Set off of STCG loss allowed despite not claimed in ITR nor revised return was filed by assessee

Set off of STCG loss with STCG allowed despite the assessee had not claimed it in his return of income nor filed revised return

ABCAUS Case Law Citation:
ABCAUS 3133 (2019) (09) ITAT

Important case law relied upon by the parties:
Goetze (India) Ltd., vs. CIT [2006] 284 ITR 323 (SC)
CIT vs. Mahalaxmi Sugar Mills AIR 1986 AIR 2111
CIT vs. Jai Parabolic Springs Ltd., [2008] 306 ITR 42 (Del.)

The instant appeal was filed by Revenue against the Order of the CIT(A) in allowing the set off of short term capital loss with the short term capital gain earned previously despite the fact that the assessee has not claimed it in his return of income.

The Assessing Officer (AO) relying upon decision of Hon’ble Supreme Court had disallowed the set off of short term capital loss with the short term capital gain earned during the assessment year under appeal.

The assessee submitted before the CIT(A) that AO had erred in not allowing set off of short term capital loss of the impugned amount in assessment year under appeal although all the conditions prescribed under the provisions of Section 74 of the Act had been duly complied with by the assessee.

It was further stated that only reason for not allowing the same was that in the original return of income the assessee failed to claim the same and the same was only claimed during assessment proceedings.

It was further stated that in the case no fresh claim was made, but, the A.O. was requested to complete the assessment as per the provisions of the Act on the basis of the facts available on record. The assessee relied upon Judgment of Hon’ble Supreme Court in which it was held that “it is duty of the A.O. to apply the relevant provisions of the Act for the purpose of determining the true figures of assessee’s taxable income.”

The CIT(A) noted that since no fresh claim had been made by the assessee and as all the facts are available on record, he allowed the claim of assessee.

Before the Tribunal, the assessee submitted that the appellate authorities have power to entertain the claim of assessee based on the facts available on record and, therefore, there was no infirmity in the order of the CIT(A) in allowing the claim of assessee.  

The Tribunal observed that the CIT(A) had noted that specific finding had been given in the assessment order that by virtue of provisions of Section 74 of the Act, the assessee was entitled for the set off of STCG with brought forward STCL.

Thus the Tribunal observed that Thus, the claim of assessee on merit was not in dispute and even no ground of appeal had been raised on merit that assessee had not been entitled for the set off of loss as claimed.

The Tribunal noted that the only grievance of the Revenue was that assessee had not made the claim on the return of income and no revised return have been filed.

The Tribunal further noted that the Hon’ble Delhi High Court considering the Judgment of Hon’ble Supreme Court had held that there was no prohibition on the powers of the Tribunal to entertain an additional ground which according to the Tribunal arose in the matter and for the just decision of the case.

In view of the above, the Tribunal held that there was no infirmity in the Order of the CIT(A) in allowing the claim of assessee.

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