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TMI Blog2023 (8) TMI 1506X X X X Extracts X X X X X X X X Extracts X X X X ..... w. We therefore set-aside the order of the ld CIT(A) and direct the AO/CPC to remove the directions as far as it relates to denial of carry forward and set off of losses is concerned. Coming to the submission of CIT/DR that practically, there is no mechanism where the AO for the subsequent assessment year can verify whether the return of previous assessment year(s) has been filed within the prescribed due date, we find that appropriate documentation needs to be maintained by the department and in particular, the necessary modification is required in the form for furnishing return of income where in due date of filing of return of income and actual date of filing of return of income for the relevant assessment years should also be provided along with particulars relating to losses to be carry forward and set off. Appeal of the assessee is allowed. - SHRI. AAKASH DEEP JAIN, VP AND SHRI. VIKRAM SINGH YADAV, AM For the Assessee :Shri Parikshit Aggarwal, CA For the Revenue :Shri Rohit Sharma, CIT DR Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/ NFAC, Delhi dt. 26/08/2022 pertaining to Assessment Year 2019-20 where in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the year, the assessee has claimed only the carry forward of the current year business loss to the subsequent year. It was submitted that there was no claim of set off in the year under consideration and all the assessee has done was that it has claimed the carry forward of the current year business losses for being set off in the subsequent year as and when there is a profit which is eligible against which the set off is possible as per the provisions of the Act. 5. It was submitted that it is a settled position that it is for the AO dealing with the assessment for the subsequent year to determine whether loss of the previous year may be set off against the profit of subsequent year. It was submitted that there is no basis for the CPC, Bengaluru to disallow the carry forward of the current year business loss which has only been claimed to be carry forward and there was nothing on record that the assessee has sought any set off the said losses in the year under consideration. 6. In this regard, reference was drawn to the provisions of Section 80 of the Act which talks about the fact that where the losses have not been determined in pursuance of the return filed in accordance with ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich is clearly not allowable in terms of the provisions of Section 139(3) read with Section 80 of the Act. It was accordingly, submitted that there was no infirmity in the action of the CPC/AO in disallowing the claim of the assessee which is clearly in accordance with the provisions of Law. It was further submitted that practically, there is no mechanism where the AO for the subsequent assessment year can verify whether the return of previous assessment year has been filed within the prescribed due date and therefore, where the AO for the impugned assessment year is examining the return of income and gives a finding that the return has not been filed in time and thus, the assessee is not allowed to carry forward the business losses, there is no infirminity in the said action of the AO. Further, reliance was placed on the decision of Hon ble Punjab Haryana High Court in case of Rajiv Gupta Vs. CIT [2014] 51 taxmann.com 53 wherein the matter was decided in favour of the Revenue upholding the decision of the Coordinate Chandigarh Benches in case of Rajiv Gupta Vs. ITO [2008] 114 ITD 346. 9. We have heard the rival contentions and purused the material available on record. The limited ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and claims that such loss should be carried forward in terms of section 73A(2), he may furnish the return of income within the time prescribed u/s 139(1) of the Act. 14. In the instant case, the assessee has incurred certain losses in respect of its specified business u/s 35D for the impugned assessment year and claims that such loss be allowed to be carried forward for being set off against income of the specified business of the subsequent assessment year. The return of income for the impugned assessment year, however, has been filed beyond the prescribed due date as provided u/s 139(1) of the Act. There is thus a violation by way of not filing the return of income within the prescribed due date, a condition precedent for allowing the assessee s claim. In the said background, the contention which has been raised by the ld AR is that the language which has been provided in the statute is carry forward and set off and therefore both these phrases have to be co-jointly read and cannot be segregated and therefore it is only in the year in which the set off is claimed by the assessee that the provisions of Section 80 may be invoked by the AO in the subsequent assessment year. In othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he income of the subsequent year is not binding on the assessee. 16. Following the same, the Coordinate Delhi Benches in case of Burda Druck India Pvt Ltd (Supra) has held in para 6 7 as under: 6. