MUKUND N. SHAH, MUMBAI V. ACIT 20(2), MUMBAI

ITA 4311/MUM/2009

• Counselvise Citation: 431119914 RSA 2009
• Duration Of Justice: 2 year(s) 1 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-08-2011
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: B
• Next Hearing Date: 09-08-2011
• Assessment Year: 2005-2006
• Appeal Filed On: 16-07-2009
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D S SUNDER SINGH
• Assessee Lawyers: DR K SHIVARAM
• Keywords: Revised return
• Section: 143(3); 139(5)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH B : MUMBAI BEFORE SHRI D.K. AGARWAL, (JUDICIAL MEMBER) AND SHRI RAJENDRA SINGH,(ACCOUNTANT MEMBER) ITA NO.4311/MUM/2009 ASSESSMENT YEAR : 2005-06 MR. MUKUND N.SHAH A-7, NANDDHAM INDUSTRIAL ESTATE, MAROL MAROSHI ROAD, ANDHERI (E), MUMBAI. ..( APPELLANT ) P.A. NO. (AAGPS 8024 G) VS. ASSTT. COMMISSIONER OF INCOME TAX-20(2) MUMBAI. ..( RESPONDENT ) APPELLANT BY : DR. K . SHIVARAM RESPONDENT BY : SHRI D. S. SUNDER SINGH DATE OF HEARING : 11.08.2011 DATE OF PRONOUNCEMENT : 17 TH AUGUST, 2011 O R D E R PER RAJENDRA SINGH (AM). THIS APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER D ATED 20.5.2009 OF CIT(A) FOR THE ASSESSMENT YEAR 2005-06. T HE ONLY DISPUTE RAISED IN THIS APPEAL IS REGARDING THE CARRY FOR WARD OF THE LOSS. 2. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT THE ASSE SSEE FOR THE RELEVANT YEAR HAD FILED THE RETURN OF INCOME ON 28.1 0.2005 UNDER SECTION 139(1) DECLARING TOTAL INCOME OF RS.30,00,223/- WHICH WAS ITA NO. 4311/M/09 A.Y:05-06 2 PROCESSED UNDER SECTION 143(1) ON 22.2.2006. SUBSEQUENT LY, THE ASSESSMENT WAS TAKEN UP FOR SCRUTINY AND THE ASSESSEE FILED RE VISED RETURN ON 28.3.2006 IN WHICH LONG TERM CAPITAL LOSS OF RS.10,80,121/- WAS SHOWN AND WAS CLAIMED TO BE CARRIED FORWARD. THE AS SESSEE HAD INCURRED LOSS OF RS.7,20,000/- IN RESPECT OF SALE OF SHARES OF M/S. PHLOX PHARMA LTD. AND THE INDEXED LOSS WAS RS.10,80,121/-. I N THE ORIGINAL RETURN LOSS HAD NOT BEEN CLAIMED. THE AO OBSERVED THAT TO REVISE THE RETURN OF LOSS, THE ORIGINAL RETURN OF LOSS SHOULD HAVE BEEN FILED UNDER SECTION 139(3) WITHIN THE TIME ALLOWED UNDER SECTION 13 9(1). IN THIS CASE THE ASSESSEE HAD NOT DECLARED ANY LOSS IN THE ORIGINAL RETURN AND THEREFORE, THE AO HELD THAT RETURN COULD NOT BE REVI SED UNDER SECTION 139(5) TO CLAIM LOSS. HE ACCORDINGLY DISALLOWED THE CLAI M OF THE ASSESSEE TO CARRY FORWARD THE LOSS. THE ASSESSEE DISPUTED THE DECISION OF THE AO AND SUBMITTED BEFORE THE CIT(A) THAT THE A SSESSEE IN THE ORIGINAL RETURN HAD CLAIMED