TMI Blog2023 (6) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... n the revised ROI beyond the time limit prescribed under S. 139(1) - provision of S. 80 thus comes into play. The law codified thus is plain and concrete and does not admit of any ambiguity. The revenue authorities, in our view, have thus rightly held that the capital loss claimed beyond the time limit u/s 139(1) thus can not be carried forward u/s 74 of the Act in the factual matrix. We do not find any reason to think differently. In the instant case, an altogether fresh claim of capital loss has been made in the revised return filed beyond 139(1) time limit. It is not a case of mere correction or modification in the existing claim of capital loss. The capital loss claimed when seen qua revised return filed under s. 139(5), the claim of carry forward thereof, clearly does not pass the muster of law. No error in the action of the revenue in denial of carry-forward of capital losses claimed in the revised return. Whether Section 139(5) permits an assessee to file a revised return only if he discovers any omission or any wrong statement in the original return filed by him? - How and where the accounting entries in this regard has been made in the financial statement is totall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the claim of interest expenses having regard to the narrower scope of deductions eligible u/s 57(iii) - We thus decline to interfere with the action of the Assessing Officer and the First Appellate Authority. - I.T.A. No. 4700/DEL/2014 - - - Dated:- 22-6-2023 - Shri Challa Nagendra Prasad, Judicial Member And Shri Pradip Kumar Kedia, Accountant Member For the Appellant : Shri Sachit Jolly, Adv., Shri Rohit Garg, Adv. And Ms. Disha Jham, Adv. For the Respondent : Shri T. Kipgen, CIT-DR ORDER PER PRADIP KUMAR KEDIA, A.M.: The captioned appeal has been filed by the Assessee against the order of the Commissioner of Income Tax (Appeals) XVIII, New Delhi [ CIT(A) in short] dated 26.06.2014 arising from the assessment order dated 30.03.2013 passed by the Assessing Officer (AO) under Section 143(3) of the Income Tax Act, 1961 (the Act) concerning AY 2010-11. 2. The grounds of appeal raised by the assessee read as under: 1. That the disallowance of carry forward of long term capital loss claimed on the sale of shares in the revised return of Rs. 206,25,53,801/- as sustained by the Hon'ble CIT(Appeals) is arbitrary, unjust, unwarranted and untenabl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 7 months and filed revised return of 02.02.2012 whereby the impugned Long Term Capital Loss (LTCL) was claimed. The Assessing Officer observed that such revised return is not a valid return and thus nonest in the eyes of law. The Assessing Officer made reference to Sections 80, 139(3) and other provisions of the Act and refused to admit the claim of Long Term Capital Loss and consequently carry forward thereof for set off against the income of the later years was denied. The AO noted that there is not even an iota of reference of any transaction involving any capital gains or capital loss in the original return. The AO also noted that as per section 139(3), for entitlement of carry forward of losses arising in the current assessment year, the loss return has to be necessarily filed within the time allowed for filing return under S 139(1) whereas in the instant case, the capital transactions resulting in huge loss has been claimed for the first time in the revised return filed beyond the time limit stipulated under S. 139(1) of the Act. The AO thus denied claim of LTCL for carry-forward and set off in subsequent assessment years. 5. Aggrieved by the non-admission of claim of Long ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Mills Ltd. vs. CIT, 90 ITR 236 (Alld) and the decision of the Co-ordinate Bench rendered in Ramesh R. Shah Vs. ACIT, ITA No.4312/MUM/2009 order dated 29.07.2011 to buttress the aforesaid proposition. The ld. Counsel thus submitted that the denial of carry forward of losses claimed in the revised return is opposed to the scheme of the Act as interpreted by the judicial dicta and hence requires to be reversed and the claim made towards Long Term Capital Losses by way of revised return requires to be admitted and the loss be directed to be carry forward for set off in accordance with law against the income arising in the subsequent assessment years. 7. The ld. CIT-DR on the other hand strongly relied upon the assessment order and the first appellate order. The ld. CIT-DR submitted that the loss return under Section 139(3) must be necessarily filed within the due date prescribed under Section 139(1) of the Act to avoid the rigors of Section 80 of the Act. In the instant case, the assessee has not claimed the losses in the original return at all. The losses claimed has come into vogue by virtue of revised return which was filed subsequent to the due date prescribed under Section 139( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gether new claim of capital losses in the revised return which is filed within the due date prescribed under Section 139(5) of the Act but subsequent to the due date prescribed under Section 139(1) of the Act and consequently whether the assessee is entitled to carry forward such capital losses claimed in the revised return. The other integral issue is whether the loss claimed in the revised return meets requirement of S. 139(5) of the Act in the facts of the case. 9.1 As noted above, the facts of the case are quite peculiar. The assessee, in the instant case, filed return