2024 (11) TMI 1153 - AT - Income Tax

Denial of setting off of carried forward Short Term Capital Loss against the Income under the head Capital Gains during the present AY - scope of section 115BAC - HELD THAT - As we know that the return processing is computerized one and no manual interference is there and if any figure or claim is not entered in appropriate column the computer disallows the same. We find that in section 115BAC neither brought forward long term capital loss nor brought forward short term capital loss is required to be disallowed but due to the fact that the assessee has entered the figure of brought forward long term capital loss in correct column the same was allowed by CPC. But the brought forward short term capital loss was not filled in proper column, the same was disallowed by CPC. Considering the totality of the facts, we deem it proper to set-aside the order passed by the ld. Addl./JCIT(A)-1, Coimbatore and remand the matter back to his file with a direction to pass a fresh order in the light of our observations after providing reasonable opportunity of being heard to the assessee. The assessee is also directed to comply with the notices issued by the ld. Addl./JCIT(A)-1, Coimbatore and bring this fact to the knowledge of the ld. Addl./JCIT(A)-1, Coimbatore that brought forward long term capital loss was allowed by CPC but brought forward short term capital loss was not allowed by CPC due to entry in wrong column in income tax return. Addl./JCIT(A)-1, Coimbatore shall decide the issue as per fact and law after giving due opportunity of being heard to the assessee. We hold and direct accordingly. Thus, the grounds of appeal raised by the assessee are partly allowed.

Summary

Issues:
Disallowance of brought forward short term capital loss for set-off against current year's income under section 115BAC.

Detailed Analysis:

Issue 1: Disallowance of brought forward short term capital loss

The appellant contested the disallowance of the brought forward short term capital loss of Rs. 27,78,028/- by the CPC for set-off against the current year's income under section 115BAC. The appellant argued that the short term capital loss was accepted by the CPC in the previous assessment year and should have been allowed to be carried forward and set-off against the short term capital gain income of the current assessment year. The appellant contended that the provisions of section 115BAC do not prohibit the set-off of short term capital loss.

Analysis:
The Tribunal noted that the CPC had indeed accepted the short term capital loss in the previous assessment year and allowed it to be carried forward. The appellant provided evidence in the form of the intimation under section 143(1) for the previous year, supporting the carry-forward of the loss. The Tribunal observed that the CPC had allowed the set-off of brought forward Long Term Capital Loss but disallowed the set-off of brought forward short term capital loss in the current year. It was highlighted that the disallowance was due to an error in the filling of columns in the return, leading to the computerized processing disallowing the claim.

Conclusion:
The Tribunal found that the disallowance of the brought forward short term capital loss was unjustified as the loss had been accepted in the previous year and should have been allowed to be set-off against the current year's income. The Tribunal set aside the order of the lower authority and remanded the matter back for a fresh decision, directing a proper consideration of the facts and law. The appellant's grounds of appeal were partly allowed, emphasizing the need for correct filing to ensure proper allowance of losses for set-off purposes.

Final Decision:
The appeal filed by the assessee was partly allowed for statistical purposes, with the Tribunal directing a fresh decision by the lower authority to consider the allowance of the brought forward short term capital loss for set-off against the current year's income in accordance with the law and facts presented.