Law:

Section:

Section 74 of the Income-tax Act, 1961 - Losses - Under head 'Capital gains' - Assessment year 1979-80 - Assessee's claim for short-term capital loss on account of share transactions was rejected by Assessing Officer on ground that assessee failed to submit balance sheets of companies from whom shares were purchased - In appeal, Commissioner (Appeals) held that mere non-filing of balance sheets could not be a ground for rejection of assessee's claim and directed Assessing Officer to consider assessee-company's claim on production of relevant evidence - Instead of considering material produced by assessee-company, Assessing Officer disallowed claim by invoking Explanation to section 73 - Whether in view of fact that Commissioner (Appeals), in assessment year 1980-81, had found that Explanation to section 73 had no application in case of very same assessee and revenue had not challenged said finding, there was no justification in disallowing assessee's claim - Held, yes FACTS The assessee-company's claim for short-term capital loss on account of share transactions was rejected by the Assessing Officer on the ground that it had failed to submit the balance sheets of the companies from whom shares were purchased. On appeal, the Commissioner (Appeals) held that the mere fact of non-filing of the balance sheets could not be made a ground for rejection of the short-term capital loss and directed the Assessing Officer to give a reasonable opportunity to the assessee to produce necessary evidence. However, the Assessing Officer, instead of considering the materials produced, disallowed the assessee-company's claim by invoking the Explanation to 73. In appeal in second round, the Commissioner (Appeals) allowed the assessee-company's claim following the view taken by the Commissioner (Appeals) in the case of very same assessee in the assessment year 1980-81, and the Tribunal confirmed the view taken by the Commissioner (Appeals). On reference : HELD Once the Commissioner (Appeals) had taken the view that non-filing of the balance sheets of the concerned companies, the shares of which were sold, could not be made a ground for rejection of the short-term capital loss, the…

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