2012 (9) TMI 361 - AT - Income Tax

Rectification u/s 154 - dis-allowance of adjustment of brought forward loss of AY 1998-99 against profit for the AY 2007-08 on the ground that eight AYs have been passed - original assessment order passed u/s 143(3) allowed b/f business loss for AY 1998-99 to be c/f and same was also allowed to be carried forward in appeal effect order dated 11.06.2010 u/s 251/143(3) - Held that - Admittedly, this is a mistake apparent from record as this business loss determined in AY 1998-99 can be carried forward till 2006-07 and not in the relevant AY 2007-08. On limitation period of four years for rectification u/s 154 it is observed that original assessment was framed u/s 143(3) for the AY 2007-08 on 31.12.2009 and the appeal effect order was passed u/s 251/143(3) on 11.06.2010, hence within time limit. In view of aforesaid, it is held that AO has rightly rectified the mistake, which is apparent from the records that this loss cannot be carried forward in AY 2007-08 - Decided against assessee.

Summary

Issues Involved:
Appeal against disallowance of brought forward loss under section 154 of the Income Tax Act.

Analysis:
1. The appeal was filed against the order of the ld. Commissioner of Income Tax (Appeals) upholding the disallowance of brought forward loss under section 154 of the Income Tax Act. The assessee raised four grounds challenging the decision.
2. The primary contention was that the orders passed by the Assessing Officer and the Commissioner of Income Tax (Appeals) were arbitrary, lacked proper reasoning, and were legally flawed.
3. The appellant argued that the assessed loss for the assessment year 1998-99 should have been allowed to be adjusted against the profit for the assessment year 2007-08, considering the timeline and the receipt of the appeal order.
4. The appellant further contended that the Commissioner of Income Tax (Appeals) erred in not considering that the count of eight assessment years should start from the date of receipt of the appeal order for the assessment year 1998-99.
5. The main issue revolved around the rectification of the assessment order under section 154 of the Act, where the Assessing Officer disallowed the carried forward business loss of the assessment year 1998-99 for the assessment year 2007-08.
6. The Assessing Officer rectified the assessment order based on the provision of section 72(3) of the Act, which allows the adjustment of losses for up to eight years only. The rectification was made as the business loss from 1998-99 could not be carried forward to 2007-08.
7. The Tribunal upheld the decision of the lower authorities, stating that the rectification under section 154 was within the limitation period of four years. The Tribunal emphasized the importance of the appellate decision and affirmed that the Assessing Officer correctly rectified the mistake regarding the carried forward loss.

This detailed analysis covers the key issues raised in the appeal against the disallowance of the brought forward loss under section 154 of the Income Tax Act. The judgment highlights the arguments presented by the appellant, the reasoning of the lower authorities, and the final decision of the Tribunal confirming the rectification made by the Assessing Officer.