Claim for Deduction of Loss on Sale of Shares Denied on ground of Invalid Filing of Revised ROI: ITAT Directs Re-adjudication [Read Order]

The Pune bench of the Income Tax Appellate Tribunal ( ITAT) directed the assessing officer to re-adjudicate the rejection of the claim for deduction of loss on sale of shares due to invalid filing of revised return of income(ROI). 

Bilcare Limited, the appellant assessee was a company incorporated under the provisions of the Companies Act, 1956 and engaged in the business of manufacturing Pharmaceutical Packages and providing research-driven packaging solutions and clinical supplies services to leading pharmaceutical companies. 

The assessee appealed against the order passed by the Commissioner of Income Tax (Appeals) for confirming the disallowance made by the assessing officer to the claim for deduction of loss on the sale of shares. 

Kishor Phadke, the counsel for the assessee contended that the revised return of income was filed within the period prescribed under the provisions of section 139(5) of the Income Tax Act,1961 and a mere reading of provisions of sub-section (5) of section 139 of the Income Tax Act would reveal that a revised return of income can be filed in a situation, where an assessee discovers any omission or any wrong statement made in the original return of income. 

It was also submitted that the filing or revised return of income and claim for deduction of loss on sale of shares was as per the law and the decisions made by the lower authorities are liable to be deleted. 

Naveen Gupta, the counsel for the revenue contended that the claim for deduction of loss on sale of shares in the revised return of income was not valid in law, as the necessity for filing the revised return of income was not on account of any omission or wrong statement in the original return of income. 

It was also submitted that the assessee company had failed to furnish the information sought by the assessee to determine the fair market value of the shares in terms of provisions of Rule 11UA of the Income Tax Rules, 1962. 

The bench observed that the primary reason given by the assessing officer was that the claim for allowance of loss was not made in the original return of income filed, but made in the revised return of income filed which according to the assessing officer, was not a valid revised return for the reason that there was no bonafide omission or mistake in the original return of income filed by the assessee. 

It was also observed that the assessee company had not failed to satisfy the conditions prescribed under the provisions of sub-section (5) of section 139 of the Income Tax Act for filing the revised return of income. 

The two-member bench comprising Inturi Rama Rao (Accountant) and S. S. Viswanethra Ravi (Judicial) held that the assessing officer had to re-examine the validity of the revised return of income filed by the assessee company for claiming the loss arising on the sale of shares while allowing the appeal filed by the assessee. 

To Read the full text of the Order CLICK HERE

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