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TMI Blog2023 (6) TMI 1067X X X X Extracts X X X X X X X X Extracts X X X X ..... disallowance of interest / financial charges to the extent of Rs. 26,44,176/-, incurred by the appellant company for acquiring the shares in NDTV Limited as sustained by the Hon'ble CIT(Appeals) is unjust, unwarranted and untenable on various factual and legal grounds 3. That the disallowance of interest to the extent of Rs. 26,44,176/- by AO/CIT (Appeals) on the funds borrowed for the purpose of acquiring controlling stake in the Company, is not in accordance in law and the interest received on bank FDs has to be adjusted against the interest paid on borrowed funds, having a direct nexus and the remaining if any only can be taxed." 3. Ground No.1 concerns eligibility of Long Term Capital Loss (LTCL) on sale of shares claimed by way of revised return filed under S. 139(5) of the Act. 4. Briefly stated, the assessee is an Investment Holding Company set up to acquire and hold shares of NDTV Ltd. and its Group Cos. The Assessee, in the instant case, filed its original return of income under S. 139(1) of the Act on 15.10.2010 declaring total income at Rs. 4,17,005/- concerning Assessment Year 2010-11 in question. The original return so filed by the assessee was subjected to sc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... referred appeal before the CIT(A). Before the CIT(A) as well, the assessee contended that once the assessee has filed original return on due date as prescribed under Section 139(1) of the Act, the assessee is entitled to file the revised return within the time limit prescribed under Section 139(5) of the Act. It was contended that revised return filed within time limit prescribed under Section 139(5) of the Act will substitute the original return filed earlier and the claim made in the revised return resulting in losses cannot be brushed aside. It was contended that the view taken by the Assessing Officer that the loss return must be necessarily filed within time limit allowed under Section 139(1) as provided in S. 139(3), to enable the assessee to claim carry forward thereof, is misdirected in law as a consequence of misconstruction of the provisions of the Act. 6. The CIT(A) however did not find merit in the plea of the assessee and determined the issue against the assessee and consequently confirmed the action of the Assessing Officer. The CIT(A) reiterated the conclusion of the Assessing Officer that in order to be entitled to carry forward the losses, the return has to be nec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving rise to losses cannot be allowed in defiance of the provisions of the Act regardless of the fact that revised return has been filed within the due date prescribed under Section 139(5) of the Act. 8.1. The ld. CIT-DR next submitted that the claim of capital loss has been made for the first time in the revised return and it is not a case where the claim of loss made in the original return has been modified in the revised return. The ld. CIT-DR referred to and relied upon the following decisions to support the addition of the Revenue. * Karnataka Forest Development Corp. Ltd. vs. CIT, 23 taxmann.com 314 (Bang ITAT) * Prima Agro Ltd. vs. CIT, 21 taxmann.com 527 (Kerala High Court) * Smt. Jawahar Kanungo vs. ITO, 1 SOT 254 (Mum ITAT) * CIT vs. Alok Enterprises, 266 ITR 399 (SC) 8.2 The Ld. CIT(DR) thereafter averted to the observations made in the assessment order that the such a huge loss was claimed for the first time by way of revised return and there is no reference to the loss in the original ROI or in the profit and loss account. It was contended that it is unbelievable that such a loss has been incurred which is omitted to be reported in the profit and loss account ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arise in the subsequent assessment years. The Assessing Officer denied the claim of such capital losses while framing assessment. The AO observed that the return claiming the carry forward of losses must be filed within the due date prescribed under Section 139(1) of the Act to claim the benefit of carry forward and set off of losses in terms of Sections 72, 73, 73A and 74 of the Act. It was observed that Section 80 r.w. Section 139(1) and 139(3) of the Act, the return filed under Section 139(5) making new claim towards losses thus does not stand on the same pedestal as the losses claimed in the return filed under Section 139(1) of the Act. The AO concluded that in view of S. 139(3), the capital loss can not be carried forward unless the return showing such loss is filed under S. 139(5) of the Act, whereas the Assessee has not claimed such loss in the ROI filed under S. 139(1) of the Act and made an altogether fresh claim toward capital losses in the revised ROI filed under S. 139(5) of the Act. A reference was made to Section 80 of the Act which postulates that such loss cannot be carried forward unless determined under S. 139(3) which section in turn refers to S. 139(1) of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for the first time in the revised ROI beyond the time limit prescribed under S. 139(1) of the Act. The 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 under S. 139(1) thus can not be carried forward under S. 74 of the Act in the factual matrix. We do not find any reason to think differently. 11. At this juncture, we also take note of the the judgment of the Hon'ble Allahabad High Court in Dhampur Sugar Mills Ltd. (supra) referred on behalf of the Assessee. However in that case, the Hon'ble Allahabad High Court itself observed as under: "There is a distinction between a revised return and a correction of the return. If the assessee files some application for correcting a return already filed or making amends therein, it would not mean that he has filed a revised return. It will still retain the character of an original return, but once a revised return is filed, the original return must be taken to have been withdrawal and to have been substituted by a fresh return for the purpose of assessment ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e Ld. Counsel of the assessee on this aspect to which he drew blank. The Ld. Counsel merely referred to comparative Investment figure. No bank statement was submitted for perusal of the bench to understand the transactions resulting in such huge losses. The loss claimed to have resulted but not reported appears incomprehensible from the perspective of rudimentary principles of accounting. Even the basic details of nature of capital loss and how such loss has been determined are not placed despite pointed query. To reiterate, how and where the accounting entries in this regard has been made in the financial statement is totally unknown. How an inadvertent omission to account for such whopping losses has resulted, is not answered despite specific opportunity. The propriety of such capital loss itself is thus under cloud. In the circumstances noted above, it is quite difficult to affirm that the omission or wrongful statement in the original return towards such colossal loss is sheer inadvertence and not deliberate or willful. Such claim of loss in the revised return without showing inadvertence even at the stage of second appeal thus has been rightly denied. 14.2 A reference to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... terms of powers conferred by law. The Aurangabad Bench of the Hon'ble Bombay High Court in the case of CIT vs. Chalisgaon People's Co-op. Bank Ltd. (Tax Appeal No. 31 of 2005 & Ors. judgment dated 23.03.2015) has also underlined the need for appropriate enquiry on the factual aspects to determine the issue. It observed that it was obligatory on the part of fact finding authorities to make inquiry and arrive at a finding. 15.2 The Assessee has failed to furnish any explanation whatsoever on the nature and character of transactions resulting in such capital loss. An unsubstantiated and uncorroborated claim is thus, in any case, untenable in law. Hence, on this score too, the claim does not meet the ingredients of provisions of S. 139(5) of the Act. 16. Ground No.1 of the appeal of the assessee is thus dismissed. 17. Grounds No.2 and 3 of the appeal of the assessee concerns disallowance of interest/financial charges to the extent amounting to Rs. 26,44,176/-. In the course of the assessment, the Assessing Officer inter alia noticed that the assessee has earned interest income on fixed deposits with ICICI bank to the tune of Rs. 31,85,254/- and claimed interest expenditure amountin ..... X X X X Extracts X X X X X X X X Extracts X X X X
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