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2018 (12) TMI 685 - AT - Income TaxRectification application u/s. 154 - Computation of long term capital loss - assessee company vide its application for rectification has stated that the assessee company considered only the actual cost of acquisition instead of indexed cost of acquisition and determined the Long Term Capital Loss at ₹ 3,85,05,000/- instead of ₹ 14,27,10,063/- - Held that - Referring to provisions of section 154, it is seen that only those mistakes which are apparent from records can be rectified under the provisions of section 154. Hence, we have to examine this as to whether the assessee s claim for rectification is for apparent mistake or not. In the present case, it is noted by the AO on page no. 2 of the order passed by him u/s. 154 of IT Act that the assessee company vide its application for rectification has stated that the assessee company considered only the actual cost of acquisition instead of indexed cost of acquisition and determined the Long Term Capital Loss at ₹ 3,85,05,000/- instead of ₹ 14,27,10,063/-. In our considered opinion, this may be a mistake against which the appeal can be filed by the assessee by filing an appeal before CIT(A) against the assessment order but such mistake is not an apparent mistake which can be rectified by the AO u/s. 154 of IT Act - rectification sought for by the assessee u/s. 154 is not in respect of an apparent mistake which can be rectified u/s. 154. - decided against assessee.
Issues Involved:
1. Computation of long-term capital loss. 2. Rectification of assessment under Section 154 of the Income Tax Act. Comprehensive, Issue-Wise Detailed Analysis: 1. Computation of Long-Term Capital Loss: The assessee contested the computation of long-term capital loss on the sale of Government Securities. The CIT(A) held that claims made during assessment proceedings, other than by filing a revised return, cannot be allowed. The assessee argued that the details for computing the correct amount of long-term capital loss (?14,27,10,063/- instead of ?3,85,05,000/-) were available on record during the assessment proceedings. The CIT(A) was criticized for not directing the Assessing Officer (AO) to allow the correct long-term capital loss since it was a mistake apparent from the record. The assessee also contended that the AO is duty-bound to allow all legitimate deductions, even if not claimed in the return, and that the CIT(A) can admit additional claims not raised before the AO. 2. Rectification of Assessment under Section 154: The assessee filed a rectification petition under Section 154, claiming that the long-term capital loss was incorrectly computed by considering the actual cost of acquisition instead of the indexed cost. The AO rejected this petition, stating that there was no mistake apparent from the records that could be rectified under Section 154, as the loss determined was the same as claimed in the original and revised returns. The CIT(A) upheld this decision, and the assessee appealed further. The Tribunal examined whether the claim made by the assessee was allowable under Section 154, which permits rectification of mistakes apparent from the record. The Tribunal noted that the issue was not an apparent mistake but rather a factual dispute about the computation of long-term capital loss. The Tribunal referred to various judicial pronouncements and CBDT Circular No. 14(XL-35) dated 11.04.1955 but found them inapplicable to the present case. The Tribunal concluded that the mistake claimed by the assessee was not apparent from the record and could not be rectified under Section 154. The Tribunal emphasized that the assessee could have raised this issue by filing an appeal during the assessment proceedings under Section 143(3), but not in the rectification proceedings under Section 154. Conclusion: The Tribunal dismissed the appeal filed by the assessee, holding that the rectification sought under Section 154 was not for an apparent mistake and could not be entertained in the present proceedings. The Tribunal reiterated that the correct procedure for the assessee would have been to file an appeal during the assessment proceedings under Section 143(3) and raise the issue as an additional ground.
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