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2023 (5) TMI 1171 - AT - Income TaxRevision u/s 263 by CIT - Debatable issue - admissibility of LTCL on securities - whether long term capital loss on securities (STT paid) can be adjusted against the non-STT paid long term capital gain resulting from securities or other assets? - whether the carrying forward of such loss is admissible? - HELD THAT - We find merit AR argument that AO has taken one of the tow possible view while framing the assessment u/s 143(3) accepting the claim of the assessee in which the long term capital loss (STT paid) has been allowed to be set off and carried forward for future set off. The issue is debatable one and therefore jurisdiction u/s 263 of the Act is not available to PCIT in the case of debatable issue. As in the case of Kishorebhai Bhikhabai Virani 2015 (2) TMI 807 - GUJARAT HIGH COURT has been referred to by the Co-ordinate Benches namely Raptakos Brett Co. Ltd. 2015 (6) TMI 529 - ITAT MUMBAI and M/s Rare Investments 2019 (11) TMI 634 - ITAT MUMBAI and after considering the same, the issue was decided in favour of the assessee. On the issue of non-availability of jurisdiction u/s 263 in case of debatable issue, we find support from the decision of Malabar Industrial Co. Ltd. 2000 (2) TMI 10 - SUPREME COURT wherein it has been held that jurisdiction u/s 263 of the Act cannot be assumed in respect of a debatable issue which is reiterated in the case of CIT vs. Max India Ltd. 2007 (11) TMI 12 - SUPREME COURT - The case is also supported by the decision of Sunil Lamba 2019 (3) TMI 1254 - DELHI HIGH COURT where referring to the two decisions of the Hon ble Apex Court in the case of Malabar Industrial Co. Ltd. (supra) and Max India Ltd. (supra) quashed the order passed u/s 263 of the Act on the ground that the issue is debatable one and ld PCIT has no jurisdiction. Assessee appeal allowed.
Issues:
The appeal challenges the jurisdiction exercised under section 263 of the Income Tax Act and the consequent order setting aside the assessment. Jurisdiction under Section 263: The Principal Commissioner set aside the assessment due to the incorrect adjustment of long term capital loss on mutual funds against long term capital gain. The appellant argued that the issue is debatable, citing various judicial decisions in their favor. The Tribunal found that the issue is indeed debatable, as there are conflicting views on whether such adjustments are permissible. Relying on precedents such as *Malabar Industrial Co Ltd. Vs CIT* and *CIT Vs Max India Ltd*, the Tribunal held that revisionary jurisdiction under section 263 cannot be invoked for debatable issues. The order under section 263 was deemed invalid and quashed. Adjustment of Capital Loss: The crux of the matter was whether long term capital loss on securities (STT paid) can be set off against long term capital gain from other assets, and if carrying forward such loss is allowed. The Tribunal noted conflicting decisions on this issue, with some in favor of the assessee and some against. Ultimately, the Tribunal held that the issue is debatable, and since the Assessing Officer had taken a permissible view in allowing the set off, the jurisdiction under section 263 was not applicable. The order under section 263 was quashed, and the appeal of the assessee was allowed.
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