The DCIT, Circle-1(1)(1), Ahmedabad V. M/s. Asman Investments Ltd., Ahmedabad

ITA 3138/AHD/2015

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 0731 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 04-10-2018
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 05-11-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: P M MEHTA
• Keywords: Earning of tax free income
• Section: 143(3)

Judgement Text

, B IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER & SHRI MAHAVIR PRASAD, JUDICIAL MEMEBR ./ I.T.A. NO. 3138/AHD/2015 ( ASSESSMENT YEAR : 2011-12) DCIT CIRCLE 1(1)(1), AHMEDABAD / VS. M/S. ASMAN INVESTMENTS LTD. ARVIND MILL PREMISES, NARODA ROAD, AHMEDABAD 380025 ./ ./ PAN/GIR NO. : AABCA5968R ( APPELLANT ) .. ( / RESPONDENT ) / APPELLANT BY : SHRI APOORVA BHARDWAJ, SR. D.R. / RESPONDENT BY : SHRI P. M. MEHTA, A.R. DATE OF HEARING 26/09/2018 !'# / DATE OF PRONOUNCEMENT 04/10/2018 / O R D E R PER PRADIP KUMAR KEDIA - AM: THE CAPTIONED APPEAL HAS BEEN FILED AT THE INSTANCE OF THE REVENUE AGAINST THE ORDER OF THE CIT(A)-3, AHMEDABA D (CIT(A) IN SHORT), DATED 03.09.2013 ARISING IN THE ASSESSME NT ORDER DATED 14.03.2014 PASSED BY THE ASSESSING OFFICER (AO) UND ER S. 143(3) OF THE INCOME TAX ACT, 1961 (THE ACT) CONCERNING AS SESSMENT YEAR 2011-12. ITA NO. 3138/AHD/15 [DCIT VS. M/S. ASMAN INVESTMENT S LTD.] A.Y. 2011-12 - 2 - 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE REA DS AS UNDER:- (1) THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACT S IN DELETING THE DISALLOWANCE OF RS.69,36,145/-. (2) THAT THE LD. CIT(A) HAS ERRED IN LAW AND FACTS IN DELETING THE DISALLOWANCE OF CLAIM OF SET OFF OF SHORT TERM CAPITAL GAIN OF R S.25,79,530/- AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS. 3. GROUND NO.1 CONCERNS DISALLOWANCE UNDER S.14A OF THE ACT. 4. THE LEARNED DR FOR THE REVENUE RELIED UPON THE O RDER OF THE AO AND SUBMITTED THAT THE DISALLOWANCE AS PER RULE 8D AMOUNTS TO RS.69,36,145/- AND THERE WAS NO JUSTIFICATION FO R THE CIT(A) TO RESTRICT THE SAME TO THE EXTENT OF EXEMPT INCOME BY WAY OF DIVIDEND AMOUNTING TO RS.41,250/-. WE FIND THAT TH E ISSUE IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE D ECISION OF THE HONBLE DELHI HIGH COURT IN THE CASE OF JOINT INVES TMENTS PVT.LTD. VS. CIT REPORTED IN 372 ITR 692 (DELHI) AS RELIED UPON ON BEHALF OF THE ASSESSEE. HONBLE DELHI HIGH COUR T IN THE AFORESAID DECISION HAS RULED THAT DISALLOWANCE UNDE R S.14A OF THE ACT CANNOT EXCEED THE AMOUNT OF TAX EXEMPT INCOME. THEREFORE, IN THE WAKE OF THE AFORESAID DECISION, WE FIND NO I NFIRMITY IN THE ORDER OF THE CIT(A). 5. GROUND NO.1 OF THE REVENUES APPEAL IS DISMISSED . 6. GROUND NO.2 CONCERNS CLAIM OF SET OFF OF SHORT T ERM CAPITAL GAIN AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS . 