DILIKUMAR ALIAS, MUMBAI V. ITO WD 11(1)(1), MUMBAI

ITA 7153/MUM/2012

• Counselvise Citation: [2013] 120 COUNSELVISE.COM (IT) 1895 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 1 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 01-02-2013
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2006-2007
• Appeal Filed On: 30-11-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: SHEKHAR L GAJBHIYE
• Section: 148; 10; 2

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES SMC : MUMBAI BEFORE SHRI R.K.GUPTA, JUDICIAL MEMBER ITA. NO.7153/MUM/2012 ASSESSMENT YEAR 2006-2007 DILIP KUMAR ALIAS MH. YOUSUF KHAN 34-B, PALI HILL, BANDRA (WEST) MUMBAI. PAN AAAPK0002E VS. ITO, WARD 11(1)(1) AAYAKAR BHAVAN MUMBAI (APPELLANT) (RESPONDENT) FOR APPELLANT : -NONE- FOR RESPONDENT : SHRI SHEKHAR L. GAJBHIYE DATE OF HEARING : 14-01-2013 DATE OF PRONOUNCEMENT : 01-02-2013 ORDER PER R.K.GUPTA, J.M. 1. THIS APPEAL FILED BY THE ASSESSEE AGAINST THE O RDER OF THE CIT(A)-3, MUMBAI FOR THE ASSESSMENT YEAR 2006-2007. THE ASSES SEE IS OBJECTING CONFIRMING THE REOPENING OF THE ASSESSMENT AND THER EAFTER, CONFIRMING THE ORDER OF THE ASSESSING OFFICER BY THE LEARNED CIT(A ) IN DRAWING THE CARRY- FORWARD AND SET OFF OF LONG TERM CAPITAL LOSS OF RS .13,04,718/- ON SALE OF SHARES WHICH WERE SUBJECTED TO SECURITIES TRANSACTION TAX (IN SHORT STT) PAYMENT. 2. BRIEF FACTS OF THE CASE ARE THAT ASSESSMENT IN THIS CASE WAS COMPLETED UNDER SECTION 143 (3) OF THE I.T. ACT, ON 26.8.2008 ACCEPTING THE RETURN OF INCOME OF THE ASSESSEE AT RS.3,34,850/-. SUBSEQUENTLY, IT WAS NOTICED THAT ASSESSEES CLAIM OF CARRY FORWARD AND SET OFF OF LONG TERM CAPITAL LOSS OF RS.13,04,718/- ON SALE OF SHARES SUBJECTED TO STT W AS ALLOWED. SINCE THE LONG TERM CAPITAL GAIN ON SALE OF SHARES SUBJECTED TO ST T IS EXEMPT FROM TAX UNDER SECTION 10 (38)OF THE ACT, HENCE, THE LONG TERM CAP ITAL LOSS ON SALE OF SHARES SUBJECTED TO STT CANNOT BE ALLOWED TO BE CARRY FORW ARD FOR SET OFF IN SUBSEQUENT ASSESSMENT YEARS. THEREFORE, ASSESSING O FFICER ISSUED NOTICE UNDER 2 SECTION 148 OF THE I.T. ACT. IN RESPONSE TO THE SAI D NOTICE, THE ASSESSEE FILED A LETTER DATED 25.04.2011 STATING THEREIN THAT ORIGIN AL RETURN FILED FOR ASSESSMENT YEAR 2005-2007 MAY BE TREATED AS FILED IN RESPONSE TO NOTICE UNDER SECTION 148 OF THE ACT. THEREAFTER, ASSESSMENT UNDER SECTION 14 3 (3) / 147 OF THE ACT WAS COMPLETED WHEREBY THE CARRY FORWARD LOSSES ALLOWED EARLIER WAS WITHDRAWN WHICH WAS AT RS.13,04,718/-. 3. AGAINST THE SAID OF THE ASSESSING OFFICER, THE ASSESSEE PREFERRED AN APPEAL BEFORE THE CIT(A) BEFORE WHOM REOPENING OF T HE ASSESSMENT AS WELL AS WITHDRAWING OF LONG TERM CARRY FORWARD LOSSES WAS C HALLENGED. CIT(A) AFTER CONSIDERING THE SUBMISSIONS AND PERUSING THE MATERI AL ON RECORD FOUND THAT NOTICE UNDER SECTION 148 HAS BEEN ISSUED WITHIN 4 Y EARS AND THEREUPON AN OBVIOUS ESCAPEMENT OF INCOME FOR THE REASON THAT IN COME ON ACCOUNT OF TRANSACTION TO STT IS EXEMPT UNDER SECTION 10 (38) OF THE ACT. THEREFORE, LOSSES ON THOSE VERY TRANSACTIONS CANNOT BE ALLOWED FOR CA RRY FORWARD. ASSESSING OFFICER HAD RECORDED REASONS AND THEREAFTER, THE CA RRY