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2012 (8) TMI 478 - AT - Income TaxAllowability of set off of the business loss brought forward arising out of banking business, income from which is eligible for deduction u/s 80P, against the house property income - Held that - It is observed that S71(2A) bars set off of business loss against salary income and does not bar setting off of the business loss against the house property income. Further, CIT(A) has passed a non-speaking order and reference made to non-eligibility of exempt nature of the income for set off, whereas provisions of S.80P falls under category of deduction which is different from being exempt. It is settled position of law that the assessee is entitled for such set off of current year s business loss against current year s income from house property as held in the case of CIT V/s. Mughneeram Bangaru and Co.(1980 (8) TMI 12 - CALCUTTA HIGH COURT ). Since, CIT(A) is not specific to the issues raised before him. Therefore, matter should be referred back to the file of the CIT(A) with a direction to adjudicate the grounds and the issues raised in the grounds of appeal and the specific arguments advanced before him, qua the grounds raised.
Issues:
Allowability of set off of business loss against property income under Section 71 of the Income Tax Act, 1961. Analysis: The appeal concerns the allowance of setting off a business loss against property income for the assessment year 2006-07. The appellant contested the CIT(A)'s decision upholding the assessing officer's ruling that the business loss cannot be set off against property income. The appellant argued that Section 71(1) permits set off of losses under any head except 'capital gains' against income under any other head when there are no taxable capital gains. The appellant distinguished the case of Ramjilal Rais v/s. CIT (1965) 58 ITR 181, cited by the Revenue authorities, emphasizing that it pertained to exempt income, unlike the present case involving entitled deductions under Chapter VIA of the Act. The appellant highlighted the distinction between exempt income and eligible deductions, asserting that the judgment was not applicable. The Tribunal noted that the Revenue authorities failed to explain the rejection of the claim under a specific sub-section and erred in applying the Allahabad High Court's judgment in the context of exempt income. The Tribunal further observed that the CIT(A) did not adequately address the grounds raised by the appellant regarding the set off of business loss against property income. The orders of the Revenue authorities lacked clarity on why the claim for set off was not allowed, especially considering the current year's business loss and income from house property. The Tribunal referenced the Calcutta High Court's decision in CIT v/s. Mughneeram Bangaru and Co., affirming the entitlement of the assessee to set off current year's business loss against current year's income from house property. Additionally, the Tribunal highlighted the absence of discussion on the issues related to the provisions of Section 72(1)(i) in the orders of the Revenue authorities. Consequently, the Tribunal concluded that the CIT(A) failed to address the raised issues adequately and directed a reconsideration of the appeal, emphasizing adherence to the provisions of Sections 71 and 72 of the Act. In light of the above analysis, the Tribunal allowed the appeal for statistical purposes and referred the matter back to the CIT(A) for a fresh decision after proper adjudication of the grounds and issues raised by the appellant. The CIT(A) was instructed to reevaluate the appeal, considering the provisions of Sections 71 and 72, and provide the appellant with a reasonable opportunity for a hearing. The appellant was directed to furnish all necessary details for a comprehensive reconsideration of the case.
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