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2021 (2) TMI 284 - HC - Income TaxRevision u/s 263 - AO Allowed set off the brought forward losses against the income from capital gains derived by the respondent-assessee by selling its undertaking relating to GGBS business - ITAT set aside revision proceedings - Whether the Hon'ble ITAT is right in ignoring the provisions of Section 263 wherein the Hon'ble Pr. CIT, Panaji rightly invoked the proceedings under Section 263 in respect of the Assessment Order which was erroneous and prejudicial to the interest of revenue? - HELD THAT:- This Court has accepted the position that it is not the requirement of Section 72 of the said Act that such gain or profit must be taxable only under the head of “profits and gains of business or profession”. The carry forward business losses would therefore be set off against theshort-term capital gains on the sale of building, plant, and machinery. This is yet another reason not to accept the submissions of Ms. Linhares and to answer the substantial questions of law against the Revenue and in favour of the assessee. Although, we may not be entirely in agreement with the ITAT on the aspect of invocation of the revisional jurisdiction under Section 263 of the said Act by the PCIT, we feel that the impugned order made by the ITAT warrants no interference because there is nothing fundamentally wrong in the view taken by the ITAT having regard to the decisions of the Hon'ble Supreme Court in the case of Chugandas & Co.[1964 (7) TMI 8 - SUPREME COURT], Cocanada Radhaswami Bank Ltd[1965 (4) TMI 11 - SUPREME COURT]and the decision of this Court in Hickson and Dadajee (P.) Ltd. [2020 (1) TMI 1399 - SUPREME COURT]. Therefore, there is no point in dilating on the first substantial question of law when the second substantial question of law which relates to the merits will have to be answered against the Revenue and in favour of the assessee. Assessee based on instructions from the assessee has fairly stated that the assessee will pay proportionate tax on the basis that the AO allowed excess set off to the extent of ₹ 22,34,366/-. In fact, even the ITAT, in paragraph 10 of its order had held that the AO, if at all, had allowed excess set-off of ₹ 22,34,366/- and therefore the appeal of the assessee is “partly allowed”. This would mean that the assessee was still to pay proportionate tax since the AO had allowed excess set-off of ₹ 22,34,366/-. This appeal is disposed of by making the following order: (a) The substantial questions of law as framed are decided against the Revenue and in favour of the assessee ; (b) However, the respondent-assessee, consistent with the statement made on its behalf is directed to pay proportionate tax based on the premise that the AO had allowed excess set off to the extent of ₹ 22,34,366/-. This payment to be made within three months from today.
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