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TMI Blog2022 (2) TMI 218X X X X Extracts X X X X X X X X Extracts X X X X ..... s factually distinguishable. With regard to Nikhilsawhney v. ACIT [ 2020 (8) TMI 508 - ITAT DELHI] this case was pronounced on 17.08.2020 and subsequently Coordinate Bench has decided the issue in favour of the assessee. Aggrieved, when revenue preferred appeal before Hon'ble Jurisdictional High Court, the same was dismissed. Therefore, the issue under consideration reached finality. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Accordingly, grounds raised by the revenue are dismissed. Assessment u/s 153A - Disallowance u/s.14A of the Act r.w.r. 8D(2) and denial of set off of brought forward long term capital loss with long term capital gain - HELD THAT:- Admittedly, the assessment for A.Y.2012-13 being unabated assessment, there cannot be any disturbance to the originally concluded assessment / appellate proceeding unless there is any incriminating material found during the course of search relatable to such assessment year. As stated earlier in the instant case, no such incriminating material has been referred b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct. The Revenue has raised the following grounds:- (i) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the assessee's claim to set off Long Term Capital Gains of ₹ 23,11,153/- arising from sale of unlisted equity of a company on which no STT is paid/payable against the Long Term Capital Loss of ₹ 8,37,59,368/- arising from sale of equity of a company listed on a recognized stock exchange on which STT is paid? (ii) Whether on the facts and circumstances of the case and in law, the Ld. CITA) is justified in allowing the assessee's claim to set off Long Term Capital Gains of ₹ 23,11,153/- which is taxable under the provision of section 48 to 55 of the Income Tax Act, 1961 against the Long Term Capital Loss of ₹ 8,37,59,368/- which do not form part of total income as envisaged in the provision of section 10(38) of the Income Tax Act, 1961? (iii) Whether on the facts and circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the assessee's claim to carry forward the Long Term Capital Loss of ₹ 8,37,59,368/- arising on sale of shares of a company listed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed long term capital loss of ₹ 8,37,59,368/-. During the same F.Y.2010-11 relevant to A.Y.2011-12, the assessee had earned long term capital gains of ₹ 23,11,153/- on sale of unlisted shares on which STT was not paid. The assessee sought to set off the long term capital loss on sale of listed shares with long term capital gain on sale of unlisted shares in the return of income. 3.2. Before the ld. AO, the assessee made submissions in support of the claim to carry forward of such loss by relying on the decision of this Tribunal in case of M/s. Raptakos Brett Co. Ltd, Mumbai v. DCIT in ITA Nos. 3317/Mum/ 2009 1692/ Mum/ 2010 [58 taxmann.com 115]. After considering the submissions of the assessee, the ld. AO rejected the same and he did not allow the assessee to carry forward for setting off the above said losses. 3.3. Aggrieved, the assessee preferred an appeal before the Ld.CIT(A) and Ld.CIT(A) considering the detailed submissions made before him, allowed the claim of the assessee by relying on Coordinate Bench decision of Pune Tribunal in the case of ACIT v. Smt Gauri Avinash Bhosale in ITA.No. 1303/PUN/2017 and of this Tribunal in the case of M/s. Raptakos Br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... shares can be set off against Long term capital gain arising on sale of land or not, as the income from Long term capital gain on sale of such shares are exempt u/s. 10(38). The nature of income here in this case is from sale of Long term capital asset, which are equity shares in a company and unit of an equity oriented fund which is chargeable to STT. First of all, Long term capital gain has been defined under section 2(39A), as capital gains arising from transfer of a Long term capital asset. Section 2(14) defines Capital asset and various exceptions and exclusions have been provided which are not treated as capital asset. Section 45 is the charging section for any profits or gain arising from a transfer of a capital asset in the previous year i.e. taxability of capital gains. Section 47 enlists various exceptions and transactions which are not treated as transfer for the purpose of capital gain u/s.45. The mode of computation to arrive at capital gain or loss has been enumerated from sections 48 to 55. Further sub section (3) of section 70 and section 71 provides for set off of loss in respect of capital gain. 8.From the conjoint reading and plain understanding of all the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly a limited portion of source is treated as exempt and not the entire capital gain (on sale of shares). If an equity share is sold within the period of twelve months then it is chargeable to tax and only if it falls within the definition of Long term capital asset and, further fulfils the conditions mentioned in subsection (38) of section 10 then only such portion of income is treated as exempt. There are further instances like debt oriented securities and equity shares where STT is not paid, then gain or profit from such shares are taxable. Section 10 provides that certain income are not to be included while computing the total income of the assessee and in such a case the profit or loss resulting from such a source of income do not enter into computation at all. However, a distinction has been drawn where the entire source of income is exempt or only a part of source is exempt. Here it needs to be seen whether section 10(38) is source of income which does not enter into computation at all or is a part of the source, the income in respect of which is excluded in the computation of total income. For instance, if the assessee has income from Short term capital gain on sale of shar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t to be included in view of the provisions of Clause (27) of s. 10 of the 1961 Act, the loss suffered from this source could also not merit the exclusion. Under the I.T. Act, there are certain incomes which do not enter into the computation of the total income at all. In this connection we have to bear in mind the scheme of the charging section which provides that the incomes shall be charged and s. 4 of the Act provides that the Central Act enacts that the incomes shall be charged for any assessment year and in accordance with and subject to the provisions of the 1961 Act in respect of the total income of the previous year or years or whatever the case may be. The scheme of total income has been explained by s. 5 of the Act which provides that subject to the provisions of the Act, the total income of the previous year of a person who is a resident includes all income from whatever source it is derived. In computing the total income, certain incomes are not included under s. 10 of the Act. It depends on the particular case where certain income, in respect of which the Act is made inapplicable to the scheme of the Act, and in such a case, the profit and loss resulting from such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s negative profit. Both positive and negative profits are of a revenue character. Both must enter into computation, wherever it becomes material, in the same mode of the taxable income of the assessee. Although Section 6 classifies income under six heads, the main charging provision is Section 3 which levies income-tax, as only one tax, on the 'total income ' of the assessee as defined in Section 2(15). An income in order to come within the purview of that definition must satisfy two conditions. Firstly, it must comprise the ' total amount of income, profits and gains referred to in Section 4(1)'. Secondly, it must be 'computed in the manner laid down in the Act'. If either of these conditions fails, the income will not be a part of the total income that can be brought to charge. While concluding the issue their Lordships observed that it may be remembered that the concept of carry forward of loss does not stand in vacuo. It involves the notion of set- off. Its sole purpose is to set off the loss against the profits of a subsequent year. It pre-supposes the permissibility and possibility of the carried forward loss being absorbed or set off against the pro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pital Loss of ₹ 8,37,59,368/- arising from sale of equity shares. With regard to case law relied by the Ld. DR in the case of Apollo Tyres Ltd., v. DCIT (supra), the issue involved in that case was whether long term capital loss incurred on which STT paid could not be set off against long term capital gain arising out of sale of land, the issue is factually distinguishable. With regard to Nikhilsawhney v. ACIT (supra), this case was pronounced on 17.08.2020 and subsequently Coordinate Bench has decided the issue in favour of the assessee. Aggrieved, when revenue preferred appeal before Hon'ble Jurisdictional High Court, the same was dismissed. Therefore, the issue under consideration reached finality. In view of the aforesaid observations and respectfully following the judicial precedents relied upon hereinabove, we do not find any infirmity in the order of the ld. CIT(A) granting relief to the assessee. Accordingly, grounds raised by the revenue are dismissed. ITA No.852/Mum/2021 ITA No.121/Mum/2021 (A.Y.2012-13) 4. At the outset, there is a delay in filing of appeal by the assessee before us by 22 days. The assessee has filed a letter dated 19/05/2021 throug ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8 in the case of assessee for A.Y.2005-06. 