Nikhil Sawhney v. ACIT - Taxpublishers.in

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The Tax Publishers2020 TaxPub(DT) 3194 (Del-Trib)

INCOME TAX ACT, 1961

Section 45 Section 71 Sections 72 & 10(38)

The loss incurred by the assessee on sale of shares and securities, on which assessee had paid securities transaction tax, holding t hat when the income was exempt, then both positive income as well as the negative income loss, both, do no tenter into the regular computation of the assessee. Accordingly the orders of the lower authorities were upheld wherein the assessee had been denied the set off and or carry forward of long-term capital loss on transfer of shares on which the assessee had paid securities transaction tax and are covered by the provision of section 10(38).

Capital gains - Capital loss - Carry forward and set-off of long-term capital loss incurred on shares having paid STT -

Assessee had incurred long-term capital loss on sale of shares which was subject to securities transaction tax. The plea of assessee was that this loss should be allowed to enter into the computation of total income of the assessee and if it was not set-off against any other capital gain in that year, then it should be allowed to be carried forward in future years. In nutshell, the controversy was exemption provisions under section 10(38) that 'income' arising from transfer of a long-term capital asset shall only include positive income, i.e., gain or the negative income, i.e., losses also. AO rejected the contention of the assessee and held that word 'income' includes loss, therefore, not only be positive income, but also any negative income, i.e., loss, was not to be considered to be the part of total income of the assessee. Therefore, exemptions provided under section 10(38) will not apply to the transactions generating positive income from transfer of security transaction tax paid securities but also similarly apply to the nature of transactions resulting in negative income or losses. Accordingly, he held that long-term capital loss was not allowable to assessee. CIT(A) held that the assessee cannot stake claim for carry forward of the long-term capital loss in course of assessment proceedings, if same were not claimed in the return of income or claimed initially but later excluded in the revised return of income. Thus, he rejected the claim of assessee on this ground. Held: The lower authorities have not committed any error in ignoring the loss incurred by the assessee on sale of shares and securities, on which assessee had paid securities transaction tax, holding that when the income was exempt, then both positive income as well as the negative income loss, both, do not enter into the regular computation of the assessee. Accordingly the orders of the lower authorities were upheld wherein the assessee had been denied the set off and or carry forward of long-term capital loss on transfer of shares on which the assessee had paid securities transaction tax and are covered by the provisions of section 10(38).

Relied:Royal Calcutta Turf Club (1983) 144 ITR 709 (Cal) : 1983 TaxPub(DT) 750 (Cal-HC), CIT v. Karamchand Premchand Ltd. (1960) 40 ITR 106 (SC) : 1960 TaxPub(DT) 176 (SC) and CIT v. Harprasad & Co. (P) Ltd. (1975) 99 ITR 118 (SC) : 1975 TaxPub(DT) 320 (SC). Applied:DDIT v. Asia Pacific Performance SICAV (2014) 30 ITR (T) 333 (Mum-Trib.) : 2014 TaxPub(DT) 1448 (Mum-Trib). Followed:Kishorebhai Bhikhabhai Virani (2015) 367 ITR 261 (Guj-HC) : 2014 TaxPub(DT) 3879 (Guj-HC).

REFERRED : Raptakos Brett & Co. Ltd. v. Dy. CIT (2015) 69 SOT 383 (Mum-Trib) : 2015 TaxPub(DT) 2490 (Mum-Trib), Netesoft India Ltd. v. Dy. CIT 5359/Mum/2017 : 2019 TaxPub(DT) 8422 (Mum-Trib), United Investments v. Asstt. CIT 511/Kol/2017 : 2019 TaxPub(DT) 6231 (Kol-Trib), Nomura India Investment Fund Mother Fund v. Addl. DIT (2020) 203 TTJ 660 (Mum.-Trib.) : 2020 TaxPub(DT) 131 (Mum-Trib), Rare Investment v. CIT ITA No. 3409/Mum/2018 (Mum-Trib.) : 2019 TaxPub(DT) 7574 (Mum-Trib), Somnath Vaijanath Sakre v. Asstt. CIT ITA 2605/Pun/2016 (Pune-Trib.), Bombay ITAT bench of 55 Taxmann.com 333, CIT v. Harprasad & Co. (P) Ltd. (1975) 99 ITR 118 (SC) : 1975 TaxPub(DT) 320 (SC), Kishorebhai Bhikhabhai Virani (2015) 367 ITR 261 (Guj.) : 2014 TaxPub(DT) 3879 (Guj-HC) (Placed at pages 165-167 of Case Laws PB-2), Somnath Vaijanath Sakre v. Astt. CIT ITA 2605/Pun/2016 (Pune Trib.) (pg.89-102 @93/CL PB), DDIT v. Asia Pacific Performance SICAV (2014) 30 ITR (T) 333 (Mum.-Trib.) : 2014 TaxPub(DT) 1448 (Mum-Trib), CIT v. Vegetable Products (1972) 88 ITR 192 (SC) : 1973 TaxPub(DT) 421 (SC), Asstt. CIT v. Vireet Investment (P) Ltd. (2017) 165 ITD 27 (Del) (SB) : 2017 TaxPub(DT) 1760 (Del-Trib), Royal Calcutta Turf Club v. CIT) (1983) 144 ITR 709 (Cal) : 1983 TaxPub(DT) 750 (Cal-HC), CIT v. Harprasad & Co. (P) Ltd. (1975) 99 ITR 118 (SC) : 1975 TaxPub(DT) 320 (SC), Schrader Duncan Ltd. v. Addl. CIT, Spl. Rg. 10(300, (2012) 18 Taxmann.com 287 (Mum Trib) : 2012 TaxPub(DT) 1991 (Mum-Trib), CIT v. S.S. Thiagaraja, (1981) 129 ITR 115 (Mad-HC) : 1981 TaxPub(DT) 302 (Mad-HC), CIT, Ahmedabad v. Gold Coin Health Food (P) Ltd., (2008) 304 ITR 308 (SC) : 2008 TaxPub(DT) 2223 (SC), Raptakose Brett & Co. Ltd. v. Dy. CIT (2015) 58 taxmann.com 115 (Mum-Trib.) : (2015) 69 SOT 383 (Mum-Trib.) : 2015 TaxPub(DT) 2490 (Mum-Trib), dated 10-6-2015 and CIT v. sati Udyog Ltd. (2015) 230 Taxman 521 (SC) : (2015) 372 ITR 746 (SC) : 2015 TaxPub(DT) 1392 (SC).

FAVOUR : Against the assessee.

A.Y. : 2012-13

IN THE ITAT, DELHI 'E' BENCH