Income Tax Appellate Tribunal - Mumbai
Valuable Technologies Pvt Ltd, Mumbai vs Commissioner Of Income Tac ... on 30 August, 2024
IN THE INCOME TAX APPELLATE TRIBUNAL
MUMBAI BENCH "F" MUMBAI
BEFORE SHRI OM PRAKASH KANT (ACCOUNTANT MEMBER)
AND
SHRI SUNIL KUMAR SINGH (JUDICIAL MEMBER)
ITA No. 645/MUM/2024
Assessment Year: 2020-21
Valuable Technologies Pvt. Ltd., CIT(A)-11, DCIT Central Circle 1
Plot No. 53/1 Media Info Park, Road, Thane, Ashok IT Park 6th floor,
No.7, MIDC, Near Akruti Trade Vs. Ward No. -16, Wagle Industrial
Centre, Andheri (East), Estate, Thane (West)-400604.
Mumbai-400093.
PAN NO. AACCV 2732 P
Appellant Respondent
Assessee by : Mr. Jagdish Shetty
Revenue by : Ms. Rajeshwari Menon, Sr. DR
Date of He aring : 11/07/2024
Date of pronouncement : 30/08/2024
ORDER
PER OM PRAKASH KANT, AM
This appeal by the assessee is directed against order dated 13.12.2023 passed by the Ld. Commissioner of Income-tax (Appeals) - Pune-11 [in short 'the Ld. CIT(A)'] for assessment year 2020-21, raising following grounds:
Valuable Technologies Pvt. Ltd 2 ITA No. 645/MUM/2024
1. On the basis of facts and circumstances of the case, the Learned oner of Income Tax (Appeals), Pune ["CIT(Appeals)"] has Commissioner long term capital loss of erred in not allowing the legitimate set off of long-term Rs.15,72,530/-- against Long Term capital gain of Rs 2,67,73,895/-
2,67,73,895/ presuming that the said capital loss is a Business Loss.
he Learned CIT(Appeals) has treated the long - term Capital Gain
2. The 21 which the assesse has set off against the brought forward of AY 20-21 term capital loss of the previous years, as Business income and Long -term erred on facts and in levied tax on such income. The CIT(Appeals) has erred law by not allowing the legitimate set off of unabsorbed capital loss of earlier years against the income from capital gains u/s 74 of the Income Tax Act and disallowing the same under section 72(1) of the Income Tax Act.
2. ed, facts of the case are that the assessee company Briefly stated, was engaged in providing software services etc. For the year under consideration, the assessee filed return of income on 12.01.2021 Rs.1,08,17,078/ . The return of income filed claiming tax refund of Rs.1,08,17,078/-. by the he assessee was processed by the Central Processing Centre, Bangalore (in short 'CPC') wherein certain adjustment to Income tax Act, 1961 (in short 'the disallowance u/s 43B of the Income-tax Act') as well as adjustment to set off of current year and brought forward losses to the income reported under capital gain and income from other sources were made. Thereafter, the Assessing Officer CPC passed a rectification order u/s 154 of the Act dated adjustment made u/s 43B of the Act, 06.07.2022 reversing the adjustment ssessee filed rectification application on 15.12.2022 however the assessee seeking rectification on the adjustment of the set off of brought forward loss. However, same was rejected by the AO CPC and against which the assessee preferred appeal before the Ld. CIT(A).
T(A) though accepted the contention of the assessee that The Ld. CIT(A) it is at liberty to choose which set off of income it wishes. However, Valuable Technologies Pvt. Ltd 3 ITA No. 645/MUM/2024 as far as brought forward loss of Rs.15,72,530/-, Rs.15,72,530/ , is concerned, tThe t Ld. CIT(A) noted that it was a brought forward business loss and therefore, declined for adjustment of the same against the current years capital gain income. Aggrieved, the assessee is in appeal before the Tribunal by way of raising grounds as reproduced above.
3. We have heard rival submission of the parties and an perused the relevant material on record. The fi finding nding of the Ld. CIT(A) rejecting the set off of brought forward loss of Rs.15,72,530/-
Rs.15,72,530/ is reproduced as under:
"7.2 It is however seen that the appellant has claimed a set-off set of brought forward business loss amounting to Rs. 15,72,530/-
15,72,530/ against the balance amount of current year's capital gains income 1,82,90,006/ . In this connection, it is seen that as per the of Rs. 1,82,90,006/-.
provisions of section 72(1) of the Act, the unabsorbed business loss can be carry-forward carry rd to subsequent assessment years and can be set-offoff against the business income only. Thus, the appellant cannot be allowed to set-offset off the brought forward 15,72,530/ against the capital gains income business loss of Rs. 15,72,530/-
or income from other sources, of tthe he assessment year under consideration. The assessing officer is directed accordingly."
3.1 Before us, the Ld. counsel for the assessee submitted that the Rs.15,72,530/ is actually brought forward brought forward loss of Rs.15,72,530/- capital loss and not brought forwa forward rd business loss as noted by the Ld. CIT(A) and therefore, the finding of the Ld. CIT(A) is erroneous.
3.2 In our opinion, the sole dispute is for the characterization of Rs.15,72,530/ . The Ld. CIT(A) has considered the said the loss of Rs.15,72,530/-.
amount as brought forward business loss whereas, the assessee is claiming the same to be brought forward capital loss.
loss If the claim Valuable Technologies Pvt. Ltd 4 ITA No. 645/MUM/2024 of the assessee is correct, correct then assessee is eligible for set off of the Rs.15,72,530/- against the current years brought forward loss of Rs.15,72,530/ capital ital gain as per the provisions of section 74 of the Act. For ready reference said provision is reproduced as under:
"
"Section 74 in The Income Tax Act, 1961
74. [ Losses under the head "Capital gains".
(1) Where in respect of any assessment year, the net result of the computation under the head "Capital gains" is a loss to the assessee, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and-
short term capital asset, it shall be
(a)in so far as such loss relates to a short-term set off against income, if any, under the head "Capital gains" assessable for that assessment year in respect of any other capital asset;
(b)in so far as such loss rela term capital asset, it shall be set relates to a long-term off against income, if any, under the head "Capital gains" assessable for that assessment year in respect of any other capital asset not being a short-term term capital asset;
(c)if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on.] (2)[[ No loss shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed.] (3) omitted by Act 20 of 2002, Section 29 (w.e.f. 1.4.2003).] 3.3 e above facts and circumstances, we restore this In view of the issue back to the file of the Assessing Officer for verification Rs.15,72,530/- is in the nature whether the brought forward loss of Rs.15,72,530/ of brought forward capital loss and if so then claim of the assessee shall be allowed in accordance with law. The ground of the appeal of the assessee is allowed for statistical purposes.
Valuable Technologies Pvt. Ltd 5 ITA No. 645/MUM/2024
4. In the result, the appeal of the assessee is allowed for statistical purposes.
Order pronounced unced in the open Court on 30/08/2024.
/08/2024.
Sd/-- Sd/-
(SUNIL
UNIL KUMAR SINGH)
SINGH OM PRAKASH KANT)
(OM KANT
JUDICIAL MEMBER ACCOUNTANT MEMBER
Mumbai;
Dated: 30/08/2024
Rahul Sharma, Sr. P.S.
Copy of the Order forwarded to :
1. The Appellant
2. The Respondent.
3. CIT
4. DR, ITAT, Mumbai
5. Guard file.
BY ORDER,
//True Copy//
(Assistant Registrar)
ITAT, Mumbai