2019 (2) TMI 785 - AT - Income Tax

Set off of carried forward business loss and current business loss against the income from other sources - Held that - The assessee company is not carrying any business. The assessee has earned income from renting of the property and the same is offered to tax by the assessee under the head Income from house property . Apart from above assessee has interest income of ₹ 3,87,540/-. Expenses in respect of house property have already been allowed as standard deduction u/s. 24(a) of the Act. The assessee has claimed expenditure in respect of remuneration to Director. The Commissioner of Income Tax (Appeals) rejected the claim of assessee on the ground that since there is no business of the assessee, there is no question of business loss. The provisions of section 72 allow set off of business loss/carried forward business loss against income under any head (except under the head Salaries ). But to claim loss, the assessee has to show business activity was carried during previous year or in the past which resulted in generation of loss. There is no material available on record controverting the findings of CIT(Appeals). - Decided against assessee.

Summary

Issues:
1. Failure of the assessee to appear for the appeal hearings.
2. Disallowance of set off of carried forward business loss and current business loss against income from other sources.

Issue 1: Failure of the assessee to appear for the appeal hearings
The appellate tribunal noted that the first notice of appeal was duly served on the assessee, but no one appeared on the scheduled date. Subsequently, a second notice was issued, and again, neither the assessee nor any authorized representative attended the hearing or requested an adjournment. The tribunal inferred that the assessee seemed uninterested in pursuing the appeal, leading them to proceed with the case in the absence of the assessee, with the assistance of the Departmental Representative (DR) and available records.

Issue 2: Disallowance of set off of carried forward business loss and current business loss
The assessee contested the order of the Commissioner of Income Tax (Appeals) by arguing that the set off of carried forward business loss and current business loss against income from other sources should have been allowed as per Section 72 of the Income Tax Act, 1961. However, the tribunal observed that the assessee was not engaged in any business activity and only earned income from renting property, which was declared under the head "Income from house property." The tribunal further noted that the assessee had interest income but no business activity, leading to the rejection of the claim for business loss. The tribunal upheld the Commissioner's decision, emphasizing that to claim a loss, the assessee must demonstrate business activity during the relevant period generating the loss, which was not evidenced in this case. Consequently, the tribunal found no grounds to interfere with the Commissioner's order, upholding the dismissal of the assessee's appeal.

In conclusion, the tribunal dismissed the appeal of the assessee, affirming the decision of the Commissioner of Income Tax (Appeals) regarding the disallowance of set off of carried forward business loss and current business loss against income from other sources.