ITO WD 11(1)(3), MUMBAI V. SALIENT TRADERS P.LTD, MUMBAI

MA 394/MUM/2022

AI Insights

The case involves M/s. Salient Traders Pvt. Ltd., which filed miscellaneous applications against the orders of the Income Tax Appellate Tribunal concerning the assessment years 2013-14 and 2014-15. The primary issue was the non-discussion of the change in shareholding pattern and its impact on the set off of brought forward losses, as per Section 79 of the Income Tax Act. The Tribunal initially failed to address these issues adequately in their combined order dated 23.12.2021. Upon review, the Tribunal acknowledged the oversight and rectified the order, ensuring that the assessee's entitlement to carry forward losses was upheld, despite the change in shareholding.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 302438 (ITAT-MUMBAI)
• Duration Of Justice: 1 month(s) 18 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 02-02-2023
• Appeal Filed By: Department
• Order Result: PartlyAllowed
• Bench Allotted: G
• Next Hearing Date: 02-02-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 14-12-2022
• Laws Referred To: Income Tax Act
• Result in Favour of: Revenue
• Court: TRIBUNAL

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, ‘G‘ BENCH MUMBAI BEFORE: SHRI AMIT SHUKLA, JUDICIAL MEMBER & SHRI M.BALAGANESH, ACCOUNTANT MEMBER MA No.394/Mum/2022 (Arising out of ITA No.332/Mum/2018) (Asse ssment Year :2013-14) & MA No.393/Mum/2022 (Arising out of ITA No.331/Mum/2018) (Asse ssment Year :2014-15) The Income Tax Officer 11(1)(1) Room No.201, 2 nd Floor Aayakar Bhavan M.K.Road, Mumbai – 400 020 Vs. M/s. Salient Traders Pvt. Ltd 801, 8 th Floor, Balaji Business Centre Subhash Road Vile Parle (E) Mumbai- 400 057 PAN/GIR No.AAICS 2454B (Appellant) .. (Respondent) Assessee by Shri Firoze B Andhyarujina / Shri Maneck F Andhyarujina Revenue by Ms. Richa Gulati Date of Hearing 03/02/2023 Date of Pronouncement 03/02/2023 आदेश / O R D E R PER M. BALAGANESH (A.M): The Revenue has preferred the following Miscellaneous Applications which are reproduced hereunder:- MA N.394/Mum/2022 The following submissions are placed before the Hon'ble Income Tax Appellate Tribunal for kind consideration MA No. 394/Mum/2022 M/s.Salient Traders Pvt. Ltd. 2 1 This Miscellaneous Application arises out of combined order pronounced by the Hon'ble ITAT "G" Bench, Mumbai vide orders ITA No.3059/Mum/2017 (AY 2012-13), ITA No 332/Mum/2018 (AY 2013-14) & ITA No.331/Mum/2018 (AY 2014-15) dated 23 12 2021 2 2. The Hon'ble Income Tax Appellate Tribunal has not discussed the issues raised in the combined order passed on 23 12 2021 in respect of the Miscellaneous Application filed on 24.01.2020 vide no MA-37/M/2020 3. The brief facts of the case are that the assessee company filed its return of income for the AY 2013-14 on 05 10 2013 declaring total income of Rs Nil after set off of brought forwarded losses of R 2,38,599/- for AY 2011-12 and Rs 11,45,236/- for the AY 2012-13, The assessee company set off total brought forwarded losses of Rs. 13,83,236/-in its return of income The Hon'ble ITAT has not discussed issue of the change in shareholding for the AY 2013-14 Since, the assessee company has not offered any explanation in respect of the issue of the change of shareholding, the persons beneficiary holding 51% of voting power on the last day of previous year in which the loss was incurred i.e. 31.03.2011 and 31.03.2012 and on the last day of the previous year in which the company wants to set off the brought forwarded losses Le 31.03.2013 are different. Thus, the Assessing Office has not allowed set off the losses during the year under consideration The Hon'ble ITAT has not discussed this issue in the order for the AY 2013-14. Further, the Hon'ble ITAT has not also discussed regarding the Miscellaneous Application filed on 24.01.2020 arised against order ITA No.332/Mum/2018 dated 14.06.2019 for the AY 2013-14 Hence, the issues mentioned above remained to be adjudicated on merits. 4 In view of the above, Hon'ble ITAT's order dated 23.12.2021 is erroneous to that extent and needs rectification and further directions. MA No.393/Mum/2022 The following submissions are placed before the Hon'ble Income Tax Appellate Tribunal for kind consideration. 1 This Miscellaneous Application arises out of combined order pronounced by the Hon'ble ITAT "G" Bench, Mumbai vide orders ITA No.3059/Mum/2017 (AY 2012-13), ITA No 332/Mum/2018 (AY 2013-14) & ITA No 331/Mum/2018 (AY 2014-15) dated 23.12.2021. 