Case Law Details
Pan Emami Cosmed Limited Vs DCIT (ITAT Kolkata)
Introduction: The Income Tax Appellate Tribunal (ITAT) Kolkata has ruled in favor of Pan Emami Cosmed Limited in a case against the denial of Long-Term Capital Gain (LTCG) exemption for the Assessment Year 2018-19. The ITAT order dated November 7, 2023, overturned the decision of the Commissioner of Income-tax (Appeals) and directed the Assessing Officer (AO) to allow the exemption after thorough examination.
Background: The assessee had claimed a loss on the sale of equity shares amounting to Rs. 2,66,49,388/- as exempt under section 10(38) of the Income Tax Act. However, the AO, during the processing of the return, disallowed the claimed loss without proper examination. The adjustment was made without providing an opportunity, and subsequent rectification moves were summarily rejected. The CIT(A) upheld the AO’s decision.
ITAT Decision: After considering the arguments and examining the records, the ITAT found that the assessee genuinely earned LTCG of Rs. 2,66,49,388/- on the sale of shares, eligible for exemption under section 10(38) of the Act. The AO had incorrectly computed the business income, resulting in an erroneous assessment. The ITAT concluded that the issue required a detailed examination at the AO level to verify facts related to business income and the claimed loss on the sale of shares.
Conclusion: The ITAT, on November 7, 2023, set aside the order of the CIT(A) and directed the AO to reexamine the issue. The AO is instructed to allow the exemption under section 10(38) for LTCG and permit the loss to be carried forward to subsequent years. The appeal by Pan Emami Cosmed Limited is allowed for statistical purposes.
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