Case Law Details
Peerless General Finance & Investment Company Limited Vs DCIT (ITAT Kolkata)
It is observed that the issue relating to the assessee’s claim for Long-Term Capital Loss arising from the sale of Government Securities by applying the Cost Inflation Index was disallowed by the Assessing Officer in the assessment completed under section 143(3). However, the set off of such loss to the extent of Rs.86,39,024/- and Rs.1,13,02,064/- being the Long-Term Capital Gain from Bonds and Right to property respectively as claimed by the assessee was allowed by the Assessing Officer and keeping in view this error allegedly committed by the Assessing Officer, the ld. Pr. CIT exercising his power conferred upon him under section 263 revised/set aside the order of the Assessing Officer passed under section 143(3) on this issue. As submitted by the ld. Counsel for the assessee before us, the action of the Assessing Officer in disallowing its Long-Term Capital Loss arising from the sale of Government Securities by applying the Cost Inflation Index was challenged by the assessee in the appeal filed before the ld. CIT(A) against the order passed by the Assessing Officer under section 143(3) and the said appeal was disposed of by the ld. CIT(A) vide his appellate order dated 28.02.2019 allowing the claim of the assessee for Long-Term Capital Loss arising from sale of Government Securities by applying Cost Inflation index. Since the said order was passed by the ld. CIT(A) on 28.02.2019, the order of the Assessing Officer under section 143(3) on this issue was already merged with the order of the ld. CIT(A) on 28.02.2019 itself, i.e. before 25.03.2019 when the impugned order under section 263 came to be passed by the ld. Pr. CIT and it was, therefore, beyond the scope of revision under section 263 in terms of Explanation (1)(c) below sub-section (1) of section 263, which clearly provides that where any order referred to in sub-section (1) of section 263 and passed by the Assessing Officer had been the subject matter of any appeal, the powers of the ld. Pr. CIT under section 263 shall extend only to such matters as had not been considered and decided in such appeal. In the present case, the issue relating to the assessee’s claim for Long-Term Capital Loss arising from the sale of Government Securities had already been considered and decided in the appeal filed against the order of the Assessing Officer passed under section 143(3) and it was, therefore, not permissible for the ld. Pr. CIT to revise the order of the Assessing Officer on this issue by exercising his powers under section 263. The order passed by the Assessing Officer under section 143(3) on this issue stood already merged in the appellate order of the ld. CIT(A) and since the claim of the assessee for Long-Term Capital Gain arising from the sale of Government Securities by applying Cost Inflation Index stood already allowed, we find that there was no error in the order of the Assessing Officer in allowing the claim of the assessee for set off of such loss against the Long-Term Capital Gain of Rs.86,39,024/- arising from the sale of Bonds as well as against the Long-Term Capital Gain of Rs.1,13,02,064/- arising from Right to property.
At the time of hearing before us, the ld. D.R. has alleged that the fact of having passed the appellate order by the ld. CIT(A) on 28.02.2019 disposing of the appeal of the assessee filed against the order of the Assessing Officer under section 143(3) was not brought to the notice of the ld. Principal CIT by the assessee during the course of proceedings under section 263 and the same was intentionally suppressed by the assessee. We are unable to accept this contention of the ld. CIT,D.R. First of all, when the order passed by the ld. CIT(A) on this issue was in favour of the assessee allowing its claim for Long-Term Capital Loss arising from the sale of Government Securities, we find no justifiable reason for the assessee to have suppressed this fact and that too intentionally as alleged by the ld. CIT,D.R. Moreover as clarified by the ld. Counsel for the assessee, notice under section 263 pointing out the error in the order of the Assessing Officer on this issue was issued by the ld. Principal CIT on 20.11.2018 and since the written submission in response to the said notice was filed before the ld. Pr. CIT on 16.01.2019 when the appeal against the order under section 143(3) was pending before the ld. CIT(A) and the order dated 28.02.2019 was yet to be passed by the ld. CIT(A) disposing of the said appeal, the factual position as prevalent then was pointed out by the assessee in the written submission on 16.01.2019. Keeping in view all these facts and circumstances of the case, we find merit in the contention of the ld. Counsel for the assessee that it was the duty of the ld. Pr. CIT to ascertain the actual position of the appeal stated to be filed by the assessee against the order passed by the Assessing Officer under section 143(3) on this issue and had he done that, he would have found that the order passed by the Assessing Officer under section 143(3) on this issue was already merged in the appellate order of the ld. CIT(A) and the claim of the assessee for Long-Term Capital Loss arising from the sale of Government Securities after applying the Cost Inflation Index having been already allowed by the ld. CIT(A), there was no error in the order of the Assessing Officer in allowing the set off of such loss against the Long-Term Capital Gain arising from the Bonds and Right to Property.
It is also pertinent to note here that the claim of the assessee for Long-Term Capital Loss arising from the sale of Government Securities after applying the Cost Inflation Index was disallowed by the Assessing Officer in the order passed under section 143(3) for the year under consideration by relying on the order passed in assessee’s own case on the similar issue for A.Y. 2010-11 under section 143(3) read with section 263 of the Act. As pointed out by the ld. Counsel for the assessee, the said order passed by the Assessing Officer for A.Y. 2010-11 was a subject matter of appeal and the claim of the assessee for Long-Term Capital Loss arising from the sale of Government Securities after applying the Cost Inflation Index was allowed by the Tribunal and following this conclusion drawn in A.Y. 2010-11, the Tribunal has already upheld the appellate order of the ld. CIT(A) dated 28.02.2019 for the year under consideration allowing the similar claim of the assessee. This issue thus stands decided by the Tribunal on merit in assessee’s own case for A.Y. 2010-11 as well as for the year under consideration and we, therefore, do not consider it necessary or expedient to deal with the argument sought to be raised by the ld. CIT, D.R. on merit of this issue. Ground No. 3 of the assessee’s appeal is accordingly allowed.
FULL TEXT OF THE ITAT JUDGEMENT
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