Valuable Technologies Pvt. Ltd. Vs CIT (ITAT Mumbai)
In a recent case before the Income Tax Appellate Tribunal (ITAT) Mumbai, Valuable Technologies Pvt. Ltd. challenged the order of the Commissioner of Income Tax (Appeals) – Pune-11 [CIT(A)]. The appeal focused on the issue of set-off of brought forward capital loss against long-term capital gain for the assessment year (AY) 2020-21. The assessee contended that the CIT(A) incorrectly treated the capital loss as a business loss, leading to the disallowance of the set-off. The case was heard and decided on 30th August 2024.
Case Background:
The assessee, Valuable Technologies Pvt. Ltd., filed its income tax return for AY 2020-21 on 12th January 2021, reporting long-term capital gains of ₹2,67,73,895 and claiming a set-off of ₹15,72,530 as a long-term capital loss. This set-off was rejected during the processing of the return by the Central Processing Centre (CPC), Bangalore, which classified the capital loss as a business loss. This resulted in an adjustment under Section 43B of the Income Tax Act, 1961, and changes to the set-off of losses.
The assessee filed a rectification request under Section 154 of the Income Tax Act, which was partially accepted by the CPC in its rectification order dated 6th July 2022. However, the CPC rejected the set-off of the brought forward loss, leading the assessee to appeal before the CIT(A). The CIT(A) ruled that the ₹15,72,530 loss was a business loss, not a capital loss, and thus could not be adjusted against the current year’s capital gain. Dissatisfied with this ruling, the assessee appealed to the ITAT.