FORWARD LOSSES ALLOWED MISTAKENLY BY THE ASSESSING OFFICER WAS WITHDRAWN. ACCORDINGLY, IT WAS HELD THAT REOPENING OF THE ASSESSMENT WAS VALID. ON MERI T, LEARNED CIT(A) FOUND THAT ASSESSEE HAS CLAIMED LONG TERM CAPITAL LOSS WH ICH IS ROUTED THROUGH STOCK EXCHANGE SUBJECTED TO STT. HENCE, BY VIRTUE OF SECT ION 10 (38) OF THE ACT, ANY INCOME ARISING FROM TRANSFER OF LONG TERM CAPITAL G AIN SHALL NOT BE CHARGEABLE TO TAX. THEREFORE, IF LONG TERM CAPITAL GAIN IS EXP ECTED THEN LONG TERM CAPITAL LOSS CANNOT BE ALLOWED TO BE CARRY FORWARD. ACCORDI NGLY, ON MERIT ALSO, THE GROUND OF THE ASSESSEE WAS REJECTED. NOW THE ASSESS EE IS IN APPEAL BEFORE US. 4. AFTER CONSIDERING THE ORDER OF THE ASSESSING OF FICER AND CIT(A), I FOUND THAT LEARNED CIT(A) WAS JUSTIFIED IN REJECTIN G THE GROUNDS OF THE ASSESSEE. I HAVE SEEN THE COPY OF ORIGINAL ASSESSMENT ORDER P LACED ON RECORD AND FOUND THAT ASSESSING OFFICER HAS NOT EXPRESSED ANY OPINIO N WHILE ALLOWING CARRY FORWARD LOSSES ON ACCOUNT OF STT TRANSACTIONS. THER EAFTER, ON EXAMINATION OF RECORD, IT WAS FOUND THAT LOSS WAS WRONGLY ALLOWED TO BE CARRY FORWARD AS THE TRANSACTION WITH STT INCOME IS EXEMPT UNDER SECTION 10 (38) OF THE ACT. 3 THEREFORE, LOSS ON THE SAME TRANSACTION CAN ALSO NO T TO BE ALLOWED TO CARRY FORWARD. REASONS WERE RECORDED. PROVISIONS OF SECTI ON 147 ARE VERY CLEAR BY WHICH IT HAS BEEN PROVIDED THAT IF ANY INCOME HAS E SCAPED ASSESSMENT, THEN ASSESSING OFFICER HAS TO ISSUE NOTICE UNDER SECTION 148. ACCORDINGLY, AFTER RECORDING REASONS, NOTICE UNDER SECTION 148 WAS ISS UED. THEREFORE, I DO NOT FIND ANY MISTAKE OR UN-JUSTIFICATION ON THE PART OF THE ASSESSING OFFICER WHO REOPENED THE ASSESSMENT ON ACCOUNT OF WRONGLY ALLOW ED CARRY FORWARD LOSSES ON ACCOUNT OF TRANSACTION WITH STT WHICH ARE EXEMPT ED UNDER SECTION 10(38) OF THE ACT. ACCORDINGLY, I HOLD THAT THE LEARNED CIT(A ) WAS JUSTIFIED IN CONFIRMING THE REOPENING OF THE ASSESSMENT. ON MERIT ALSO, I F OUND NO INFIRMITY IN THE ORDER OF THE LEARNED CIT(A). IT IS A SETTLED POSITI ON IN LAW THAT ANY INCOME WHICH IS EXEMPT TO TAX IS NOT TAXABLE. SIMILARLY, IF ANY LOSS ARISING ON ACCOUNT OF THE TRANSACTIONS OF WHICH THE INCOME IS EXEMPT, THEN LO SS ON THOSE TRANSACTIONS ALSO CANNOT BE ALLOWED TO BE CARRY FORWARD. INCOME EARNED ON STT TRANSACTIONS IS EXEMPT. SIMILARLY LOSS ON THE SAME TRANSACTION I .E., TRANSACTION WITH STT WHOSE INCOME IS EXEMPT UNDER SECTION 10 (38), LOSS ALSO CANNOT BE ALLOWED TO BE CARRY FORWARD. THEREFORE, I HOLD THAT LEARNED CI T(A) WAS CORRECT IN HOLDING THAT CLAIM OF THE ASSESSEE IS NOT ALLOWABLE AS THE LOSS ARISING OUT OF TRANSFER OF SHARES WHICH ARE EXEMPT UNDER SECTION 10 (38) CANNO T BE CARRY FORWARD TO BE SET OFF. ACCORDINGLY, I CONFIRM THE ORDER OF THE LE ARNED CIT(A) ON THIS ISSUE ALSO. 5. IN THE RESULT, APPEAL OF THE ASSESSEE IS DISMIS SED. ORDER PRONOUNCED IN THE OPEN COURT ON 01 ST FEBRUARY, 2013. SD/- (R.K.GUPTA) JUDICIAL MEMBER MUMBAI, DATE 01 ST FEBRUARY, 2013. VBP/- 4 COPY FORWARDED TO 1. THE APPELLANT 2. THE RESPONDENT 3. CIT(A)-3, MUMBAI. 4. CIT-2, MUMBAI 5. DR SMC BENCH 6. GUARD FILE. BY ORDER //TRUE COPY// (DY./ASSTT. REGISTRAR) ITAT, MUMBAI