MAHENDRAKUMAR MANSINGHKA, MUMBAI V. INCOME TAX OFFICER 8(2)(3), MUMBAI

ITA 1870/MUM/2018

• Counselvise Citation: [2018] 121 COUNSELVISE.COM (IT) 6672 (ITAT-MUMBAI)
• Duration Of Justice: 3 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 23-03-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: N HEMALATHA
• Keywords: Sale consideration of property below Jantri Value; Transactions in derivatives; Reassessment proceedings
• Section: 143(3); 50C

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'SMC' BENCH, MUMBAI BEFORE SHRI B.R. BASKARAN, ACCOUNTANT MEMBER AND SHRI AMARJIT SINGH, JUDICIAL MEMBER ITA NO. 1870/MUM/2018 (ASSESSMENT YEAR: 2011-12) SHRI MAHENDRAKUMAR MANSINGHKA C-8, NAVPRABHAT CHS LTD. SAT JANABAI ROAD VILE PARLE (E), MUMBAI 400057 VS. INCOME TAX OFFICER - 8(2)(3) ROOM NO. 201, 2ND FLOOR AAYAKAR BHAVAN, M.K. ROAD MUMBAI 400020 PAN AABPM5531B APPELLANT RESPONDENT APPELLANT BY: SHRI HARESH P. SHAH RESPONDENT BY: MS. N. HEMALATHA DATE OF HEARING: 28.06.2018 DATE OF PRONOUNCEMENT: 28.06.2018 O R D E R PER B.R. BASKARAN, AM THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER DATED 11.12.2017 PASSED BY THE CIT(A)-17, MUMBAI AND IT R ELATES TO A.Y. 2011- 12. 2. THE ASSESSEE IS AGGRIEVED BY THE DECISION OF THE LE ARNED CIT(A) IN CONFIRMING THE DISALLOWANCE OF SET OFF OF MARK TO M ARKET LOSS FROM F & O TRANSACTIONS AMOUNTING TO ` 28.14 LAKHS. 3. THE FACTS RELATING TO THE ISSUE ARE STATED IN BRIE F. THE ASSESSEE FILED HIS RETURN OF INCOME ON 29.07.2011 DECLARING TOTAL INCOME OF ` 9,60,440/- WHICH CONSISTED OF INCOME FROM HOUSE PROPERTY OF ` 2,79,300/- AND INCOME FROM OTHER SOURCES OF ` 7,81,142/-. THE RETURN OF INCOME WAS PROCESSED UNDER SECTION 143(3) OF THE ACT. SUBSEQUENTLY THE A O RECEIVED INFORMATION THAT THE ASSESSEE HAS SOLD A PROPERTY FOR ` 25.50 LAKHS WHICH WAS LESS THAN ITA NO. 1870/MUM/2018 SHRI MAHENDRAKUMAR MANSINGHKA 2 THE VALUE PRESCRIBED BY THE STAMP VALUE AUTHORITY. THE STAMP VALUE AUTHORITY HAS DETERMINED THE VALUE OF THE TRANSACTI ON AT ` 32.16 LAKHS AND HENCE AS PER PROVISIONS OF SECTION 50C OF THE INCOM E TAX ACT (HEREINAFTER THE ACT) THE SALE VALUE OF THE PROPERTY HAS TO BE ADOPTED AT ` 32.16 LAKHS FOR THE PURPOSE OF COMPUTATION OF CAPITAL GAINS. AC CORDINGLY THE AO REOPENED THE ASSESSMENT OF THE ASSESSEE FOR THE YEA R UNDER CONSIDERATION. 4. BEFORE THE AO THE ASSESSEE SUBMITTED THAT IT HAD D ULY COMPUTED THE CAPITAL GAIN BY ADOPTING THE SALE VALUE AT ` 32.16 LAKHS AND THE CAPITAL GAIN WAS ARRIVED AT RS17.04 LAKHS. IT WAS SUBMITTED TH AT THE ENTIRE CAPITAL GAIN WAS ADJUSTED AGAINST THE MARK TO MARKET LOSS I NCURRED BY THE ASSESSEE IN F&O TRANSACTIONS. ACCORDINGLY THE INCO ME FROM CAPITAL GAIN WAS RETURNED AT NIL FIGURE AND HENCE IT DID NOT FOR M PART OF TOTAL INCOME. ACCORDINGLY IT WAS SUBMITTED THAT THE LOSS FROM F & O TRANSACTIONS, REFERRED ABOVE, SHOULD BE ADJUSTED AGAINST THE LONG TERM CAPITAL GAIN. THE ASSESSEE HAD ALSO ADJUSTED A PART OF LOSS AGAINST I NCOME FROM OTHER SOURCES, WHICH WAS ALSO CLAIMED IN REASSESSMENT PRO CEEDINGS. HOWEVER, THE AO TOOK THE VIEW THAT THE ASSESSEE HAS MADE VAR IOUS ADJUSTMENTS AT HIS WHIMS AND FANCIES AND FURTHER OBSERVED THAT THE ASSESSEE DID NOT CLAIM ANY SUCH LOSS IN THE ORIGINAL RETURN OF INCOM E AS PER THE DETAILS AVAILABLE IN THE ORIGINAL RETURN OF INCOME. ACCORD INGLY THE AO TOOK THE VIEW THAT THE CLAIM FOR SET OFF OF LOSS WAS A NEW C LAIM MADE BY THE ASSESSEE AND DID NOT ALLOW THE SAME. AS NOTICED EARLIER, TH AT THE ASSESSEE