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TMI Blog2017 (2) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... O is directed to allow the set off of carried forward business loss against the Capital Gain computed u/s 50 of the Act. - Decided in favour of assessee - ITA No.4893/Mum/2014 - - - Dated:- 1-2-2017 - SHRI D.KARUNAKARA RAO, ACCOUNTANT MEMBER AND SHRI PAWAN SINGH, JUDICIAL MEMBER For The Assessee : Shri Anil Sathe (AR) For The Revenue : Shri B.C.S. Naik (CIT-DR) Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JM: 1. This appeal by assessee u/s 253 of the Income-tax Act ( Act ) is directed against the order of Ld. Commissioner of Income-tax (Appeals) [for short the CIT(A)] 13, Mumbai dated 30.06.2010 for Assessment Year (AY) 2007-08. 2. We have noticed that the appeal is barred by 375 days of limitation period as recorded by the registry. The assessee filed an application for condonation of delay which is supported with the affidavit of Shri Sandeep Arjan Khetwani, Director of assesseecompany. In the application and the affidavit the assessee has contended that the ld. CIT(A) passed the impugned order on 30.06.2010. The order passed by ld. CIT(A) was not served at the address given in the Form-35. In the application the assessee/applica ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing on Form- 35 and the same was returned. The record submitted in compliance of Tribunal s order further reveals that the assessee applied for copy of impugned order vide application dated 04.05.2013 and the impugned order was supplied to the assessee only on 15.05.2013. Thus, we have noticed that the contention of applicant with regard to delay from the date of passing of impugned order till 15.05.2013 appears to be correct. The other contentions of ld. AR of the assessee which is duly supported with the affidavit of Shri Sandeep Arjan Khetwani. Thus, considering the contention, we are inclined to condone the delay and to decide the appeal on merit, hence, the delay in filing the appeal is condoned. Now, we shall take up the grounds of appeal raised on merits. 5. The assessee has raised the following grounds of appeal: 1. The learned CIT (A) erred in confirming the view taken by the Ld.AO that the carried forward business loss of ₹ 30,40,999 cannot be set off against income in the nature of capital gain computed under Section 50 of the Income Tax. 2. The learned CIT (A) failed to appreciate that the provisions of Section 50 of the income Tax Act provide for spe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ning Pressing Factory vs. DCIT (2009) 29 DTR 0001 (Mumbai Trib.) Visakhapatnam Tribunal and Pune Tribunal in DCIT vs. Demech Heavy Equipments Pvt. Ltd.(2016) 47 CCH 0109 (Pune Trib.). On the other hand, ld. DR for the Revenue honestly supported the order of authorities below. 9. We have considered the contention of both the parties. The AO while framing the assessment disallowed the set off of carried forward business loss holding that carried forward business loss cannot be set of against the income from capital gain u/s. 72 of the Act. The ld. CIT(A) while considering this ground upheld the action of AO on two counts (i) that section 50 being a special provision shall prevail the general provision for computing capital gain in respect of depreciable asset. First, section 50 is a charging section independent of section 45 48, thus, being deeming provision is required to be strictly interpreted. (ii) Even a fiction is created u/s 15, the transfer of assets/block of asset will result in STCG which cannot change the nature of assets. Nature of asset and the capital gain earned cannot be a business income. 10. We have seen that the co-ordinate bench of Mumbai Tribunal in Dem ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Lordships of the Hon'ble Supreme Court took note of this distinction and the implications of these provisions regarding carry forward and set off of business loss. It was noted by the Hon'ble Supreme Court that while one set of provisions, i.e., the nature of loss incurred by the assessee, classifies the same on the basis of income being taxable under a particular head for the purpose of computation of the net income, the other set of provisions is concerned, only with the nature of gains being from business and not with the head of tax. Their Lordships held that as long as the profits and gains are in the nature of business profits and gains, and even if these profits are liable to be taxed under a head other than income from business and profession, the loss carried forward can be set off against such profits of the assessee. In this view of the matter, the objection raised by the authorities below, in our humble understanding, are devoid of any legal substance. Coming to the judicial precedents cited by the CIT(A), we find I that in the case of CIT vs. Millind Trading Co. (P) Ltd. (1994) 118 CTR (Guj) 154 : (1995) 211 690 (Guj), their Lordships were concerned with the qu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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