DCIT, Bangalore V. M/s Anapothana Vema Trust, Bangalore

ITA 27/BANG/2014

• Counselvise Citation: [2014] 140 COUNSELVISE.COM (IT) 80764 (ITAT-BANGALORE)
• Duration Of Justice: 10 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 21-11-2014
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Next Hearing Date: 29-10-2014
• Assessment Year: 2009-2010
• Appeal Filed On: 09-01-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: P DHIVAHAR J
• Assessee Lawyers: MRS SHEETAL
• Keywords: Capital asset

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH : BANGALORE BEFORE SMT. P. MADHAVI DEVI , JUDICIAL MEMBER A ND SHRI JASON P.BOAZ, ACCOUNTANT MEMBER ITA NO. 27 / BANG/20 14 (ASSESSMENT YEAR: 20 0 9 - 10 ) DEPUTY COMMISSIONER OF INCOME - TAX, CIRCLE 7(1), BANGALORE. APPELLANT VS. M/S.ANAPOTHANA VEMA TRUST , NO.868, 12 TH MAIN, 3 RD BLOCK, KORAMANGALA, BANGALORE - 560034. PAN:AABTA2907R RESPONDENT APPELLANT BY: SHRI P.DHIVAHAR, JCIT(DR). RESPONDENT BY: MRS. SHEETAL, ADVOCATE. DATE OF HEARING : 29/10/2014. DATE OF PRONOUNCEMENT: 21 /11/2014. O R D E R PER SMT.P.MADHAVI DEVI, JM: THIS IS AN APPEAL FILED BY THE REVENUE AGAINST THE ORDER OF THE CIT(A) - I, BANGALORE, DATED 23/09/2013 FOR THE ASSESSMENT YEAR 2009 - 10. THE REVENUE IS AGGRIEVED BY THE ORDER OF THE CIT(A) IN HOLDING THAT THE SHORT - TERM CAPITAL LOSS IS TO BE SET OFF AGAINST CAPITAL GAINS ASSESSABLE FOR THAT ASSESSMENT I TA NO . 27 /BANG/20 1 4 M/S.ANAPOTHANA VEMA TRUST PAGE 2 OF 5 YEAR THAT IS AVAILABLE, IF ANY, IN RESPECT OF ANY OTHER CAPITAL ASSET AND IN ALLOWING THE ASSESSEE TO CARRY FORWARD THE SHORT TERM CAPITAL LOSS TO THE SUCCEEDING YEAR AND ALSO IN HOLDING THAT THE AMOUNT OF CAPITAL GAINS WHICH IS COVERED BY THE EXEMPTION U/S 10(38) IS NOT TO BE TREATED AS INCOME ASSESSABLE DURING THAT ASSESSMENT YEAR. 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE IS A PRIVATE TRUST AND HAS FILED ITS RETURN OF INCOME ON 26 /09/2009 DECLARING A TOTAL INCOME OF RS.19,49,790/ - . DURING THE ASSESSMENT PROCEEDINGS U/S 143(3)OF THE INCOME - TAX ACT, 1961[HEREINAFTER REFERRED TO A S 'THE ACT'], THE ASSESSING OFFICER (AO) OBSERVED THAT THE ASSESSEE HAS REFLECTED AN AMOUNT OF RS.15,35,939/ - AS SHORT TERM CAPITAL LOSS WHICH WAS TO BE CARRIED FORWARD . HE ALSO OBSERVED THAT THE ASSESSEE HAS REFLECTED LONG TERM CAPITAL GAIN OF RS.1,30,96 ,725/ - AND CLAIMED THE SAME AS EXEMPT. THE AO ASKED THE ASSESSEE TO EXPLAIN AS TO WHY THE SHORT - TERM CAPITAL LOSS IS NOT SET OFF AGAINST THE LONG TERM CAPITAL GAIN . THE AR OF THE ASSESSEE STATED THAT THE CAPITAL GAIN OF RS.1,30,96,725/ - IS EXEMPT FROM TA X U/S 10(38) OF THE ACT SINCE SECURITIES TRANSACTION TAX (STT) FOR THE SAME HAS BEEN PAID AND THEREFORE THE SHORT TERM CAPITAL LOSS CANNOT BE SET OFF FROM SUCH LONG TERM CAPITAL GAIN. HOWEVER, THE AO WAS OF THE OPINION THAT AS PER THE PROVISIONS OF SEC.70 (2) OF THE ACT, THE ASSESSEE HAS TO SET OFF THE CAPITAL LOSS AGAINST CAPITAL GAIN AND THAT THE ACT DOES I TA NO . 