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TMI Blog2016 (7) TMI 66X X X X Extracts X X X X X X X X Extracts X X X X ..... has filed his return of income on 23.9.2009 declaring nil income. The return was taken in scrutiny by the Assessing Officer, upon completion of which, framed assessment under section 143 of the Income Tax Act on 20.12.2011. One of the claims of the petitioner in the return which came up for consideration before the Assessing Officer was of capital loss of Rs. 20.89 crores(rounded off). The Assessing Officer however, made no additions on this count. To reopen such scrutiny assessment, he issued impugned notice which was done beyond a period of four years from the end of relevant assessment year. To issue such notice, he had recorded the following reasons : "The assessment in this case has been finalized u/s.143(3) of the Act 20/12/2011 by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ication money paid for Warrants through QlB offer and the offer among promoter companies and not meant for general public as in the cited case. 5. In the case law relied upon by the assesses company, the very application for shares has been treated as having gained a right for allotment and the date of shareholding reckons from application itself. The decision also mentions that as per TableA of the company's Act, 1956, the applicant becomes a member of the company on the basis of application itself. In the case of the aforesaid assessee the application is for warrants which, unlike an equity shares would not have rendered membership of the company. ln this case the QIB issue for warrants was issued by Syntax Industries Ltd. and in the "ot ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons. Firstly, that the issue of capital loss of Rs. 20.89 crores was minutely scrutinised by the Assessing Officer for original assessment proceedings and second, that there was no failure on part of the assessee to disclose truly and fully all material facts. The reopening of assessment beyond a period of four years was therefore, not permissible. 5. On the other hand, learned counsel Shri Nitin K. Mehta for the department opposed the petition contending that the loss of advances for warrants would not qualify as capital loss and was thus wrongly claimed by the assessee. 6. From the record, we notice that during the assessment proceedings, the Assessing Officer with respect to this claim of capital loss of Rs. 23.89 crores asked the asse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the judicial pronouncement in the case of Dy. CIT v. BPL Sanyo Finance Ltd. (2009 TMI 33346 Karnataka High Court), Hon'ble High Court of Karnataka has decided that loss on account of forfeiture of share application money is capital loss and decision of Hon'ble High Court of Karnataka is reproduced hereunder for your ready reference...." 7. It can thus be seen that entire issue was thoroughly examined by the Assessing Officer during the original assessment proceedings. He had serious doubt about the assessee's claim of capital loss upon which he raised multiple queries. All these queries were explained by the assessee including pointing out the reasons for not exercising warrants. He placed heavy reliance on decision of Karnataka High ..... X X X X Extracts X X X X X X X X Extracts X X X X
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