2020 (7) TMI 602 - AT - Income Tax

Determining the business loss by allowing carried forward loss - return is filed beyond the due date prescribed u/s 139(1) - HELD THAT - The facts are very clear that the assessee filed return on 02.01.2013, which is beyond the due date prescribed u/s 139(1). In the return of income the assessee has declared loss consisting of business loss for the year and unabsorbed depreciation. As per the provision of section 139(3) to carry forward business loss u/s 72(1), assessee should have filed its return of income in time allowed u/s 139(1). The above condition does not apply in case of unabsorbed depreciation in view of the provision of section 32(2) - AO has correctly held that business loss is not allowable to be carried forward and has allowed being unabsorbed depreciation to be carried forward. CIT (A) clearly referred to the provision of section 80 also The ld CIT (A) has also upheld the same view. - Decided against revenue.

Summary

Issues:
- Whether the business loss of a company for Assessment Year 2012-13 can be carried forward when the return of income was filed after the due date prescribed under section 139(1) of the Income Tax Act, 1961.

Analysis:
The appeal was filed by the Additional Commissioner of Income-tax against the order of the CIT(A) for Assessment Year 2012-13. The main issue raised was regarding the determination of business loss and the allowance of carried forward losses in the case of a belated return. The assessee, a company engaged in installation services, filed its return after the due date, showing a total loss for the year. The Assessing Officer disallowed the carry forward of business loss but allowed the unabsorbed depreciation to be carried forward. The CIT(A) upheld this decision, citing the provisions of section 139(3) and section 32(2) of the Act.

In the appellate proceedings, the appellant demonstrated that due to the late filing of the return, the company did not carry forward the losses to the next year as per Section 80 of the Act. The CIT(A) agreed with the Assessing Officer and held that for late filing of the return, the assessee cannot carry forward the current year loss to the next year. The business loss was determined, and only the unabsorbed depreciation was allowed to be carried forward, as per the appellant's treatment.

The Tribunal considered the contentions of both parties and reviewed the orders of the lower authorities. It was noted that the return was filed after the due date, resulting in a declared business loss and unabsorbed depreciation. The Tribunal agreed with the Assessing Officer and CIT(A) that business loss cannot be carried forward in case of a belated return, as per section 139(3). However, unabsorbed depreciation was allowed to be carried forward under section 32(2). The Tribunal found no fault in the CIT(A)'s reasoned decision and dismissed the appeal filed by the Additional Commissioner of Income-tax.

Therefore, the Tribunal upheld the decision that the business loss could not be carried forward due to the late filing of the return, while allowing the unabsorbed depreciation to be carried forward. The appeal was dismissed, affirming the order of the CIT(A) for Assessment Year 2012-13.