27 /BANG/20 1 4 M/S.ANAPOTHANA VEMA TRUST PAGE 3 OF 5 NOT DISTINGUISH BETWEEN EXEMPT CAPITAL GAINS AND NON - EXEMPT CAPITAL GAIN FOR THE PURPOSE OF SETTING OF LOSSES. HE, THEREFORE, SET OFF THE SHORT - TERM C APITAL LOSS AGAINST THE LON G - TERM CAPITAL GAIN OF RS.1,30,9 6,725/ - AND REFUSED TO CARRY FORWARD THE SHORT TERM CAPITAL LOSS TO THE NEXT ASSESSMENT YEAR. AGGRIEVED, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) WHO ALLOWED THE SAME AND AGAINST THE REL IEF GIVEN BY THE CIT(A), THE REVENUE IS IN APPEAL BEFORE US. 3. THE LEARNED DEPARTMENTAL REPRESENTATIVE PLACED RELIANCE UPON THE ORDER OF THE AO WHILE THE LEARNED COUNSEL FOR THE ASSESSEE PLACED RELIANCE UPON THE ORDER OF THE CIT(A) AS WELL AS T HE DECISION OF THE G BENCH OF THE TRIBUNAL AT MUMBAI IN THE CASE OF G.K.RAMAMURTHY VS. JOINT CIT IN ITA N O .1367/MUM/2009 DATED 09/10/2010 . 4. HAVING REGARD TO THE RIVAL CONTENTIONS AND THE MATERIAL ON RECORD, WE FIND THAT THE LONG - TERM CAPITA L GAINS IS EXEMPT FROM TAX U/S 10(38) OF THE ACT SINCE THE ASSESSEE HAS PAID SECURITIES TRANSACTION TAX ON THE SAME. THE ASSESSEE HAS ALSO INCURRED SHORT - TERM CAPITAL LOSS WHICH IS SOUGHT TO BE CARRIED FORWARD TO THE SUBSEQUENT ASSESSMENT YEAR. THE CIT(A ) HAS FOLLOWED THE DECISION OF THE TRIBUNAL IN THE CASE OF G.K.RAMAMURTHY (CITED SUPRA) WHEREIN IT WAS HELD THAT THE LONG - TERM CAPITAL GAINS LOSS INCURRED PRIOR TO 01/10/2010 IN THAT I TA NO . 27 /BANG/20 1 4 M/S.ANAPOTHANA VEMA TRUST PAGE 4 OF 5 CASE CANNOT BE SET OFF AGAINST CAPITAL GAINS EXEMPT U/S 10(38) BUT SHOULD BE ALLOWED TO BE CARRIED FORWARD. THE TRIBUNAL HAD HELD THAT INCOME WHICH DO NOT FORM PART OF THE TOTAL INCOME DO NOT ENTER THE COMPUTATION OF TOTAL INCOME AT ALL I.E. UNDER ANY OF THE HEADS OF INCOME MENTIONED IN SEC.14 OF THE ACT. THEREFORE, THE QUESTION OF AGGRE GATING THEM UNDER CHAPTER VI DOES NOT ARISE AT ALL AND SET OFF OF THE SAME U/S 70(3) OF THE ACT ALSO DOES NOT ARISE FOR CONSIDERATION. IT WAS THEREFORE HELD THAT RIGHT OF CARRY FORWARD U/S 71 OF THE ACT IN RESPECT OF LONG - TERM CAPITAL LOSS SUFFERED BY THE ASSESSEE IS NOT HIT BY THE PROVISIONS OF SEC.70(3) OF THE ACT. IN THE CASE BEFORE US ALSO, LONG - TERM CAPITAL GAIN OF THE ASSESSEE AMOUNTING TO RS.1,30,96,725/ - DOES NOT ENTER THE COMPUTATION OF THE TOTAL INCOME AS IT HAS ALREADY SUFFERED SECURITIES T RANS ACTION T AX. THEREFORE, SETTING OFF OF THE SAME AGAINST THE SHORT - TERM CAPITAL LOSS U/S 70(2) OF THE ACT ALSO DOES NOT ARISE AND THEREFORE IT HAS TO BE CARRIED FORWARD FOR ADJUSTMENT IN THE NEXT ASSESSMENT YEAR. THEREFORE, RESPECTFULLY FOLLOWING THE DECISION OF THE CO - ORDINATE BENCH OF THE TRIBUNAL AT MUMBAI IN THE CASE OF G.K.RAMAMURTHY (CITED SUPRA), WE DO NOT SEE ANY REASON TO INTERFERE WITH THE ORDER OF THE CIT(A). I TA NO . 27 /BANG/20 1 4 M/S.ANAPOTHANA VEMA TRUST PAGE 5 OF 5 5. IN THE RESULT, THE REVENUE S APPEAL IS DISMISSED. PRON OUNCED IN THE OPEN COURT ON 21 ST OF NOVEMBER , 201 4. SD/ - SD/ - (JASON P BOAZ ) ( SMT. P.MADHAVI DEVI) ACCOUNTANT MEMBER JUDICIAL MEMBER EKSRINIVASULU COPY TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(A) 5. DR, ITAT, BANGALORE. 6. GUARD FILE BY ORDER ASSISTANT REGISTRAR INCOME - TAX APPELLATE T RIBUNAL BANGALORE