SUBSEQUENT YEAR WHERE THE ASSESSEE CAN CLAIM THE SE T OFF. IN THIS CASE, AS WE HAVE ALREADY NOTED THAT THE ASSESSEES COUNSEL GAVE AN UNDERTAKING THAT THE ASSESSEE WILL NOT CLAIM SET OF F OF THE LOSS AGAINST THE CAPITAL GAIN, IF ANY, IN THE SUBSEQUENT YEAR. THEREFORE, WE AGREE THAT THE TAX EFFECT IN THIS REVENUES APPEAL IS NIL AND CBDT INSTRUCTION NO.3/2011 DATED 9 TH FEBRUARY, 2011 WOULD BE SQUARELY APPLICABLE. ACCORDINGLY, WE DISMISS THE REVENUES APPEAL. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. DECISION PRONOUNCED IN THE OPEN COURT ON 23 RD MAY, 2014. SD/- SD/- ( (( (ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY ABY T. VARKEY) )) ) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) (G.D.AGRAWAL) JUDICIAL JUDICIAL JUDICIAL JUDICIAL MEMBER MEMBER MEMBER MEMBER VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT VICE PRESIDENT DATED : 23.05.2014 VK. ITA-1670/DEL/2012 4 COPY FORWARDED TO: - 1. APPELLANT : INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, INCOME TAX OFFICER, WARD WARD WARD WARD- -- -10(3), NEW DELHI. 10(3), NEW DELHI. 10(3), NEW DELHI. 10(3), NEW DELHI. 2. RESPONDENT : M/S DIWAN LIME M/S DIWAN LIME M/S DIWAN LIME M/S DIWAN LIME CO. (P) LTD., CO. (P) LTD., CO. (P) LTD., CO. (P) LTD., A AA A- -- -7, MAHARANI BAGH, NEW DELHI 7, MAHARANI BAGH, NEW DELHI 7, MAHARANI BAGH, NEW DELHI 7, MAHARANI BAGH, NEW DELHI 110 065. 110 065. 110 065. 110 065. 3. CIT 4. CIT(A) 5. DR, ITAT ASSISTANT REGISTRAR