2022 (7) TMI 1414 - AT - Income Tax

Carry forward and set off of long term capital loss incurred on transaction of sale of equity shares as subject to payment of Securities Transaction Tax (STT) - HELD THAT - As decided in own case 2022 (1) TMI 537 - ITAT MUMBAI as following the aforesaid decision in case of Raptakos Brett Co. Ltd. 2015 (6) TMI 529 - ITAT MUMBAI has attained finality as the appeal preferred by the department against the said decision has been dismissed by the Hon ble Jurisdictional High Court though due to non-prosecution. Thus we do not find any infirmity in the order of the Ld.CIT(A) in allowing the claim of carry forward of Long Term Capital Loss arising from sale of equity shares. Disallowance u/s 14A - HELD THAT - As decided in own case 2022 (1) TMI 537 - ITAT MUMBAI disallowance u/s. 14A of the Act cannot be more than the exempt income earned by the assessee. Therefore we are in agreement with the finding of the Ld.CIT(A) and we do not find any reasons to interfere with the finding of the Ld.CIT(A). Accordingly ground raised by the revenue is dismissed. Addition on account of Helicopter / air craft charges - HELD THAT - As decided in own case 2022 (1) TMI 537 - ITAT MUMBAI in the case of the assessee has allowed 1/7th of the expenses incurred by the assessee as personal. Ld.CIT(A) has relied on the above finding and accordingly allowed the appeal filed by the assessee before him. No reason to disturb or interfere with the above finding. Accordingly ground raised by the revenue is dismissed. Addition on account of software license charges - HELD THAT - As decided in own case 2022 (1) TMI 537 - ITAT MUMBAI CIT(A) allowed the software licence charges expenses claimed by the assessee by relying on case of DCIT v. Integrated Technology Solutions Pvt. Ltd 2016 (4) TMI 30 - ITAT MUMBAI After considering the detailed findings of the Ld.CIT(A) we do not find any reason to interfere with the findings of the Ld.CIT(A). Therefore the grounds raised by the revenue is dismissed.

Summary

Issues Involved:
1. Deletion of addition on account of brought forward long-term capital loss set off.
2. Restriction of addition on account of Section 14A disallowance.
3. Restriction of addition on account of Helicopter/aircraft charges.
4. Deletion of addition on account of Software License Charge.

Detailed Analysis:

1. Deletion of Addition on Account of Brought Forward Long-Term Capital Loss Set Off:
The primary issue in ground no.1 pertains to the carry forward and set-off of long-term capital loss incurred on the sale of equity shares subject to Securities Transaction Tax (STT). The Tribunal referenced its earlier decision in the assessee's own case, where it was established that the long-term capital loss incurred from the sale of shares, which are capital assets, can be set off against long-term capital gains from other sources. The Tribunal highlighted that the income from the sale of these shares is exempt under Section 10(38) of the Income Tax Act, but this does not preclude the set-off of losses. They emphasized that the entire source of income is not exempt, only a part of it is, hence the loss can be carried forward and set off. Consequently, the Tribunal upheld the CIT(A)'s decision allowing the carry forward of the long-term capital loss.

2. Restriction of Addition on Account of Section 14A Disallowance:
Ground no.2 addresses the disallowance under Section 14A of the Act. The Tribunal noted that the disallowance calculated by the Assessing Officer exceeded the exempt income earned by the assessee. Citing precedents, the Tribunal stated that disallowance under Section 14A cannot exceed the exempt income. They agreed with the CIT(A)'s restriction of the disallowance to the amount of exempt income and dismissed the Revenue's appeal on this ground.

3. Restriction of Addition on Account of Helicopter/Aircraft Charges:
In ground no.3, the issue is the addition on account of Helicopter/aircraft charges. The Tribunal referred to its previous decision where it allowed only 1/7th of the expenses as personal, aligning with the CIT(A)'s findings. The Tribunal found no reason to deviate from this view and upheld the CIT(A)'s decision, thereby dismissing the Revenue's appeal on this ground.

4. Deletion of Addition on Account of Software License Charge:
Ground no.4 involves the addition on account of software license charges. The Tribunal cited its earlier decision, which allowed the software license charges as revenue expenditure based on the precedent set in the case of DCIT v. Integrated Technology Solutions Pvt. Ltd. The Tribunal found the CIT(A)'s reliance on this precedent justified and saw no reason to interfere with the decision. Consequently, the Revenue's appeal on this ground was dismissed.

Conclusion:
The Tribunal, referencing its own previous decisions and established legal principles, dismissed the Revenue's appeal on all grounds. They upheld the CIT(A)'s decisions regarding the carry forward of long-term capital loss, restriction of Section 14A disallowance, Helicopter/aircraft charges, and software license charges. The appeal by the Revenue was consequently dismissed in its entirety.