2. The Hon'ble Income Tax Appellate Tribunal has not discussed the issues raised in the combined order passed on 23.12 2021 in respect of the Miscellaneous Application filed on 24.01.2020 vide no. MA-38/M/2020 3. The brief facts of the case are that the assessee company filed its return of income for the AY 2014-15 on 30.09 2014 declaring total income of Rs Nil after set off of brought forwarded losses of R. 16,44,134/-for the AY 2012-13 and MA No. 394/Mum/2022 M/s.Salient Traders Pvt. Ltd. 3 balance loss of Rs 7,31,63,017/- was carry forward to the subsequent year The Hon'ble ITAT has wrongly discussed issue of the change in shareholding for the AY 2014-15, which belongs to the AY 2013-14. Further, the Hon'ble ITAT has not also discussed regarding the Miscellaneous Application filed on 24.01.2020 against order ITA No.331/Mum/2018 dated 14.06.2019 for the AY 2014-15. Further, the Hon'ble ITAT has not also discussed regarding the Miscellaneous Application filed on 24.01 2020 arise against order ITA No 331/Mum/2018 dated 14 06.2019 for the AY 2014-15. Hence, the issues mentioned above remained to be adjudicated on merits 4 In view of the above. Hon'ble ITAT's order dated 23 12 2021 is erroneous to that extent and needs rectification and further directions 2. We have heard rival submissions and perused the materials available on record. The main crux of the Miscellaneous Application preferred by the Revenue is that for A.Y.2013-14, the Tribunal had not discussed the issue with regard to change of shareholding pattern in terms of Section 79 of the Act, but this Tribunal while disposing of the appeal for A.Y.2014-15 in ITA No.331/Mum/2018 in para 7 had erroneously stated that the ground raised by the assessee for A.Y.2014-15 is similar to that raised in A.Y.2013-14. Factually Tribunal had not adjudicated this issue for A.Y.2013-14 with regard to change in shareholding pattern u/s.79 of the Act. However, since the addition made in A.Y.2012-13 has already been deleted by this Tribunal, the assessee would anyway be entitled to carry forward the losses pertaining to A.Y.2012-13 to subsequent assessment years commencing from A.Y.2013-14 onwards. In these circumstances, it would suffice if the first sentence in para 7 in Tribunal order is removed. In our considered opinion, the entire Miscellaneous Applications preferred by the Revenue are purely academic in nature. Hence, we deem it fit to rectify para 7 of our Tribunal Order by removing the first sentence thereon. The revised para 7 of the Tribunal order shall be as under:- MA No. 394/Mum/2022 M/s.Salient Traders Pvt. Ltd. 4 ITA No.331/Mum/2018 (A.Y.2014-15) 7. We find that the ld. AO had sought to disallow the loss of A.Y.2012-13 on the pretext that no loss was available in A.Y.2012-13 in view of additions made by him. As stated earlier, the additions made by the ld. AO in A.Y.2012-13 has already been directed to be deleted, hence, assessee would be eligible for carry forward of the losses of A.Y.2012-13 for consequential set off in subsequent years. During this year, there was a change in shareholding beyond 51% of voting power which was stated to be in violation of provision of Section 79 of the Act. Hence, in the opinion of the Revenue, the assessee is not entitled for set off of losses. But we find that the shares were only transferred from Karta to its Coparceners and hence, there was no change in shareholding at all. But from the perusal of the assessment order, we find that there is no finding recorded by the ld. AO in this regard. Hence, we are inclined to dismiss the ground No.3 raised by the assessee as not emanating from the order of the ld. AO. However, we hold that assessee would be entitled for set off of loss of A.Y.2012-13 with the profits, if any, of A.Y.2014-15 as stated supra. 3. All other contents of our Tribunal order dated 23/12/2021 shall remain unchanged. 4. In the result, Miscellaneous Applications preferred by the Revenue are partly allowed. Order pronounced on 03/02/2023 by way of proper mentioning in the notice board. Sd/- (AMIT SHUKLA) Sd/- (M.BALAGANESH) JUDICIAL MEMBER ACCOUNTANT MEMBER Mumbai; Dated 03/02/2023 KARUNA, sr.ps MA No. 394/Mum/2022 M/s.Salient Traders Pvt. Ltd. 5 Copy of the Order forwarded to : BY ORDER, (Asstt. Registrar) ITAT, Mumbai 1. The Appellant 2. The Respondent. 3. The CIT(A), Mumbai. 4. CIT 5. DR, ITAT, Mumbai 6. Guard file. //True Copy//