2012 (10) TMI 1257 - AT - Income Tax

Summary

Issues involved: Appeal against CIT (A) order regarding disallowance of set off of brought forward loss, addition of unsecured loan, and addition of payable amount to another entity.

Issue 1 - Set off of brought forward loss:
The assessee appealed against the disallowance of set off of brought forward loss of Rs. 78,781 by CIT (A). The ITAT considered the submission that the loss was already crystallized in assessment year 2001-02 and the assessee was only claiming set off in subsequent assessment years. Referring to previous ITAT orders, the ITAT allowed the set off, stating that once the loss is determined in the return filed u/s 139(3), the assessee becomes eligible for set off in subsequent years, irrespective of when the returns for those years were filed. The ITAT directed the AO to allow the set off subject to availability of loss after verification.

Issue 2 - Addition of unsecured loan:
The appeal also addressed the addition of an unsecured loan of Rs. 81,646 from Sangeeta Jaiswal and an amount of Rs. 44,242 payable to Raksha Holding Pvt. Ltd under section 68. The AO added these amounts to the total income without specifying the section invoked. The CIT (A) applied section 68 without considering that the credits were from earlier years. The ITAT directed the AO to verify whether the credits were of the current year and decide accordingly, as no addition can be made under section 68 or section 41(1) if the credits are from earlier years.

Conclusion:
The ITAT allowed the appeal for statistical purposes, directing the AO to allow the set off of the brought forward loss and to verify the year of receipt of the loan/liability before making any additions.