The Pune Bench of Income Tax Appellate Tribunal ( ITAT ) has held that Section 115BAC of the Income Tax Act , 1961 does not specifically bar carry forward and set off of losses under Capital Gains.
Jaynt Vasudeo Aradhye, the appellant/assessee is a retired engineer and super senior citizen and also a high net worth individual having income from capital gains and income from various types of investments. Since the last 4 decades, the assessee is regularly assessed for income tax and is paying his taxes continuously. The return of income was e-filed timely declaring taxable income.
The return of income was processed by CPC and intimation under section 143(1) was issued wherein additional demand of Rs.9,96,750/- was raised. On verification of the intimation, it was discovered that bringing forward short term capital loss was not allowed by the CPC while processing the return, without any valid reason.
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The assessee preferred appeal before the Addl./JCIT(A) and furnished written submissions before him wherein it was submitted that the short term capital loss was brought forward from assessment year 2021-22 which was accepted by CPC while processing the return for assessment year 2021-22.
The assessee contended that the assessee has opted for taxation under section 115BAC of the Income Tax Act and the above section does not prohibit set-off of short term capital loss. It was further submitted that B/F long term capital loss has already been allowed by CPC but has disallowed the set off of B/F short term capital loss, without any valid reason.
Therefore, when CPC has accepted the amount of short term capital loss arising in assessment year 2021-22 by issuing an intimation u/s 143(1) dated 21.06.2022, the same should be allowed to be brought forward to assessment year 2022-23 and set- off be given against the short term capital gain income of assessment year 2022-23, when all other conditions are also fulfilled.
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The tribunal held that the CPC has already accepted the figure of short capital loss in assessment year 2021-22 and allowed the same to be carried forward to assessment year 2022-23.
The tribunal found that Addl./JCIT(A) has already reproduced the section 115 BAC in his order and from perusal of the same, it is found that long term capital loss & short term capital loss is not specifically barred and accordingly short term capital loss was required to be allowed by CPC.
The court noted that there are different columns for disclosing short term capital gain. For example, short term capital gain taxable at the rate of 15% or 30% and another column is short term capital gain taxable at applicable rates but it appears that the assessee has not filled in short term capital gain taxable at the rate of 15% or 30% but has filled in the column short term capital gain taxable at applicable rates and according to us this is the error committed by the assessee.
As we know that the return processing is computerized one and no manual interference is there and if any figure or claim is not entered in appropriate column the computer disallows the same.
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The court found that in section 115BAC neither brought forward long term capital loss nor brought forward short term capital loss is required to be disallowed but due to the fact that the assessee has entered the figure of brought forward long term capital loss in correct column the same was allowed by CPC. But the brought forward short term capital loss was not filled in proper column, the same was disallowed by CPC.
The ITAT set-aside the order passed by the Addl./JCIT(A)-1, Coimbatore and remand the matter back to his file with a direction to pass a fresh order in the light of our observations after providing reasonable opportunity of being heard to the assessee.
The tribunal directed the assessee is also directed to comply with the notices issued by the Addl./JCIT(A)-1 and bring this fact to the knowledge of the Addl./JCIT(A) that brought forward long term capital loss was allowed by CPC but brought forward short term capital loss was not allowed by CPC due to entry in the wrong column in income tax return.
Shri Deepak Chintaman Gadgil appeared for the assessee and Shri Ramnath P. Murkunde appeared for the revenue
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