ITA No.:2131/Chny/2025

Parties Involved

Facts Summary

The assessee, Sri Jayajothi and Company Private Limited, is a domestic company engaged in the manufacture and sale of cotton yarn. For the assessment year 2014-15, the assessee filed its return of income declaring a loss of Rs.16,95,20,002/-. The case was selected for scrutiny and concluded with a net loss assessed at Rs.16,79,19,439/-. Subsequently, the Principal Commissioner of Income Tax revised the assessment, questioning the treatment of a loss of Rs.6,81,04,103/- on the sale of shares, which was erroneously adjusted against business loss. The assessee revised its income computation, reducing its claimed expenditure by Rs.6,81,04,103/-. The Assessing Officer disallowed this entire amount as expenditure, reducing the loss to Rs.9,98,15,336/-. Aggrieved, the assessee appealed to the Commissioner of Income Tax (Appeals), who allowed the appeal, treating the amount as long-term capital loss.…

Legal Issues

• 1. Whether the order of the Ld.CIT(A) is opposed to law on the facts and in the circumstances of the case.
• 2. Whether the Ld.CIT(A) erred in allowing the capital loss as an allowable expenditure in the Profit and Loss Account of the assessee.
• 3. Whether the Ld.CIT(A) erred in deciding that the alleged capital loss was brought forward correctly in the subsequent assessment year.

Judgment Outcome

Decided in favour of Revenue.

Precedents Relied Upon

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• ITA No.1969/Chny/2025, Assessment Years: 2014-15 CO No.86/Chny/2025, Assessment Years: 2014-15