2023 (3) TMI 1306 - AT - Income Tax

Loss from business or profession - A.R. submitted that disallowance of business expenses is bad in law and therefore, the AO should be directed to allow the same by computing the total income - A.R.submitted that the assessee s case is covered under Section 71 and said section state that barring exception losses, business loss can be set off against other heads (as Inter Head Adjustment ) for the Assessment Year under consideration - HELD THAT - A.R. submitted that for A.Y. 20101-11 on the identical facts the issue was held in assessee s favour. At that time the assessee has set off his business income against the income from house property which has been allowed by the Tribunal. D.R. remark that the return of income was not filed and Section 139(1) will not allow the assessee to take set off of business expenses to income from house property, as incorrect as the assessee has genuinely invoke the Section 71 and has set off against the other head the business loss. The Section does not state that the assessee has to file the return under Section 139 only. Thus, appeal of the assessee is allowed.

Summary

Issues:
1. Validity of notice issued under section 148 of the Act and subsequent reassessment proceedings.
2. Disallowance of Business Loss claimed by the appellant.
3. Allowance of set off and carried forward of Business Loss.

Analysis:

Issue 1:
The appeal challenged the order passed by the Ld. CIT(Appeals) regarding the notice issued under section 148 of the Act and subsequent reassessment proceedings. The Assessing Officer reopened the assessment for A.Y. 2012-13 due to non-filing of the return by the assessee. The assessee had received income on which TDS was deducted. The Assessing Officer disallowed a claimed business loss. The CIT(A) partly allowed the appeal. The Ld. A.R. contended that the disallowance was unjustified as similar expenses were allowed in a previous case. The Ld. D.R. supported the assessment order. The Tribunal held in favor of the assessee, allowing the appeal.

Issue 2:
The second issue pertained to the disallowance of Business Loss claimed by the appellant. The assessee had claimed a business loss, which was disallowed by the Assessing Officer. The Ld. A.R. argued that the expenses were genuine business expenses and should be allowed. The Ld. D.R. supported the disallowance. The Tribunal considered past judgments and directed the Assessing Officer to allow the claimed business loss, ruling in favor of the assessee.

Issue 3:
The third issue revolved around the allowance of set off and carried forward of Business Loss. The Ld. A.R. contended that the business loss should be set off against property income as per Section 71 of the Act. The Ld. D.R. disagreed, citing non-filing of the return under Section 139(1). The Tribunal held that the assessee had correctly invoked Section 71 and allowed the set off against other heads, ruling in favor of the assessee.

In conclusion, the Tribunal allowed the appeal of the assessee, directing the Assessing Officer to quash the assessment order, allow the claimed business loss, and permit set off of business loss against property income. The judgment emphasized the correct application of relevant sections of the Income Tax Act and past precedents in deciding the case.