Supreme Court refused to condone 215 days in filing SLP Against order Upholding Merger of Short Term Capital Loss of 108.75 crores [Read Judgement]

The Supreme Court refused to condone 215 days in filing Special Leave [etition (SLP) against order upholding merger of short term capital loss of 108.75 Cr. The delay has not been satisfactorily explained by the petitioner - Revenue and the two judge bench of Justice J.B. Pardiwala and Justice R. Mahadevan dismissed the Special Leave Petition on the ground of delay.

The SLP arose out of the impugned final judgment and order dated 04-03-2024 in ITA No. 136/2022 passed by the High Court of Delhi at New Delhi. The Commissioner impugns the order dated 28 January 2021 passed by the Income Tax Appellate Tribunal ["ITAT"] and insofar as it has proceeded to reject the appeal of the Department which had raised the issue of Short Term Capital Loss originating from the forfeiture of share warrants of India Bulls Infrastructure Ltd.

In the said case, the respondent / assessee although having suffered a loss of INR 108.75 crores, had never sought a Short Term Capital Loss set off consequent to forfeiture of the share warrants. In any case, the transaction came to be subsumed in the Scheme of Merger which came to be sanctioned by the appropriate High Court. In that view of the matter, the amount in question could not have even been taxed in the hands of the respondent / assessee.

The ITAT observed that although the entire transaction appeared to be a sham, the same could not form subject matter of further inquiry or determination under the Income Tax Act, 1961 ["Act"].

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