7. IT IS THE CASE ON BEHALF OF THE ASSESSEE THAT TH E SHORT TERM CAPITAL GAIN OF RS.25,79,530/- ARISES OUT OF DEPREC IABLE ASSETS SOLD ITA NO. 3138/AHD/15 [DCIT VS. M/S. ASMAN INVESTMENT S LTD.] A.Y. 2011-12 - 3 - AFTER A PERIOD OF 36 MONTHS FROM THE DATE OF THEIR ACQUISITION. THEREFORE, THE CAPITAL GAIN ARISING THEREON WAS WOR KED OUT AS PER THE PROVISIONS OF SECTION 50 OF THE ACT WHICH IS A SPECIAL PROVISION FOR COMPUTATION OF CAPITAL GAINS IN THE C ASE OF DEPRECIABLE ASSETS. THE ASSESSEE CLAIMED THAT THE AFORESAID CAPITAL GAIN ARISING FROM LONG TERM CAPITAL GAIN UN DER S.50 OF THE ACT IS ENTITLED TO BE SET OFF AGAINST LONG TERM CAP ITAL GAINS FOR THE REASON THAT EVEN THOUGH FOR THE PURPOSES OF SECTION 50 OF THE ACT, THE CAPITAL GAINS IS DEEMED TO BE SHORT TERM CAPITA L GAIN BUT WHEREVER THE ASSETS HAVE BEEN HELD FOR A PERIOD OF MORE THAN 36 MONTHS. SUCH CAPITAL GAINS FOR ALL OTHER PURPOSES OF THE INCOME TAX ACT INCLUDING FOR THE PURPOSES OF SET OFF HAS T O BE TREATED AS LONG TERM CAPITAL GAIN AND ACCORDINGLY MUST BE SET OFF AGAINST BROUGHT FORWARD LONG TERM CAPITAL LOSS. FOR THIS P ROPOSITION, THE LEARNED AR FOR THE ASSESSEE RELIED UPON THE DECISIO N OF THE HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. P OLESTAR INDUSTRIES LTD. [2014] 41 TAXMANN.COM 237 (GUJ) AND CIT VS. ADITYA MEDISALES LTD. [2013] 38 TAXMANN.COM 244 (GU J). THE LEARNED AR THEREAFTER REFERS TO THE DECISION OF HON BLE BOMBAY HIGH COURT IN THE CASE OF CIT VS. MANALI INVESTMENT [2013] 39 TAXMANN.COM 4(BOM) WHEREIN THE DECISION OF TRIBUNA L IN MANALI INVESTMENT VS. ACIT [2011] 10 TAXMANN.COM 293 (MUM) WAS APPROVED IN THE MATTER OF SET OFF OF LOSSES UNDER S .74 OF THE ACT. 8. PER CONTRA, LEARNED DR RELIED UPON THE ORDER OF THE AO. 9. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIO NS ON THE ISSUE. IN VIEW OF THE DECISION OF THE HONBLE GUJA RAT HIGH COURT IN THE CASE OF POLESTAR INDUSTRIES (SUPRA); ADITYA MEDISALES LTD. ITA NO. 3138/AHD/15 [DCIT VS. M/S. ASMAN INVESTMENT S LTD.] A.Y. 2011-12 - 4 - (SUPRA); AND MANALI INVESTMENT (SUPRA), THE DEEMING FICTION FOR COMPUTATION OF CAPITAL GAINS IN THE CASE OF DEPRECI ABLE ASSET CREATED UNDER S.50 OF THE ACT DO NOT EXTEND TO THE PROVISIONS OF SECTION 74 OF THE ACT FOR THE PURPOSES OF SET OFF O F CAPITAL LOSSES AND CARRY FORWARD THEREAFTER. THEREFORE, WE FIND N O INFIRMITY IN THE ORDER OF THE CIT(A). 10. IN THE RESULT, GROUND NO.2 OF THE REVENUES APP EAL IS DISMISSED. 11. IN THE RESULT, THE APPEAL OF THE REVENUE IS DIS MISSED. SD/- SD/- (MAHAVIR PRASAD) (PRADIP KUMA R KEDIA) JUDICIAL MEMBER ACCOUNTANT MEMBER AHMEDABAD: DATED 04/10/2018 TRUE COPY S. K. SINHA !'#' / COPY OF ORDER FORWARDED TO:- &. / REVENUE 2. / ASSESSEE (. )*+ , / CONCERNED CIT 4. ,- / CIT (A) /. 012 33*+4 *+#4 56) / DR, ITAT, AHMEDABAD 7. 289 : / GUARD FILE. BY ORDER / 4 /5 *+#4 56) THIS ORDER PRONOUNCED IN OPEN COURT ON 04/10/201 8