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TMI Blog2019 (12) TMI 976X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act, cannot be revised under section 139(5) of the Act. Once a return filed under section 139(3) of the Act has been considered a return filed in the section 139(1) of the Act which implies that all the provisions of section 139 of the Act will be equally applicable. In holding so we find support and guidance from the judgment of Hon ble High Court of Gujarat in the case of PCIT Vs. Babubhai Ramanbhai Patel [ 2017 (7) TMI 744 - GUJARAT HIGH COURT] We hold that the assessee cannot be denied the benefit of the loss to be allowed carried forward under the provisions of subsection 139(3) read with section 80 of the Act in a situation where the loss was claimed in the revised return of income. On this technical count, the assessee succeeds. Eligible for deduction for the FDR s written off against the business income of the assessee - HELD THAT:- Any loss on account of FDR s written off cannot be denied merely on the ground that the impugned interest income was offered under the head income from other sources. We also note that the activity of the assessee for investing its money as FDR s is a normal business activity despite the interest thereon is offered to tax un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .s) 2012-13 2013-14 respectively. ITA No.130/Rjt/2017 for A.Y.2012-13. The assessee has raised the following grounds of appeal: 1. The learned Commissioner of Income-tax (Appeals) - 7, Ahmedabad erred in confirming action of the assessing officer in not accepting the revised return filed by the appellant on 20-03-2014. 2. The learned Commissioner of Income-tax (Appeals) - 7, Ahmedabad erred in confirming the action of the assessing officer in disallowing the claim of loss of ₹ 1,56,71,108/- being irrecoverable amount of deposits placed by the appellantbank with Madhavpura Mercantile Co-operative Bank Ltd. 3. The learned Commissioner of Income-tax (Appeals) - 7, Ahmedabad erred in holding that the explanation offered by the appellant for having claimed the amount of ₹ 1,56,71,108/- as business loss in A.Y. 2012-13 does not hold water. 4. The learned Commissioner of Income-tax (Appeals) - 7, Ahmedabad erred in confirming the action of assessing officer in not allowing to carry forward and set off of loss of ₹ 2,31,857/- for A.Y. 2005-06 and ₹ 16,7 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act as per the provisions of section 80 of the Act. Thus the AO on the technical count proposed not to allow the claim of the assessee. 3.5 The AO on merit observed certain facts as detailed under: i. The assessee has created an investment depreciation fund on account of such investments in MMCBL. The details of such fund stand as under: Madhav-pura Mercantile Co-operative Bank Investment Depreciation Fund up to 31.03.2011 Date of deposit in the above fund Source of above fund Amount of funds transferred from the funds as per para 2 Total fund transferred to this fund Closing balance in this Fund i.e MMCB Investment Depreciation Fund 31.03.2011 Investment Depreciation reserve fund 11,71,000/- 51,00,000/- 51,00,000/- Bad and doubtful debt fund ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... viia) of the Act at the rate of 7.50% of the total income irrespective of the fact whether there was any actual claim or not. As such the amount sourced from the bad and doubtful debt fund shows that the assessee has already enjoyed the benefit by claiming the deduction and there is a credit balance at ₹ 3,98,84,000.00 as appearing in the balance sheet as on 31st March 2011. iv. The fact of such loss about the recoverability of FDR s from MMCBL was known to the assessee since many years and therefore there was no reason for claiming the deduction in the year under consideration. The letter written by the RBI was neither any circular, instruction, statutory order nor warning but it was an advisory letter after the statutory inspection of the assessee bank. v. The income from the FDR s made with MMCBL was subject to tax under the head income from other sources under section 56 of the Act and therefore such business loss cannot be allowed as deduction under section 28, 36 and 37 of the Act which relates to the business and profession. In view of the above, the AO disallowed the claim of the assessee on account of the loss incurr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n within the time specified under section 139(1) of the Act despite the fact that it was in the knowledge of the assessee about the position of the FDR s with the MMCBL. Accordingly, the learned CIT (A) held that the return filed under section 139(4) showing the loss cannot be accepted as a valid return. Accordingly the learned CIT (A) denied the claim of the assessee on technical count as discussed above. 4.6 Similarly, the learned CIT (A) also rejected the contention of the assessee on merit by observing as under: 4.2.4 Considering the issue raised on merits, the appellant has stated that it had placed deposits with the MMCB over the years, which was claimed as a loss by it during the year under consideration as per the directions/instructions of the RBI. Firstly, it is seen that the said letter of the RBI dated 10th April, 2012, is an 'advisory . Secondly, even going by the said letter, the appellant should have made the said provision for MMCB in the subsequent year, post receiving the communication from RBI, instead of filing a non est return of loss by filing a revised return. 4.2.5 Moreover, a perus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... also submitted that the losses on account of FDR s written off were arising in the course of the business and therefore the same is eligible for deduction under section 28 of the Act. 5.2 The learned AR also claimed that the impugned loss was written off in the year under consideration as per the direction of the RBI. As such, such loss cannot be treated as prior period expenses/claim. 