DCIT CEN CIR 1, MUMBAI V. ROLTA SHARES & STOCK P. LTD, MUMBAI

ITA 3421/MUM/2010

• Counselvise Citation: [2012] 119 COUNSELVISE.COM (IT) 8511 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 5 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-10-2012
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 03-10-2012
• Assessment Year: 2006-2007
• Appeal Filed On: 30-04-2010
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A B KOLI

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'D' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ITA NO. 3421/MUM/2010 (ASSESSMENT YEAR: 2006-07) DCIT, CENTRAL CIRCLE-6 M/S. ROLTA SHARES & STOCK P. LTD. 9TH FLOOR, OLD CGO BUILDING UNIT NO. 10, 17TH FLOOR, WORLD TRADE ANNEXE, M.K. ROAD VS. CENTRE, CUFFE PARADE, COLABA MUMBAI 400020 MUMBAI 400005 PAN - AAACR 3156 M APPELLANT RESPONDENT APPELLANT BY: SHRI A.B. KOLI RESPONDENT BY: SHRI SHEKHAR GUPTA DATE OF HEARING: 03.10.2012 DATE OF PRONOUNCEMENT: 03.10.2012 O R D E R PER D. MANMOHAN, V.P. THIS APPEAL IS FILED AT THE INSTANCE OF THE REVENUE AND IT PERTAINS TO A.Y. 2006-07. 2. THE ONLY GROUND URGED BY THE REVENUE READS AS UNDER : - 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE C ASE AND IN LAW, THE LD CIT(A) ERRED IN DIRECTING SET OFF OF LONG TERM C APITAL LOSS OF RS.1,17,04,550/- AGAINST SHORT TERM CAPITAL GAIN OF ` 4,11,06,974/- IN VIOLATION OF THE PROVISIONS OF SEC TION 74(I)(B) OF THE ACT. 3. THE ASSESSEE COMPANY IS A SHARE BROKER. FOR THE YEA R UNDER CONSIDERATION IT DECLARED TAXABLE INCOME OF ` 2.36 CRORES AFTER SETTING OFF THE LONG TERM CAPITAL LOSS OF ` 1.17 CRORES AGAINST THE SHORT TERM CAPITAL GAIN OF ` 4.11 CRORES. THE CASE WAS TAKEN UP FOR SCRUTINY. IN THE LIGHT OF THE PROVISIONS OF SECTION 74(I)(B) OF THE ACT THE AO WA S OF THE OPINION THAT LONG TERM CAPITAL LOSS CANNOT BE SET OFF AGAINST SHORT T ERM CAPITAL GAIN IN VIEW OF THE AMENDMENT TO THE SAID PROVISION. HE ACCORDINGLY COMPLETED THE ASSESSMENT BY COMPUTING THE TOTAL INCOME AT ` 3,70,89,880/-. ON AN APPEAL ITA NO. 3421/MUM/2010 M/S. ROLTA SHARES & STOCK P. LTD. 2 FILED BY THE ASSESSEE THE LEARNED CIT(A) NOTICED TH AT THE APPELLANT SUFFERED CAPITAL LOSS IN A.Y. 2002-03. THE LOSS INCLUDED LON G GERM CAPITAL LOSS AND SHORT TERM CAPITAL LOSS. THE SAID LOSS WAS SET OFF AGAINST LONG TERM AND SHORT TERM CAPITAL GAINS FOR A.Y. 2003-04 AND THE UNADJUS TED LOSS WAS CARRIED FORWARD FOR FURTHER SET OFF AGAINST ASSESSMENT YEAR S 2004-05 AND 2005-06. SINCE THE MATTER PERTAINING TO ASSESSMENT YEARS 200 4-05 AND 2005-06 WERE PENDING BEFORE THE SETTLEMENT COMMISSION, WHICH IN TURN REFUSED CARRIED FORWARD OF CAPITAL LOSS OF 2002-03, ASSESSEE HAD CA RRIED FORWARD THE LOSS FOR A.Y. 2006-07 AND CLAIMED SET OFF. IN HIS OPINION TH E PROVISION, WHICH WAS AMENDED BY FINANCE ACT 2002 WITH EFFECT FROM 01.04. 2003, APPLIES TO LOSSES SUFFERED IN A.Y. 2003-04 OR AFTERWARDS BUT LOSSES S UFFERED IN EARLIER YEARS CAN BE CARRIED FORWARD AND ADJUSTED. ACCORDINGLY HE DIRECTED THE AO TO ALLOW THE SET OFF IN A.Y. 2006-07. AGGRIEVED REVENUE IS I N APPEAL BEFORE US. 4. AT THE TIME OF HEARING THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ISSUE STANDS SQUARELY COVERED BY THE DECIS ION OF THE ITAT MUMBAI SPECIAL BENCH IN THE CASE OF KOTAK MAHINDRA CAPITAL CO. LTD. VS. ACIT (24 TAXMAN 100) WHEREIN THE BENCH OBSERVED AS UNDER: - 46. IN VIEW OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT THE PROVISIONS OF SECTION 74 WHICH DEAL WITH CARRY FORW ARD AND SET OFF OF LOSSES UNDER THE HEAD CAPITAL GAINS AS AMENDED BY FINANCE ACT, 2002, WILL APPLY ONLY TO THE UNABSORBED CAPITAL LOS S FOR THE ASSESSMENT YEAR 2003-04 AND ONWARDS AND WILL NOT AP PLY TO THE UNABSORBED CAPITAL LOSSES RELATING TO THE ASSESSMEN T YEARS PRIOR TO THE ASSESSMENT YEAR 2003-04. ACCORDINGLY, WE ANSWER THE QUESTION REFERRED TO THIS SPECIAL BENCH IN FAVOUR OF THE ASS ESSEE HOLDING THAT THE ASSESSEE IS ENTITLED TO SET OFF THE LONG-TERM C APITAL LOSS IN AY 2001-02 AGAINST THE SHORT-TERM CAPITAL GAIN MADE BY IT IN AY 2003- 04. GROUND NO. 2 OF THE ASSESSEES APPEAL IS ACCORD INGLY ALLOWED. 5. THE LEARNED D.R. FAIRLY ADMITTED THAT THE ISSUE IS COVERED BY THE ORDER OF THE SPECIAL BENCH THOUGH HE SUBMITTED THAT THE P LAIN LANGUAGE OF SECTION 74 DOES NOT PERMIT SET OFF OF LONG TERM CAPITAL LOS S AGAINST SHORT TERM CAPITAL GAIN. 6. HAVING REGARD TO THE CIRCUMSTANCES OF THE CASE WE H OLD THAT THIS ISSUE STANDS SQUARELY COVERED BY THE DECISION OF THE ITAT SPECIAL BENCH (SUPRA). SINCE THE VIEW TAKEN BY THE LEARNED CIT(A) IS IN CO NFORMITY WITH THE DECISION ITA NO. 3421/MUM/2010 M/S. ROLTA SHARES & STOCK P. LTD. 3 TAKEN BY THE SPECIAL BENCH, WE DO NOT FIND ANY INFI RMITY IN THE ORDER PASSED BY THE CIT(A) AND, THEREFORE, DISMISS THE APPEAL FI LED BY THE REVENUE ORDER PRONOUNCED IN THE OPEN COURT ON 3 RD OCTOBER, 2012. SD/- SD/- (N.K. BILLAIYA) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 3 RD OCTOBER, 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 36, MUMBAI 4. THE CIT CENTRAL 1, MUMBAI CITY 5. THE DR, D BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.