Short Term Capital cannot be carried forward as it has not been claimed through a Return filed under Sec 139(3): ITAT [Read Order]

The appeal is filed by the assessee before the Income Tax Appellate Tribunal (ITAT), Mumbai against order passed by the Commissioner of Income-Tax (CIT) for assessment year 2016-17. ITAT held that short term capital cannot be carried forward as it has not been claimed through a return filed under section 139(3).

The assessee company, Chalet Hotels Limited, filed its return of income under section 139(1) of the Income-Tax Act, 1961 declaring a loss of Rs (-)1,89,90,32,020/. Thereafter a search and seizure action was carried out at the premises of the assessee and as a consequence of search action notice under section 153A. In response, the assessee filed return of income on 14/07/2018, declaring loss of ₹1,54,21,64,359/-. This return was further revised to ₹1,49,75,40,455/-. During the scrutiny proceedings before the Assessing Officer (AO) the assessee explained the cause of reduction of loss as inadvertent mistake in computing the loss under the head “income from capital gain.”

The assessee submitted that it had purchased shares of “Intime Properties Private Limited” on 30/04/2013 for a sum of ₹54,90,47,767/-and were sold on 31/03/2016 for a sum of ₹54,32,72,901/-, thus, the shares are held for a period of 35 months and therefore loss of ₹57,74,866/- arising from the sale of those shares should have been reported as short term capital loss whereas by mistake been reported as ‘long-term capital loss’, therefore after reducing indexed cost of acquisition of ₹63,20,77,335/-out of the sale consideration, resulted in loss of ₹8,88,04,454/-and same was claimed in the return of income filed under section 139(1) of the Act.

The Assessing Officer disallowed the claim of carry forward of the ‘short-term capital loss’ of on the ground that same has not been claimed in the return of income filed under section 139(1) of the Act. On further appeal, the CIT also upheld the non-allowance of the carry forward of ‘short-term capital loss.’

Kuldip Singh, Judicial Member and Om Prakash Kant, Accountant Member observed that “In light of the clear provisions of the Act, the assessee cannot be allowed to carry forward the short term capital loss as the same has not been claimed through a return filed under section 139(3) of the Act. The claim of carry forward is denied to the assessee.”

To Read the full text of the Order CLICK HERE

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