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2016 (3) TMI 327 - HC - Income TaxRevision u/s 263 - Computation of MAT u/s 15JB - Book Profit - loss of an amount on account of transfer of investment division of the assessee - CIT was of the opinion that the loss could not have been debited to the P/L account and the amount was required to be added back for computation of book profit under Section 115JB - ITAT held that the loss on account of transfer of investment division of the assessee could not be adjusted in Section 115JB of the Act although this loss is booked in the Profit and Loss Account - Held that:- The disclosure made in the financial statements is in pursuance of the requirement of Clause- 25 quoted above and is also in pursuance of Clause 2(b) of Part II of Schedule VI to the Companies Act, 1956 which is not to be construed as any qualification indicating any inaccuracy in the accounts. There was, thus no mistake on the part of the assessee in debiting the loss to the profit and loss account. Once it is realized that the assessee had correctly debited the profit and loss account for the loss arising out of the transfer of investment division, there remains no difficulty in realizing that the CIT proceeded on a wrong premise which was responsible for exercise of jurisdiction under Section 263 which he would not have done if he had realized the correct position Had it not been a case of section 115JB the capital loss incurred on transfer of investments would have been dealt as follows: 1. Under section 70(2) short term capital loss would be set off against either short term or long term capital gain. 2. Under section 70(3) long term capital loss would be set off against long term capital gain only. 3. Under section 71(3) if the net result of computation under the head “Capital gain” is a loss then such loss cannot be set off against income under any other head. 4. Under section 74(1)(a) short term capital loss would be carried forward to the following assessment year and be set off against either short term or long term capital gain. 5. Under section 74(1)(b) long term capital loss would be carried forward to the following assessment year and be set off against long term capital gain only. In that view of the matter, the only conclusion which can be arrived at is that the order passed by the learned Tribunal is unexceptionable. - Decided against revenue
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