IN THE INCOME TAX APPELLATE TRIBUNAL
"D" Bench, Mumbai
Before Shri D. Manmohan, Vice President
and Shri N.K. Billaiya, Accountant Member
ITA No. 3421/Mum/2010
(Assessment Year: 2006-07)
DCIT, Central Circle-6 M/s. Rolta Shares & Stock P. Ltd.
9th Floor, Old CGO Building Vs. Unit No. 10, 17th Floor, World Trade
Annexe, M.K. Road Centre, Cuffe Parade, Colaba
Mumbai 400020 Mumbai 400005
PAN - AAACR 3156 M
Appellant Respondent
Appellant by: Shri A.B. Koli
Respondent by: Shri Shekhar Gupta
Date of Hearing: 03.10.2012
Date of Pronouncement: 03.10.2012
ORDER
Per D. Manmohan, V.P.
This appeal is filed at the instance of the Revenue and it pertains to
A.Y. 2006-07.
2. The only ground urged by the Revenue reads as under: -
"1. On the facts and in the circumstances of the case and in law, the
Ld CIT(A) erred in directing set off of long term capital loss of
Rs.1,17,04,550/- against short term capital gain of
`4,11,06,974/- in violation of the provisions of section 74(i)(b) of
the Act."
3. The assessee company is a share broker. For the year under
consideration it declared taxable income of `2.36 crores after setting off the
long term capital loss of ` 1.17 crores against the short term capital gain of
`4.11 crores. The case was taken up for scrutiny. In the light of the
provisions of section 74(i)(b) of the Act the AO was of the opinion that long
term capital loss cannot be set off against short term capital gain in view of
the amendment to the said provision. He accordingly completed the
assessment by computing the total income at `3,70,89,880/-. On an appeal
2 ITA No. 3421/Mum/2010
M/s. Rolta Shares & Stock P. Ltd.
filed by the assessee the learned CIT(A) noticed that the appellant suffered
capital loss in A.Y. 2002-03. The loss included long germ capital loss and
short term capital loss. The said loss was set off against long term and short
term capital gains for A.Y. 2003-04 and the unadjusted loss was carried
forward for further set off against assessment years 2004-05 and 2005-06.
Since the matter pertaining to assessment years 2004-05 and 2005-06 were
pending before the Settlement Commission, which in turn refused carried
forward of capital loss of 2002-03, assessee had carried forward the loss for
A.Y. 2006-07 and claimed set off. In his opinion the provision, which was
amended by Finance Act 2002 with effect from 01.04.2003, applies to losses
suffered in A.Y. 2003-04 or afterwards but losses suffered in earlier years
can be carried forward and adjusted. Accordingly he directed the AO to allow
the set off in A.Y. 2006-07. Aggrieved Revenue is in appeal before us.
4. At the time of hearing the learned counsel for the assessee submitted
that the issue stands squarely covered by the decision of the ITAT Mumbai
Special Bench in the case of Kotak Mahindra Capital Co. Ltd. vs. ACIT (24
Taxman 100) wherein the Bench observed as under: -
"46. In view of the above discussion, we are of the view that the
provisions of section 74 which deal with carry forward and set off of
losses under the head "capital gains" as amended by Finance Act,
2002, will apply only to the unabsorbed capital loss for the
assessment year 2003-04 and onwards and will not apply to the
unabsorbed capital losses relating to the assessment years prior to
the assessment year 2003-04. Accordingly, we answer the question
referred to this Special Bench in favour of the assessee holding that
the assessee is entitled to set off the long-term capital loss in AY
2001-02 against the short-term capital gain made by it in AY 2003-
04. Ground No. 2 of the assessee's appeal is accordingly allowed."
5. The learned D.R. fairly admitted that the issue is covered by the order
of the Special Bench though he submitted that the plain language of section
74 does not permit set off of long term capital loss against short term capital
gain.
6. Having regard to the circumstances of the case we hold that this issue
stands squarely covered by the decision of the ITAT Special Bench (supra).
Since the view taken by the learned CIT(A) is in conformity with the decision
3 ITA No. 3421/Mum/2010
M/s. Rolta Shares & Stock P. Ltd.
taken by the Special Bench, we do not find any infirmity in the order passed
by the CIT(A) and, therefore, dismiss the appeal filed by the Revenue
Order pronounced in the open court on 3rd October, 2012.
Sd/- Sd/-
(N.K. Billaiya) (D. Manmohan)
Accountant Member Vice President
Mumbai, Dated: 3rd October, 2012
Copy to:
1. The Appellant
2. The Respondent
3. The CIT(A) 36, Mumbai
4. The CIT Central 1, Mumbai City
5. The DR, "D" Bench, ITAT, Mumbai
By Order
//True Copy//
Assistant Registrar
ITAT, Mumbai Benches, Mumbai
n.p.
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