HAD INCURRED LOSS OF ` 28.40 LAKHS FROM F&O TRANSACTIONS. THE ASSESSEE HAS ADJUSTED A SUM OF ` 17.04 LAKHS AGAINST LONG TERM CAPITAL GAIN AND ` 11.36 LAKHS AGAINST INCOME FROM OTHER SOURCES. AS NOTI CED EARLIER, THE ENTIRE LONG TERM CAPITAL GAIN GOT ADJUSTED AGAINST THE LOS S AND THE ASSESSEE DECLARED NIL INCOME UNDER LONG TERM CAPITAL GAIN. I N SIMILAR MANNER ASSESSEE DECLARED ` 7.81 LAKHS UNDER THE HEAD INCOME FROM OTHER SOURCES AFTER ADJUSTING THE LOSS OF RS.11.36 LAKHS REFERRED ABOVE. SINCE THE AO TOOK THE VIEW THAT THE ASSESSEE HAS MADE THE CLAIM FOR LOSS FOR THE FIRST TIME BEFORE THE REOPENED ASSESSMENT, HE DID NOT ALL OW THE CLAIM OF SET OFF OF LOSS. THE LEARNED CIT(A) ALSO CONFIRMED THE SAME . ITA NO. 1870/MUM/2018 SHRI MAHENDRAKUMAR MANSINGHKA 3 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. T HE ASSESSEE HAS FURNISHED A COPY OF THE STATEMENT OF TOTAL INCOME F URNISHED BY HIM ALONG WITH THE ORIGINAL RETURN OF INCOME. A PERUSAL OF TH E SAME WOULD SHOW THAT THE ASSESSEE HAS COMPUTED LONG TERM CAPITAL GAIN OF ` 17.04 LAKHS BY ADOPTING THE SALE VALUE OF THE PROPERTY AT STAMP DU TY VALUE OF ` 32.16 LAKHS. WE HAVE ALREADY NOTICED THAT THE AO HAS REOP ENED THE ASSESSMENT ONLY TO EXAMINE THE COMPUTATION OF LONG TERM CAPITA L GAIN, I.E. WHETHER THE LONG TERM CAPITAL GAIN WAS COMPUTED BY ADOPTING THE STAMP DUTY VALUATION OR NOT. IN THE REOPENED ASSESSMENT THE AO HAS IN FACT ACCEPTED THE LONG TERM CAPITAL GAIN WORKING OF THE ASSESSEE. HOWEVER, HE DISALLOWED THE CLAIM OF SET OFF OF LOSS UNDER THE IMPRESSION T HAT THE ASSESSEE IS MAKING THE CLAIM FOR THE FIRST TIME IN THE REOPENED THE ASSESSMENT. SINCE THE INCOME FROM CAPITAL GAIN WAS SHOWN AT NIL FIGUR E IN THE ORIGINAL RETURN OF INCOME, THE LD CIT(A) ALSO CONFIRMED THE VIEW TA KEN BY THE AO. 6. WE NOTICE THAT, ALONG WITH THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAS ALSO ATTACHED A STATEMENT OF TOTAL INC OME WHICH CLEARLY SHOWS THAT THE ASSESSEE HAS SET OFF F&O LOSS OF ` 28.40 LAKHS AGAINST LONG TERM CAPITAL GAIN AND ALSO AGAINST INCOME FROM OTHE R SOURCES. HENCE IT IS CLEAR THAT THE CLAIM FOR SET OFF OF LOSS WAS NOT A NEW CLAIM AS OBSERVED BY THE AO IN THE REASSESSMENT PROCEEDINGS. IT CAN BE NOTICED THAT, IN THE ORIGINAL RETURN OF INCOME, THE ASSESSEE HAS DECLARE D INCOME FROM OTHER SOURCES AT ` 7.81 LAKHS, WHICH IS THE NET FIGURE ARRIVED AT AFTE R ADJUSTING THE F&O LOSS OF ` 11.36 LAKHS. THIS FACT MAKES IT CLEAR THAT THE ASSE SSEE HAS CLAIMED F&O LOSS IN THE ORIGINAL RETURN OF INCO ME ALSO, MEANING THEREBY THAT THE REMAINING LOSS OF F&O TRANSACTIONS OF ` 17.04 LAKHS WAS ADJUSTED AGAINST LONG TERM CAPITAL GAIN. HENCE WE FIND MERIT IN THE CONTENTIONS OF THE ASSESSEE. ACCORDINGLY WE ARE OF THE VIEW THAT THE ASSESSEE HAS MADE THE CLAIM OF SET OFF OF LOSS IN T HE ORIGINAL RETURN OF INCOME ITSELF. IN VIEW OF THE ABOVE WE ARE UNABLE T O AGREE WITH THE VIEW EXPRESSED BY THE TAX AUTHORITIES. ACCORDINGLY WE SE T ASIDE THE ORDER PASSED BY THE LEARNED CIT(A) ON THIS ISSUE AND DIRECT THE AO TO ALLOW THE SET OFF OF LOSS FROM F&O TRANSACTIONS AGAINST OTHER INCOME. ITA NO. 1870/MUM/2018 SHRI MAHENDRAKUMAR MANSINGHKA 4 7. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28 TH JUNE, 2018. SD/ - SD/ - (AMARJIT SINGH) (B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 28 TH JUNE, 2018 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) -17, MUMBAI 4. THE PR. CIT - 10, MUMBAI 5. THE DR, SMC BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.