6. On the other hand, the learned DR vehemently supported the order of the authorities below. 7. We have heard the rival contentions of both the parties and perused the materials available on record. Broadly, two issues are emanating from the order of the authorities below which are as follows: i. Whether the assessee can claim the losses for the current year in the return revised under section 139(5) of the Act. ii. Whether the loss on account of FDR s maintained with MMCBL and written off is eligible for deduction under the head business and profession. 7.1 For deciding the question No. 1, we find pertinent to refer the provisions of section 139(3) of the Act which reads as under: ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t which implies that all the provisions of section 139 of the Act will be equally applicable. In holding so we find support and guidance from the judgment of Hon ble High Court of Gujarat in the case of PCIT Vs. Babubhai Ramanbhai Patel reported in 249 taxman 470 wherein it was held as under: 5. We may notice that under sub-section (1) of Section 139, every person whose income for the previous year exceeds the maximum amount not chargeable to tax, is required to file a return before the due date. Sub-section (3) of Section 139 provides that any person who has sustained a loss and claims that the loss should be carried forward would file a return of loss within the time prescribed under sub-section (1) and thereupon all the provisions of the Act shall apply as if it was a return under sub-section (1) of Section 139 of the Act. Under sub-section 4 of Section 139, a person who has not furnished a return within the time allowed under sub-section (1) may still furnish a return at any time before the end of the relevant assessment year or before the completion of the assessment whichever is earlier. Sub-section (5) of Section 139 provides that any person ha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther sources. In this regard we find support and guidance from the order of this tribunal in the case of Junagadh Commercial Co-operative Bank Ltd. Vs. JCIT in ITA No. 70/AHD/2015 for the assessment year 2009-10 vide order dated 8 November 2017. The relevant extract of the order is reproduced as under: 8. We have given a thoughtful consideration to the orders of the authorities below. It is an undisputed fact that die investment in FDR with Madhavpura Co-operative Bank Ltd. amounting to ₹ 47,36,308/- was treated as eligible investment in the earlier years. It is also true that die Madhavpura Co-operative Bank Ltd. became sick and the RBI directed the assessee to write off die amount bad. It is equally true that the assessee was showing interest earned from fixed deposit with die Madhavpura Co-operative Bank Ltd. as its income in the past. In our considered opinion, since the investment was accepted as eligible investment and since the assessee was showing interest income from FDR with Madhavpura Co-operative Bank Ltd. in the past, die write off of die same has to be allowed as bad debts. We accordingly set aside die findings of the Id. CIT(A) and direct the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ale of investment. Thus, the amounts claimed by the assessee were to be understood as a loss on investments suffered by the assessee. Such loss could neither be considered as expenditure nor a allowance . Hence, the Assessing Officer erred in adding back the same in the computation of assessee s income chargeable to tax. 8.3 Indeed the above judgment was rendered in connection with the investment written off by the Insurance Company, but to our mind the principles laid down therein can be applied in the case on hand. In view of the above and after considering the facts in totality, we hold that the impugned loss claimed by the assessee is allowable deduction under the head business and profession. Hence the ground of appeal of the assessee is allowed. 9. The 2nd issue raised by the assessee is that learned CIT (A) erred in confirming the order of the AO by not allowing the carry forward of the business loss to the assessment year 2006-07. 10. The assessee in the year under consideration has carried forward the business loss of ₹ 2,31,857.00 and 16,71,665.00 pertaining to the assessment year 2005-06 and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... deduction under section 80P of the Act is available. Admittedly, the assessee was entitled for the deduction under section 80P of the Act with respect to its income up to the assessment year 2006-07 and the impugned losses as discussed above pertain the earlier years i.e. 2005-06 and 2006-07 which were allowed be carried forward in the assessments framed under section 143(3) of the Act for the assessment years 2007-08, 2009-10 and 2010-11. The copies of the assessment orders are enclosed on pages 57 to 66 of the paper book. In our considered view, if any loss is not be allowed to be carried forward as discussed above, then the revenue has the power to deny the claim of the assessee in that very year only. If the revenue has omitted to do so, the remedy provided under the Act for the revenue to invoke the provisions of section 154 of the Act or 263 of the Act or 147 of the Act for that very assessment year as the case may be and depending upon the facts and circumstances. However, the Revenue has no remedy/power to disturb such claim of the assessee in any other assessment year. 14.1 It is also pertinent to note that there were several assessments carried out by the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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