declaring income of Rs. 4,17,005/- but choose not to claim substantial amount of capital loss of Rs. 206,25,53,801/- in the original return of income filed under Section 139(1) of the Act. The loss was not reflected in the audited profit loss account of the Assessee either. The case of the assessee was subjected to scrutiny and some inquiries were initiated by the Investigation Wing Delhi. In the course of the scrutiny assessment, the assessee filed revised return under S. 139(5) after a lapse of nearly 17 months and put forward a claim towards incurring staggering Long Term Capital Loss(LTCL) of Rs. 206.25 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scovers any omission or any wrong statement therein, he may furnish a revised return at any time before the expiry of one year from the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Section 80 which begins with non-obstante clause, unequivocally lays down that to get the benefit of carry forward of loss pertaining to Capital Gains, the return of loss has to be filed within the time allowed under S. 139(1). 10. Thus, a bare reading of these provisions gives an infallible impression that to be entitled to carry forward the business loss or capital loss, the assessee is required to file the return under Section 139(1) of the Act. Section 80 of the Act by a non obstante clause prohibits claim of carry forward of such losses unless determined under S. 139(3) of the Act. Section 139(3) in turn, makes the mandate of the law clear that the loss return must be filed within time limit permissible under s. 139(1) of the Act. The revision of return under S. 139(5) is also circumscribed by expression discovers any omission or any wrong statement in the original return. 11. In the instant case, the original return filed under S. 139(1) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r raising claim for carry forward of speculation loss made by way of revised return but not raised in the original return. Significantly, Section 80 of the Act which seeks to place statutory embargo upon the assessee for eligibility of carry forward of losses raised beyond the due date under S. 139(1) has not been presented for the consideration of the Hon ble High Court at all. Thus, the reliance upon such judgment rendered without reference to Section 80 of the Act, which is pivotal to the controversy, is of no moment and the observations made therein cannot be applied in the facts of the case. 13. We thus see no error in the action of the revenue in denial of carry-forward of capital losses claimed in the revised return. 14. There is another aspect to the matter. As noted, Section 139(5) permits an assessee to file a revised return only if he discovers any omission or any wrong statement in the original return filed by him. 14.1 On facts, it is clearly discernible from the records that the impugned capital loss was not reported in the audited financial statement at all. The profit loss account does not make any reference to such loss at all. It is not known as to how ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lled capital losses is integral to determine the issue with reference to s. 139(5) of the Act. The ITAT can venture into examination of such an integrally connected critical aspect of the matter to determine the character of transactions as well as quantification of loss. This view is fortified by the decision of the Hon ble Karnataka High Court in the case of Fidelity Business services India Pvt. Ltd. vs. ACIT (2018) 95 taxmann.com 253 (Kar.). Similar view has been expressed by the Hon ble Delhi High Court in the case of CIT vs. Jansampark Advertising and Marketing Pvt. Ltd. (2015) 56 taxmann.com 286 (Del.). The Hon ble Delhi High Court in this case observed that where the AO failed to discharge its obligation to conduct a proper inquiry to take the matter to logical conclusion, it is also the obligation of the first appellate authority and indeed that of ITAT to have ensured that effective inquiry is carried out on the subject matter of appeal. Likewise, the Hon ble Bombay High Court in ITO (TDS) vs. Thyrocare Technology Ltd. (Bom) Income Tax Appeal No.53 of 2016 Ors. judgment dated 11.09.2017 also similarly observed that once the Tribunal was obliged in law to examine the matt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Assessing Officer to be in conformity with the provisions of the Act. The CIT(A) thus denied any relief to the assessee on this score. 19. Before the Tribunal, the ld. counsel has merely reiterated its contentions placed before the lower authorities without showing any nexus between the interest earned and corresponding interest expenditure as observed. The Revenue on the other hand has clearly recorded a finding of fact that the interest expenditure has not given rise to the corresponding interest income. The interest income has arisen independently out of fixed deposits fixed with bank, the source of which in turn is sale of investments. The interest expenditure on the other hand has been incurred on borrowers utilized for investment in acquisition of shares of NDTV Ltd. Thus, apparently the assessee has failed to discharge the onus which lays upon it to show that incurring of expenditure has resulted in corresponding income taxable under the head income from other sources . In the absence of any live nexus between the expenditure and the corresponding income, the Revenue Authorities have rightly disallowed the claim of interest expenses having regard to the narrower sc ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
