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2011 (12) TMI 714 - AT - Income TaxFiling of Return u/s 153A beyond the period of limitation - The assessee had claimed interest expenditure of loan in the returns filed u/s. 153A which was not claimed in the returns of income filed u/s. 139(1) - Increase in loss was not carry-forward as response to notice u/s 153A was beyond time limit HELD THAT - As laid down by the Mumbai Bench of the Tribunal THE DY. COMMISSIONER OF INCOME-TAX CENTRAL CIRCLE 6 MUMBAI. VERSUS M/S. EVERSMILE CONSTRUCTION CO. PVT. LTD. 2011 (8) TMI 495 - ITAT MUMBAI If any deduction is claimed by the assessee in the proceedings u/s 153A that cannot be rejected simply on the ground that it was not claimed in the original assessment or was disallowed. In the case of SUJANI TEXTILES (P.) LTD. VERSUS ASSISTANT COMMISSIONER OF INCOME-TAX. 2003 (1) TMI 281 - ITAT MADRAS-B it was held that if the assessee has filed a loss return u/s. 139(3) within the period provided under the Act and if the assessee has filed a revised loss return under Sub-section (5) thereof again within the prescribed time limit the A.O is bound to take cognizance of the revised return because the original return is replaced by the revised return undisputedly the assessment u/s. 153A r.w.s. 143(3) of the Act has been framed on the basis of return filed in response to notice issue u/s. 153A of the Act. Hence now it is not open to raise contention by the revenue that return was filed beyond the prescribed time period mentioned in the notice issued u/s. 153A of the Act. The return of income filed in response to the notice u/s. 153A on the basis of which assessment in question has been framed thus has replaced the original return for determining the net income in the assessment u/s. 153A. Thus in a sense return filed in response to the notice issued u/s. 153A was a revised return and the assessment was re-assessment. For the purpose of levy of penalty u/s. 271(1)(c ) excess income in difference to the originally assessed income may be subject matter under the facts and circumstances of the case that the same was due to concealment of particulars of income or furnishing inaccurate particulars thereof but for the purpose of assessment of net income the return filed in response to notice u/s. 153A of the Act is the revised return superseding earlier return of income and the assessment based upon that original return of income. We thus following the ratio laid down by the Mumbai Bench of the Tribunal in the case of DCIT Vs. Eversmile Construction Pvt. Ltd. hold that the A.O was not justified in denying the claim of carry forward of loss in question in the A.Ys. under consideration - Decision in favour of Assessee.
Issues Involved:
1. Whether the assessee is entitled to carry forward losses despite filing returns in response to notices under Section 153A beyond the time limit specified. 2. Whether the returns filed under Section 153A can be considered as revised returns replacing the original returns filed under Section 139(1). Issue-wise Detailed Analysis: Issue 1: Entitlement to Carry Forward Losses The assessee challenged the first appellate order for not allowing the carry forward of losses for various assessment years (A.Y. 2002-03, 2003-04, and 2005-06). The assessee argued that the returns filed under Section 139(1) were within the due date, thus entitling them to carry forward the losses as per Section 80 of the Act. The Assessing Officer (A.O.) allowed the interest expenditure claimed in the returns filed under Section 153A but restricted the carry forward of losses to the amounts declared in the original returns, citing Section 80. The A.O. and the CIT(A) held that losses not determined as per Section 139(3) cannot be carried forward. The assessee contended that Section 80 does not restrict the carry forward of losses to those claimed only under Section 139(1). Issue 2: Nature of Returns Filed Under Section 153A The assessee argued that the returns filed under Section 153A should be considered as revised returns, replacing the original returns filed under Section 139(1). The CIT(A) disagreed, stating that the returns under Section 153A were filed beyond the time limit prescribed under Section 139(5) and thus could not replace the original returns. The assessee cited various decisions to support the claim that returns under Section 153A should be treated as fresh assessments, allowing for new claims. Tribunal's Findings: 1. Assessment of Total Income vs. Undisclosed Income: The Tribunal referenced the decision in DCIT vs. Eversmile Construction Co. Pvt. Ltd., noting that Section 153A requires the A.O. to determine the "total income" rather than just "undisclosed income." The Tribunal emphasized that deductions claimed under Section 153A cannot be rejected solely because they were not claimed in the original assessment. 2. Revised Returns and Fresh Claims: The Tribunal found that the returns filed under Section 153A should be considered as revised returns, replacing the original returns. The Tribunal held that the A.O. is empowered to consider the deductibility of claims made in these returns, and the assessment under Section 153A is a fresh assessment. 3. Precedent and Interpretation: The Tribunal cited the case of Sujani Textiles (P) Ltd. vs. ACIT, where it was held that the procedural process under Section 139 does not affect Section 80. The Tribunal concluded that the returns filed under Section 153A, which led to the assessment in question, replaced the original returns for determining net income. 4. Distinguishing Other Cases: The Tribunal distinguished the case of Steri Moulds Pvt. Ltd., where no revised return was filed, and the case of Koppind P. Ltd. vs. CIT, which dealt with Section 147 and not Section 153A. The Tribunal clarified that Section 153A permits a fresh assessment, unlike Section 147, which only addresses escaped income. Conclusion: The Tribunal set aside the orders of the lower authorities and directed the A.O. to allow the carry forward of the losses claimed by the assessee. The Tribunal held that the returns filed under Section 153A should be treated as revised returns, and the assessment under Section 153A is a fresh assessment, allowing for the carry forward of losses. The appeals were allowed in favor of the assessee. Order Pronouncement: The order was pronounced in open court on 23rd December 2011.
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