LONG TERM CAPITAL LOSS OF 1 ,13,398/- TO BE CARRIED FORWARD WHICH WAS DULY ALLOWED BY THE AO. IN THE ORIGINAL RETURN, THE LOSS OF RS.10,80,121/- ON TRANSFER OF SHARES OF M/S. PHLOX PHARMA LTD. WAS WRONGLY SHOWN AS EXEMPT EVEN THOUGH NO STT WAS PAID. THEREFORE, THE ASSESSEE REVISED THE RETURN TO CLAIM THE LOSS AND THE TOTAL LOSS CLAIMED IN THE REVISED RETURN WAS RS.11,9 3,519/- (RS.10,80,121 + RS.1,13,398). THE MISTAKE WAS CORRECTED IN THE REVISED RETURN FILED UNDER SECTION 139(5) WHICH WAS IN T IME AND THEREFORE, LOSS AS PER REVISED RETURN COULD NOT BE IGNO RED. THE CIT(A), HOWEVER, DID NOT ACCEPT THE CONTENTIONS RAISED. HE REFER RED TO THE PROVISIONS OF SECTION 80 AS PER WHICH NO LOSS WHICH HAD NOT BEEN DETERMINED IN PURSUANCE OF RETURN FILED IN ACCORDANCE W ITH SECTION 139(3) SHALL BE CARRIED FORWARD AND SET OFF . IN THIS CA SE LOSS HAD BEEN DETERMINED IN PURSUANCE OF RETURN FILED UNDER SECTION 139(5) AND, THEREFORE, CIT(A) HELD THAT THOUGH THE AO HAD DETER MINED THE LOSS AS ITA NO. 4311/M/09 A.Y:05-06 3 CLAIMED BY THE ASSESSEE AT RS.10,80,121/- UNDER SECTION 14 3(3), THE LOSS COULD NOT BE CARRIED FORWARD. ACCORDINGLY HE CONFIRM ED THE ORDER OF THE AO AGGRIEVED BY WHICH THE ASSESSEE IS IN APPEAL BE FORE THE TRIBUNAL. 3. BEFORE US, THE LD. AR FOR THE ASSESSEE REITERATED TH E SUBMISSIONS MADE BEFORE THE LOWER AUTHORITIES THAT THE LOSS WAS REQ UIRED TO BE CARRIED FORWARD. HE PLACED RELIANCE ON THE DECISION OF THE TRIBUNAL IN THE CASE OF RAMESH R. SHAH VS. ACIT IN ITA NO.4312/MUM /2009 ORDER DATED 29.7.2011 FOR ASSESSMENT YEAR 2005-06 IN WH ICH SIMILAR CLAIM OF LOSS ARISING ON SALE OF SHARES OF M/S. PHLOX PH ARMA LTD. HAD BEEN ALLOWED TO BE CARRIED FORWARD. THE LD. DR ON T HE OTHER HAND PLACED RELIANCE ON THE ORDERS OF AUTHORITIES BELOW. 4. WE HAVE PERUSED THE RECORDS AND CONSIDERED THE RIVAL CONTENTIONS CAREFULLY. THE DISPUTE IS REGARDING CARRY FOR WARD OF LOSS OF RS.10,80,121/- ARISING ON SALE OF SHARES OF M/S. PHLOX PH ARMA LTD. THE ASSESSEE HAD FILED THE ORIGINAL RETURN ON 28.10.200 5 WHICH WAS WITHIN THE TIME ALLOWED UNDER SECTION 139(1). IN THE SAID RETURN, THE ASSESSEE HAD CLAIMED CARRY FORWARD OF LONG TERM CAPITAL LO SS OF RS.1,13,398/-. IN THE SAID RETURN, THE ASSESSEE HOWEVER DID NOT CLAIM THE LOSS OF RS.10,80,121/- ON ACCOUNT OF SALE OF SHARES OF M/S. PHLOX PHARMA LTD. UNDER THE WRONG IMPRESSION THAT THE LOSS W AS EXEMPT EVEN THOUGH NO STT HAD BEEN PAID. THE ASSESSEE THEREAF TER REVISED THE RETURN IN WHICH THE LOSS OF RS.10,80,121/- WAS CLAIME D. THE AO IN ASSESSMENT UNDER SECTION143(3) ACCEPTED