Mr. Rajiva Maheshwari, New Delhi V. ACIT, New Delhi

ITA 5860/DEL/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 4508 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 10 month(s) 29 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: F
• Assessment Year: 2012-2013
• Appeal Filed On: 30-10-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Assessee Lawyers: NEERAJ KABRA
• Keywords: Capital asset; Rectification of order
• Section: 80C; 154

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH : F , NEW DELHI BEFORE SH. N.K. SAINI , ACCOUNTANT M EMBER AND SH. KULDIP SINGH , JUDICIAL MEMBER ITA NO. 5860 /DE L/ 2014 ASSESSMENT YEAR : 2012 - 13 MR. RAJIVA MAHESHWARI, 308, SINCERE TOWER, 4, PREET VIHAR COMPLEX, NEW DELHI VS. ACIT, CIRCLE - 36(1), NEW DELHI PAN : AAACR0312F (APPELLANT) (RESPONDENT) APPELLANT BY SH. NEERAJ KABRA, CA RESPONDENT BY SH. ATIQ AHMAD, SR.DR DATE OF HEARING 21.09.2017 DATE OF PRONOUNCEMENT 28.09.2017 ORDER PER KULDIP SINGH, JM . : THE APPELLANT, MR. RAJIVA MAHESHWARI (HEREINAFTER REFERRED TO AS THE ASSESSEE ) BY FILING THE PRESENT APPEAL SOUGHT TO SET ASIDE THE IMPUGNED ORDER DATED 26.08.2014 PASSED BY LEARNED COMMISSIONER OF INCOME TAX (APPEALS) - XXVII, NEW DELHI, ON THE GROUND S , INTER ALIA, THAT: I . THE LD. CIT(APPEAL) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING THE ORDER U/S 154 PASSED BY THE LD. ACIT (CPC)/ASSESSING OFFICER; II . THE LD. CIT (APPEAL) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING THE GROSS TOTAL INCOME (AFTER INTRA HEAD ADJUSTMENTS)U/S 71, WITHOUT AL LOWING PROPER INTER HEAD ADJUSTMENTS; 2 ITA NO . 5860/DEL/2014 III . THE LD. CIT (APPEAL) HAS ERRED IN FACTS AND IN LAW IN UPHOLDING DISALLOWANCE OF DEDUCTIONS U/S 80C OF RS. 73,189/ - ; IV . THAT THE IMPUGNED APPELLATE ORDER IS ARBITRARY, ILLEGAL, BAD IN LAW AND IN VIOLATION OF RUDIMENTARY PRINCIPLES OF CONTEMPORARY JURISPRUDENCE; AND V . THAT APPELLANT CRAVES LEAVE TO ADD/ALTER ANY/ALL GROUNDS OF APPEAL BEFORE OR AT THE TIME OF HEARING OF THE APPEAL 2. BRIEFLY STATED FACTS NECESSARY FOR ADJUDICATION OF THE CONTROVERSY AT HAND ARE THE ASSESSEE HAS SHOWN LOSS FROM BUSINESS TO THE TUNE OF RS.1,06,71,464/ - WHICH WAS ADJUSTED AGAINST THE LONG TERM CAPITAL GAINS OF RS.1,10,19,297/ - , REMAINING LONG TERM GAINS OF RS.3 , 47,833/ - AND INCOME FROM OTHER SOURCES OF RS.3,97,251/ - WAS OFFERED TO TAX. THE ASSESSEE ALSO CLAIMED DEDUCTION OF RS.73,189/ - . ASSESSEE FURTHER CLAIMED LONG TERM CAPITAL GAINS OF RS.3,47,835/ - WHICH WAS TAXED AT SPECIAL RATES, WHEREAS THE REMAINING INCOME TAXED AT THE NORMAL RATES. WHILE PROCESSING THE RETURN UNDER SECTION 143(1) OF THE INCOME - TAX ACT, 1961 (FOR SHORT THE ACT ) , THE BUSINESS LOSSES HAVE BEEN ADJUSTED AGAINST THE INCOME FROM OTHER SOURCES AND GROSS TOTAL INCOME WAS DETERMINED AT RS.7,45,084/ - AND 80C DEDUCTION WAS NOT GRANTED AS THE ASSESSEE S LONG TERM CAPITAL GA INS TAXED AT SPECIAL RATES, WHICH WAS ALSO DISALLOWED BY THE CPC, BANGALORE, VIDE RECTIFICATION ORDER DATED 30.08.2013 PASSED UNDER SECTION 154 OF THE ACT. 2.1 THE ASSESSEE CARRIED THE MATTER BEFORE THE LEARNED CIT(A) BY FILING THE APPEAL, WHICH HAS BEEN DISMISSED. FEELING AGGRIEVED, THE ASSESSEE HAS 3 ITA NO . 5860/DEL/2014 COME UP BEFORE THE TRIBUNAL BY WAY OF FILING THE PRESENT APPEAL BEFORE THE TRIBUNAL. 