5.4. We find that there was a search and seizure action u/s. 132 of the Income-tax Act (for short Act ) which was initiated on ABIL Group on 21.07.2017 , pursuant to which, various residences of the partners/directors of the group situated at Mumbai and Pune were covered by search action. The assessee Shri Avinash N. Bhosale is a promoter and founder of ABIL Group. The group companies are primarily engaged in infrastructure development, real estate development and hospitality services. As the case of the assessee is covered under search action, all the cases were centralized u/s. 127(2) of the Act and accordingly, notices u/s. 153A of the Act were issued and served on the assessee calling for filing of correct return of income for the A.Y.2012-13. 5.5. In response to the said notice, the assessee filed the return of income on 14/11/2018 declaring total income of ₹ 12,07,93,160/-. Subsequently, the assessment u/s.153A r.w.s. 143(3) of the Act was completed by the ld. AO on 29/05/2019 assessing total income at ₹ 15,59,80,360/- by making disallowance u/s.14A of the Act amounting to ₹ 54,50,000/- and long term capital ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowances. This issue is no longer res integra in view of the decision of the Hon ble Jurisdictional High Court in the case of Continental Warehousing Corporation reported in 374 ITR 645 wherein it had been categorically held by the Hon ble Jurisdictional High Court that no addition could be made in respect of assessments which have become final if no incriminating material is found during search. The relevant portion of the said order is hereby reproduced as under:- 28. In dealing with those arguments, the Division Bench outlined the ambit and scope of the powers conferred by section 153A and observed thus : (8) We find it difficult to accept the above contention raised on behalf of the revenue. The object of inserting Sections 153A, 153B and 153C by Finance Act, 2003 by discarding the existing provisions relating to search cases contained in Chapter XIV B of the Income-tax Act, as stated in the Memorandum explaining the provisions in the Finance Bill 2003 (see 260 ITR (St) 191 at 219) was that under the existing provisions relating to search cases, often disputes were raised on the question, as to whether a particular income could be treated as `undisclosed income' ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ax Act stand abated cannot be accepted. Similarly on annulment of assessment made under Section 153A (1) what stands revived is the pending assessment/reassessment proceedings which stood abated as per section 153A(1). (11) In the present case, as contended by Shri Mani, learned counsel for the assessee, the assessment for assessment year 1998-99 was finalised on the 29-12-2000 and search was conducted thereafter on 3-12-2003. Therefore, in the facts of the present case, initiation of proceedings under Section 153A would not affect the assessment finalised on 29-12-2000. (12) Once it is held that the assessment finalised on 29.12.2000 has attained finality, then the deduction allowed under section 80 HHC of the Income-tax Act as well as the loss computed under the assessment dated 29-12-2000 would attain finality. In such a case, the A.O. while passing the independent assessment order under Section 153A read with Section 143 (3) of the I.T. Act could not have disturbed the assessment/reassessment order which has attained finality, unless the materials gathered in the course of the proceedings under Section 153A of the Income-tax Act establish that the reliefs granted unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to trace out the history and we can do nothing better than to reproduce the observations and conclusions as above that we are not repeating the same. Even if the exercise of power under section 153A is permissible still the provision cannot be read in the manner suggested by Mr. Pinto. Not only the finalised assessment cannot be touched by resorting to those provisions, but even while exercising the power can be exercised where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after 31st March, 2003. There is a mandate to issue notices under section 153(1)(a) and assess or reassess the total income of six assessment years immediately preceding the assessment year relevant to the previous year in which such search is conducted or requisition is made. Thus, the crucial words search and requisition appear in the substantive provision and the provisos. That would throw light on the issue of applicability of the provision. It being enacted to a search or requisition that its construction would have to be accordingly. That is the conclusion reached by the Division Bench in Murli Agro Products Ltd. (supra) w ..... X X X X Extracts X X X X X X X X Extracts X X X X
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