THE CLAIM OF THE ASSESSE E THAT THERE WAS LOSS OF RS.10,80,121/- BUT DID NOT CARRY FORWARD THE LOSS ON THE GROUND THAT THE SAID LOSS HAD NOT BEEN DETE RMINED IN ITA NO. 4311/M/09 A.Y:05-06 4 PURSUANCE OF RETURN UNDER SECTION 139(3). THE CIT(A) H AS CONFIRMED THE ORDER OF THE AO. 4.1 ON CAREFUL CONSIDERATION OF THE VARIOUS ASPECTS OF THE CASE WE ARE UNABLE TO SUSTAIN THE FINDINGS OF THE LOWER AUTHO RITIES. THERE IS NO DISPUTE THAT THE ORIGINAL RETURN WAS FILED WITHIN TH E TIME ALLOWED UNDER SECTION 139(1). IN THE SAID RETURN THERE WAS A MISTAKE D UE TO WHICH LOSS ON SALE OF SHARES OF M/S. PHLOX PHARMA LTD. WAS SHOWN AS NIL. THE MISTAKE WAS RECTIFIED IN THE REVISED RETURN UNDER SECTION 139(5) WHICH WAS WITHIN THE TIME LIMIT AND THEREFORE A VALID RETU RN. ONCE RETURN IS REVISED THE ORIGINAL RETURN FILED GETS SUBSTITUTED BY REVISED RETURN, AND THEREFORE, LOSS DETERMINED AS PER REVISED RETURN WAS TO BE TREATED AS LOSS DECLARED UNDER SECTION 139(3) BECAUSE ORIGINAL RETURN WAS FILED WITHIN THE TIME ALLOWED UNDER SECTION 139(1). THEREFO RE THE LOSS DETERMINED HAS TO BE TAKEN AS LOSS COMPUTED IN ACCORDANCE W ITH THE PROVISIONS OF SECTION 139(3) AND SUCH LOSS HAS TO BE ALLOWE D TO BE CARRIED FORWARD UNDER THE PROVISIONS OF SECTION 80. THE PROBLEM MAY BE LOOKED AT FROM A DIFFERENT ANGLE. SUPPOSE THE ASSE SSEE HAD NOT REVISED THE RETURN AT ALL AND NO LOSS WAS SHOWN IN THE O RIGINAL RETURN DUE TO SOME MISTAKE BUT THE AO IN THE ASSESSMENT UNDER SECT ION 143(3) IS REQUIRED TO COMPUTE INCOME OR LOSS CORRECTLY. ON CE THE LOSS HAS BEEN DETERMINED BY THE AO UNDER SECTION 143(3), IT CANNOT BE SAID THAT THE LOSS CANNOT BE ALLOWED TO BE CARRIED FORW ARD WHEN RETURN HAS BEEN FILED WITHIN TIME ALLOWED UNDER SECTION 139(1 ). WE ARE THEREFORE OF THE VIEW THAT LOSS IS REQUIRED TO BE CARR IED FORWARD. THIS VIEW IS ALSO SUPPORTED BY THE DECISION OF THE TRIBUNAL I N CASE OF RAMESH R. SHAH VS. ACIT IN ITA NO.4312/MUM/2009 (SUPR A), IN WHICH UNDER IDENTICAL CIRCUMSTANCES LOSS ARISING FROM SALE OF SHAR ES OF M/S. PHLOX PHARMA LTD. HAS BEEN ALLOWED TO BE CARRIED FORW ARD. WE ITA NO. 4311/M/09 A.Y:05-06 5 THEREFORE, SET ASIDE THE ORDER OF THE CIT(A) AND ALL OW THE CLAIM OF THE ASSESSEE TO CARRY FORWARD THE LOSS. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 17.8.2011. SD/- SD/- (D.K. AGARWAL) (RAJENDRA SINGH ) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 17.8.2011. JV. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT(A) CONCERNED, MUMBAI THE DR B BENCH TRUE COPY BY ORDER DY/ASSTT. REGISTRAR, ITAT, MUMBAI.