| The Tax Publishers2020 TaxPub(DT) 5515 (Mum-Trib) INCOME TAX ACT, 1961
Section 154 Section 47(v) Section 10(38)
To disallow assessee's claim of carry forward of short-term capital loss terming the transaction to be sham AO had revisited the issue and had invoked rectification provision to review his order the AO had limited scope under section 154 to rectify any mistake apparent from the record substitution of opinion by the AO under section 154 was not permissible as the issue was debatable and tantamount to review.
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Rectification - Debatable issue - Divergent view of High Court - No jurisdictional High Court decision
In the instant case, the assessee had declared long-term capital loss on sale of shares and had carry forward unabsorbed long-term capital loss to the succeeding assessment years. In scrutiny assessment proceedings, the AO allowed the same. Subsequently, the AO invoked the provisions of section 154 to disallow carry forward of long-term capital loss in the light of the provisions of section 10(38). The assessee had assailed the action of AO in exercising his jurisdiction under section 154 for making such disallowance. Held: The issue of carry forward of long-term capital loss on sale of shares in the light of provisions of section 10(38) is debatable as two non-jurisdictional High Courts have taken a divergent view. It would be pertinent to mention here that no decision by jurisdictional High Court on this issue has been brought to the notice of the Bench by either sides. Thus, the issue being debatable, the AO had erred in invoking the provisions of section 154 in disallowing the benefit of carry forward of long-term capital loss. The AO in the garb of rectification had resorted to review of his order, the same was not permissible. To disallow assessee's claim of carry forward of short-term capital loss terming the transaction to be sham. The AO had revisited the issue and had invoked rectification provision to review his order. The AO in the present case had over-stepped his jurisdiction in exercising his powers under section 154 to review his order. Co-ordinate Bench of the Tribunal inadvertently failed to decide the legal issue of jurisdiction raised by the assessee in cross-objections. Hence, the Bench recalled its Order, dated 3-11-2017 partially for the limited purpose of adjudicating the additional grounds (on jurisdiction) raised in cross-objections. The AO while giving effect to the orders of the Tribunal had to first decide the issue of jurisdiction before stepping further to decide the issue on merits.
Relied:CIT v. Eveline International (2000) 243 ITR 493 (P&H-HC) : 2000 TaxPub(DT) 1011 (P&H-HC) , V.R. Sonti v. CIT (1979) 117 ITR 838 (Cal-HC) : 1979 TaxPub(DT) 750 (Cal-HC) and CIT v. Orient Paper Industries Ltd. (1994) 208 ITR 158 (Cal) : 1994 TaxPub(DT) 338 (Cal-HC)
REFERRED : Raptakos Brett & Co. Ltd. v. DCIT, (2015) 69 SOT 383 (Mum-Trib) : 2015 TaxPub(DT) 2490 (Mum-Trib), Kishorebhai Bhikabhai Virani v. Asstt. CIT (2014) 367 ITR 261 (Guj-HC) : 2014 TaxPub(DT) 3879 (Guj-HC) and Royal Calcutta Turf Club v. CIT, (1983) 144 ITR 709 (Cal) : 1983 TaxPub(DT) 750 (Cal-HC)
FAVOUR : In assessee's favour.
A.Y. : 2005-06
IN THE ITAT, MUMBAI BENCH
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