2024 (8) TMI 1319 - AT - Income Tax

Revision u/s 263 - date of filing of the original return of income -There was an international transaction - Assessee carried forward losses - HELD THAT - Since there was an international transaction the assessee took the due date for its return of income as 30th November and as per the provisions of Section 92E of the Act, the assessee obtained a report from an accountant and furnished the same in Form 3CEB. Merely because the assessee had raised objections before the AO, who was referring the matter to the TPO, the PCIT cannot say that the assessee accepted the due date for filing its return of income as 30th October. In our considered view, the assessee may have objected for the reference to the TPO but that would not have changed the colour of the mandatory provisions of the Act as mentioned elsewhere. As per the provisions of Section 92E, since the assessee has entered into an international transaction it obtained the report from an accountant in Form 3CEB and furnished the same and since the AO was about to refer the matter to the TPO, it shows that there was an international transaction and, therefore, the due date for the assessee for filing the return of income was 30th November. Assessee has simply carried forward losses and the apprehension of the PCIT are premature as the same will be considered only when the assessee claims set off of brought forward losses which will happen in the subsequent AYs as and when the assessee claims the set off of losses. For the year under consideration the assessee has simply carried forward losses. Thus, we are of the opinion that the assessment order is neither erroneous nor prejudicial to the interest of the revenue - Appeal of the assessee is allowed.

Summary

Issues:
Jurisdiction under Section 263 of the Income Tax Act, 1961; Correctness of assessment order dated 23/04/2021; Due date for filing original return of income; Allowability of carry forward loss; International transaction and Form 3CEB submission.

Analysis:
The appeal was filed against the order dated 26/03/2024, framed under Section 263 of the Income Tax Act, 1961 by the Principal Commissioner of Income Tax, Mumbai - 4, for Assessment Year 2011-12. The primary grievance of the assessee was the assumption of jurisdiction by the Principal Commissioner of Income Tax (PCIT) under Section 263 and the contention that the assessment order dated 23/04/2021 was not erroneous or prejudicial to the revenue's interest.

The PCIT issued a notice under Section 263 based on the delay in filing the original return of income for the assessment year 2018-19. The PCIT argued that the due date for filing the original return was 30/10/2018, whereas the assessee filed it on 30/11/2018, beyond the time allowed under Section 139(1) of the IT Act. Despite objections raised by the assessee regarding referral to the Transfer Pricing Officer (TPO), the PCIT contended that the due date for filing the return was 30/10/2018, disallowing the carry forward of loss amounting to Rs. 7,57,49,062.

The Tribunal analyzed the situation, emphasizing that the objections raised by the assessee did not alter the statutory provisions. As the assessee had entered into an international transaction, obtained a report in Form 3CEB, and the AO was considering referral to the TPO, the due date for filing the return was deemed to be 30/11/2018. The Tribunal highlighted that the carry forward of losses would only be relevant when claimed for set off in subsequent assessment years, and for the current year, the assessee had only carried forward losses, making the PCIT's concerns premature.

After a comprehensive review, the Tribunal concluded that the assessment order was neither erroneous nor prejudicial to the revenue's interest for the relevant year. Consequently, the order of the PCIT was set aside, and the AO's order dated 23/04/2021 was restored. The appeal of the assessee was allowed, and the decision was pronounced on 20th August 2024 in Mumbai.