The Delhi High Court directed the Income Tax department to grant hearing to Ester industries in a case related to claim of capital loss. The Court directed the Income Tax department to correct its mistake in taking action in favor of the assessee in accordance with section 154 of the Income Tax Act.
The assessee had submitted an application dated 26.04.2022 before the ITAT to rectify a previous order issued by the Assessing Officer under section 143(3) read with section 254 of the Act on 31.03.2022, highlighting that the AO(Assessing Officer) has not set off the income assessed with available unabsorbed depreciation amounting to Rs.18,30,23,363/- while computing income for AY 2005-06. The assessee’s application was thoroughly reviewed and found to be accurate. The ITAT ordered the AO to rectify the identified mistake according to the provisions of section 154 of the Income Tax Act, 1961.
The petitioner, Ester Industries Ltd contends that they have been disallowed short term capital loss of Rs.1,16,64,344/- under Section 94(7) of the Act and the Assessing Officer has not given effect to the order passed by the Tribunal.
Revenue contended that a substantial part of the grievance raised before this court had been addressed, except the matter concerning disallowance of short-term capital loss amounting to Rs.1,16,64,344/. Revenue prayed for some time to obtain instructions for taking action.
The division bench of the Delhi HC comprising of Justice Rajiv and Justice Girish Kathpalia held that ”The application of the assessee has been examined and found correct. On perusal of the tax computation for AY 2005-06, it is observed that the AO has taken income of Rs. 18,30,.23,363/-but had not set off it against the available unabsorbed depreciation of Rs.18,30,23,363/-. The mistake mentioned above being apparent from records is hereby rectified u/s 154 of the Income Tax Act, 1961.” The court directed the Income Tax department to grant hearing to the petitioner and pass a speaking order concerning the issue involving short-term capital loss
The assessee was represented by M Sandhana. The respondent was represented by Sanjeev Menon.
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