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2024 (12) TMI 430 - AT - Income TaxDetermining the total income without setting off losses pertaining to the earlier years - HELD THAT - Addl./Jt. CIT(A) has not specified which of the two returns of A.Ys. 2021-22 and 2022-23, were not filed within the due date as required u/s 139(3) of the Act, so that the losses for those years could not be set off during the current year while we note that the return for A.Y. 2022-23 stated to be filed on 23.09.2022 was filed within the due date and the loss had to be allowed to be carried forward for being set off in subsequent years as per law. There is no requirement in section 80 of the Act that for setting off losses of the earlier years, the return for the assessment year in which the loss is to be set off has to be filed within the due date specified u/s 139(3) of the Act. Accordingly, if the returns for A.Ys. 2021-22 and 2022-23, were filed within the due date specified u/s 139(3) of the Act, the assessee was entitled to set off the brought forward loss in A.Y. 2023-24, even if the return for A.Y. 2023-24 has been filed u/s 139(4) of the Act. AO is directed to verify the date of filing of return of A.Y. 2021-22 and in case, this return also has been filed within the due date specified u/s 139(3) of the Act, allow the set off of brought forward losses for both the assessment years against the income of A.Y. 2023-24. Ground nos. 1, 2 3 are allowed, subject to the verification of the date of filing of return of A.Y. 2021-22 and the same being within the due date specified u/s 139(3) of the Act. Charging of interest u/s 234B and 234C is consequential to the income determined after setting off the losses claimed and the Ld. AO is directed to recompute the interest, if required.
Issues:
1. Disallowance of setting off losses pertaining to earlier years 2. Charging of interest under section 234B and 234C of the Act Analysis: Issue 1: Disallowance of setting off losses pertaining to earlier years The appeal was filed against the order of the Ld. ADDL/JCIT(A) confirming the action of the AO-CPC in determining the total income without setting off losses from earlier years. The assessee had filed its original return of income for the assessment year 2023-24, showing total income after adjustment of brought forward business losses. The Ld. AO did not consider the brought forward losses without providing any reason. The Ld. Addl./Jt. CIT(A) noted that the returns for earlier years were filed within the due date or extended due date. However, the Ld. AO contended that since the return for the assessment year 2023-24 was filed after the due date, the losses could not be carried forward. The Tribunal held that there is no requirement in the Act that the return for the assessment year in which the loss is to be set off must be filed within the due date specified under section 139(3). Therefore, if the returns for earlier years were filed within the due date, the assessee was entitled to set off the brought forward losses in the current year. The Tribunal directed the Ld. AO to verify the date of filing of the return for the earlier years and allow the set off if filed within the due date specified under section 139(3). Issue 2: Charging of interest under section 234B and 234C of the Act The ground relating to the charging of interest under section 234B and 234C of the Act was considered consequential to the income determined after setting off the losses claimed. The Tribunal directed the Ld. AO to recompute the interest, if required, based on the revised income calculation after allowing the set off of brought forward losses. The Tribunal allowed the appeal of the assessee, subject to the verification mentioned above. In conclusion, the Tribunal allowed the appeal of the assessee, directing the Ld. AO to verify the date of filing of the return for the earlier years and allow the set off of brought forward losses if filed within the due date specified under section 139(3). The Tribunal also directed the Ld. AO to recompute the interest under section 234B and 234C based on the revised income calculation.
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