3. WE HAVE HEARD THE LEARNED AUTHORIZED REPRESENTATIVES OF THE PARTIES TO THE APPEAL, GONE THROUGH THE DOCUMENTS RELIED UPON AND ORDER PASSED BY THE REVENUE AUTHORITIES BELOW. 4. UNDISPUTEDLY, THE ASSESSEE IS ENTITLED FOR DEDUCTION UNDER SECTION 80C OF THE ACT. IT IS ALSO NOT IN DISPUTE THAT THE REVENUE AUTHORITIES BELOW HAS NOT ALLOWED THE DEDUCTION UNDER SECTION 80C AND THE ASSESSEE S LONG TERM CAPITAL GAIN WAS TAXED AT SPECIAL RATES. 5. IN THE BACKDROP OF THE AFORESAID UNDISPUTED FACTS, THE SOLE QUESTION ARISES FOR DETERMINATION IN THIS CASE IS: AS TO WHETHER L D. CIT(A) HAS ERRED IN UPHOLDING THE DISALLOWANCE OF DEDUC TION UNDER SECTION 80C OF THE ACT CLAIMED BY THE ASSESSEE TO THE TUNE OF R S.73,189/ - BY GIVING PRECEDENCE TO SECTION 71(1 ) OVER SECTION 71(2) OF THE ACT? 6. FOR FACILITY OF REFERENCE, THE PROVISIONS CONTAINED UNDER SECTION 71(1) & (2) ARE REPRODUCED AS UNDER : '71.(1) WHERE IN RESPECT OF ANY ASSESSMENT YEAR THE NET RESULT OF THE COMPUTATION UNDER ANY HEAD OF INCOME, OTHER THAN CAPITAL GAINS , IS A LOSS AND THE ASSESSEE HAS NO INCOME UNDER THE HEAD CAPITAL SAINS , HE SHALL, SUBJECT TO THE PROVISIONS OF THIS CHAPTER, BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER ANY OTHER HEAD. 71.(2) WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NET RESULT OF THE COMPUTATION UNDER ANY HEAD OF IN COME, OTHER THAN CAPITAL GAINS , IS A LOSS AND THE ASSESSEE HAS INCOME ASSESSABLE UNDER 4 ITA NO . 5860/DEL/2014 THE HEAD CAPITAL GAINS , SUCH LOSS MAY, SUBJECT TO THE PROVISIONS OF THIS CHAPTER, BE SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER AN Y HEAD OF INCOME INCLUDING THE HEAD CAPITAL GAINS (WHETHER \ RELATING TO SHORT TERM CAPITAL ASSETS OR ANY OTHER CAPITAL ASSETS). 6. WHEN WE READ THE PROVISIONS CONTAINED UNDER SECTION 71(1) AND 71(2) OF THE ACT REPRODUCED ABOVE CONJOINTLY, SECTION 71( 1) CANNOT BE GIVEN PRECEDENCE OVER SECTION 71(2) OF THE ACT, PARTICULARLY WHILE ALLOWING DEDUCTION UNDER SECTION 80C OF THE ACT. IT IS CATEGORICALLY MENTIONED UNDER SECTION 71(1)(C) THAT WHEN NET RESULT OF THE COMPUTATION UNDER ANY HEAD OF THE INCOME OTHER THAN THE CAPITAL GAINS IS A LOSS AND THE ASSESSEE HAS NO INCOME UNDER THE HEAD CAPITAL GAINS, THE ASSESSEE IS ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER ANY OTHER HEAD. SECTION 71 (1) IS INDEPENDENT OF SECTION 71(2) AND AS SUCH, SECTION 71 (1) ( 2) CANNOT BE GIVEN PRECEDENCE OVER SECTION 71(1)(C) TO DENY THE DEDUCTION UNDER SECTION 80C OF THE ACT. SO IN THE INSTANT CASE, FIRSTLY, THE ASSESSEE IS ENTITLED TO DEDUCTION UNDER SECTION 80C AND THEN THE ASSESSEE IS TO BE TAXED ON THE NORMAL RATES AND NO T THE SPECIAL RATES. 7. IN VIEW OF WHAT HAS BEEN DISCUSSED ABOVE FIRSTLY THE ASSESSEE IS TO BE GRANTED INTRA HEAD ADJUSTMENT INCLUDING, ALLOWING THE DEDUCTION UNDER SECTION 80C OF THE ACT TO THE TUNE OF RS.73,189/ - AND THEN THE ASSESSEE IS TO BE TAXED ON THE NORMAL RATES. CONSEQUENTLY, ORDER PASSED BY THE LEARNED 5 ITA NO . 5860/DEL/2014 CIT(A) IS NOT SUSTAINABLE IN THE EYES OF LAW, HENCE THE APPEAL FILED BY THE ASSESSEE IS HEREBY ALLOWED. THE DECISION IS PRONOUN CED IN THE OPEN COURT ON 2 8 T H SEPT. , 201 7 . S D / - S D / - ( N.K. SAINI ) ( KULDIP SINGH ) ACCOUNTANT MEMBER JUDICIAL MEMBER DATED: 2 8 T H SEPTEMBER , 201 7 . RK / - COPY FORWARDED TO: 1 . APPELLANT 2 . RESPONDENT 3 . CIT 4 . CIT(A) 5 . DR ASST. REGISTRAR, ITAT, NEW DELHI