2023 (4) TMI 140 - AT - Income Tax

Disallowance of brought forward and carried forward total business loss - returns of income could not be filed within due date - HELD THAT - Revenue has not disputed the fact that in earlier years, from the years 2011-12 to 2014-15, the condonation has been allowed by the Competent Authority u/s 119(2)(b) of the Act. It is stated that the facts are identical and the petition for condonation of delay qua the year under consideration is pending for adjudication before the Competent Authority. Matters need to be restored to the file of Ld.CIT(A) to decide the issue of allowability of business loss to be carried forward relating to the year under consideration afresh and allow carry forward business loss relating to the Assessment Years 2011-12 to 2014-15 where the Competent Authority has allowed condonation of delay in filing the return of income. Thus, grounds raised by the assessee are allowed in the terms indicated herein above. Appeal filed by the assessee is allowed for statistical purposes.

Summary

Issues involved:
The judgment involves the non-allowance of brought forward and carried forward total business loss and current year depreciation loss by the authorities, leading to an appeal by the assessee against the order of Ld. CIT(A)-1, Udaipur dated 20.09.2018.

Business Loss Issue:
The assessee, a company engaged in manufacturing bulk drugs and intermediates, faced a dispute between directors resulting in the closure of business activities from November 2011 onwards. Despite no business activities in the relevant year, the return of income was filed declaring a business loss of Rs. 4,64,458/-. The Assessing Officer did not discuss the allowability of the loss in the assessment order, and the CIT(A) disallowed the claim citing late filing of returns. However, delay condonation petitions for previous years were allowed by competent authorities, directing consideration of carry forward losses on merits. The Tribunal found the facts similar to previous years and directed the matter to be reconsidered by CIT(A) for the year under consideration and allowed carry forward of losses from 2011-12 to 2014-15.

Depreciation Loss Issue:
The appellant did not press the ground for current year depreciation loss and requested to withdraw it. The Tribunal did not address this issue further as per the appellant's request.

Conclusion:
The Tribunal allowed the appeal for statistical purposes, directing the CIT(A) to reexamine the issue of business loss carry forward for the year under consideration and to permit carry forward of business losses from 2011-12 to 2014-15, where delay condonation was allowed by the Competent Authority. The judgment was pronounced on 23/03/2023.