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TMI Blog2018 (2) TMI 1336X X X X Extracts X X X X X X X X Extracts X X X X ..... the Act. It was further observed that the AO that the assessee has also claimed deduction towards Long Term Capital Loss (LTCL) of Rs. 55,91,510/- brought forward from earlier years. The AO denied the deduction towards capital losses brought forward as well as exemption claimed under s.54 of the Act and held that entire Long Term Capital Gains of Rs. 92,76,732/- is susceptible to incidence of tax. The aforesaid action of the AO was challenged in the quantum proceedings before the CIT(A) as well as the ITAT. The CIT(A) confirmed the action of the AO which was, in turn, endorsed by the ITAT in ITA No.1719/Ahd/2011 order dated 14/02/2017. The denial of exemption claimed by the assessee under s.54 of the Act and also rejection of claim of brought forward losses invited penalty proceedings under s.271(1)(c) of the Act. The AO vide penalty order dated 16/03/2012 imposed penalty of Rs. 21,03,000/- towards wrongful claim of adjustment towards brought forward Long Term Capital Losses as well as wrongful deduction claimed under s.54 of the Act. The CIT(A) in first appeal endorsed the aforesaid action of imposition of penalty vide its order dated 20/09/2013. 3. Aggrieved by the imposition o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or set off of brought forward losses has been admitted for adjudication on merits in quantum proceedings. The Ld.Counsel accordingly submitted that the circumstances narrated above would show that the issues involved is highly debatable and there is no concealment of particulars of income per se. 6. The Ld.DR, on the other hand, relied upon the orders of the authorities below and stridently opposed the contentions made on behalf of the assessee. The Ld.DR submitted that a reading of section 54 of the Act would suggest that deduction eligible under s.54 of the Act is restricted to specified classes of the assessee, namely 'individuals' and 'HUF's subject to other conditions prescribed therein. The assessee being a trust is neither individual nor HUF and thus not eligible for claim of aforesaid deduction. The Ld.DR pointed out to a specific finding of the ITAT on facts in quantum proceedings that the assessee is assessed in the status of AOP and therefore as a corollary does not fall in the category specified under s.54 of the Act. The Ld.DR accordingly submitted that the deduction claimed by the assessee under s.54 of the Act runs counter to the very scheme of section 54 of the Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laim deduction under plain and unequivocal provisions of section 54 of the Act. This finding clearly goes to support that there is no scope whatsoever for any debate on non-availability of deduction of section 54 of the Act. Significantly, we further notice that the assessee itself has treated the aforesaid trust as an 'AOP' in line with provisions of s.164 of the Act. For instance, the assessee has clearly mentioned in its return for AY 2006-07 that its is assessable at 'maximum marginal rate' (page 26 of the paper-book). This fact unflinchingly proves that the assessee had taken a specific position itself for taxation in the status of AOP. We also find that the assessee has applied flat rate of taxation (at 30%) applicable to assessee holding the status of AOP, unlike individuals where slab rates for different level of income is specified. Same is the case for return filed relevant AY 2007- 08. Needless to say, determination of status of an assessee is a part of process of computation of income and assessment. This clearly goes to show without any need for interpretation that the assessee was not susceptible to tax at par with individual. Therefore, we fail to find legitimacy of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n itself is found to contrary to mandate of law. In these circumstances, we find difficult to admit the plea on behalf of the assessee that the issue of deductibility is debatable of any sort. 11. As observed, the claim of deduction under s.54 carried is clearly in contravention of statutory mandate and hence cannot be bracketed in league of bonafide action. The assessee has totally failed to demonstrate the bonafide of its action except ex-parte admission of the appeal before the Hon'ble Gujarat High Court against the quantum proceedings. The Hon'ble Gujarat High Court in the case of CIT vs. Dharanshi V.Shah 366 ITR 140 (Guj.) has held that the admission of appeal is under S.260A per se is inconsequential for determination of imposition of penalty. As we notice that the action of the assessee prima-facie lacks bonafide both on facts as well as on law, the consequences of penalty is inescapable. Therefore, we do not find any error in the conclusion drawn by the CIT(A). Consequently, we decline to interfere therewith. 12. We shall now turn to the other aspect namely bonafides of claim of carried forward LTCLs purportedly arose in AY 2006-07. It is the case of the assessee that Lon ..... X X X X Extracts X X X X X X X X Extracts X X X X
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