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that while concluding assessment the AO declared that the loss computed is not allowed to be carried forward. In our considered opinion all that the AO is required is to notify the assessee the amount of loss as computed by him. Whether the loss in any year may be carried forward to the following year and set off against the profits has to be determined by the AO who deals with the assessment of the subsequent year. It is for the ITO dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. For this proposition we place strong reliance on the decision of the Hon ble Supreme Court in the case of CIT Vs. Manmohan Das 59 ITR 699 wherein:- It was held by the Hon'ble Supreme Court that it is for the Assessing Officer dealing with the assessment in the subsequent year who has to determine whether ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Assessing Officer of the earlier year. The relevant decision of the Co-ordinate Bench is as under: We have carefully considered the rival submissions and find that the issue before us can be disposed off in the light of the point of law laid down by the Hon'ble Supreme Court in the case of Manmohan Das (Deceased) (supra). As per the Hon'ble Supreme Court, whether the loss in any year may be carried forward to the following year and set-off against the income of the subsequent year is liable to be determined by the Assessing Officer who deals with the assessment of such subsequent year. The Hon'ble Supreme Court further noted that a decision recorded by the Assessing Officer who computes the loss in a previous year that the loss cannot be set-off against the income of the subsequent year is not binding on the assessee in the subsequent actual year of set-off. Considered in this light, in our view, the Assessing Officer in the instant year had no jurisdiction to give a finding that the loss of Rs. 7,96,21,402/-cannot be carried forward and set-off against the income of the subsequent year. Therefore, such observations/directions of the Assessing Officer, in our view, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e actually claimed set off of carry forward losses against the profits of that year. The assessee contends that the Assessing Officer can examine the applicability of the provisions of section 79 of the Act only in the year in which the loss is set off and not in the year in which the assessee claims the loss to be carried forward. In the present case during the A.Y. 2006-07 the Assessing Officer invoking the provisions of section 79 of the Act denied carry forward of losses prior to the A.Y. 2006-07. Assessee carried the matter unsuccessfully before the appellate authorities and the matter is now pending before the Hon'ble High Court. 19. In the case of CIT v. Manmohan Das [59 ITR 699] the following question which came up before the Hon'ble Allahabad High Court has been examined by the Hon'ble Supreme Court in the appeal preferred by the revenue. Whether the assessee could claim a set off of the loss suffered by him in the preceding year 1950-51 against his profits in the year under consideration, i.e., 1951-52, having failed to prefer an appeal against the refusal by the Income-tax Officer making the assessment for the year 1950-51 to allow the assessee to carry forwa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by the Assessing Officer who computes the loss in the previous year that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. 22. Following this decision of the Hon'ble Supreme Court, the Chandigarh Bench of the Tribunal in the case of Rajiv Gupta v. ITO [114 ITD 346] held that, the Assessing Officer was justified in refusing set off of the long-term capital loss suffered in A.Y. 1996-97, in A.Y. 1997- 98 as well as in A.Y. 1999-2000. It was observed by the Tribunal that there was a glaring and patent mistake committed by the Assessing Officer originally while making the assessments for the said assessment years under section 143(3) of the Act which was rightly modified, the assessment orders by rectifying the mistake of law by denying set off of long term capital loss claimed by the assessee. The facts in this case were that the assessee claimed carry forward of long term capital loss of A.Y.1996-97 in its return of income filed belatedly. This loss was set off during the A.Y. 1997-98 and A.Y. 1999-2000 by the assessee in the return of income filed. The Assessing Officer originally while completing the assessments u/s. 143(3) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he assessee has claimed set off of carry forward of losses against the income of the current assessment year i.e. A.Y. 2012-13 and also in the subsequent assessment years this claim of the assessee has to be examined only during the assessment year 2012-13 and subsequent assessment years. Thus, the grounds raised in this regard are restored to the file of the Assessing Officer who shall decide the implication of section 79 of the Act in the light of our above said findings and observations. The grounds raised are disposed off accordingly. 19. In the last of the aforesaid decisions, the Coordinate Mumbai Benches have also discussed the decision of the Coordinate Chandigarh Benches in case of Rajiv Gupta (Supra) wherein the facts of the case were that the long term capital loss incurred in A.Y 1996-97 was refused to be allowed set off by the AO while passing the rectification order for A.Y 1997-98 to 1999-2000 and which was upheld by the Bench. It was again a case where the AO for the year where the loss was claimed to be set off (and not a case where the AO for the year where the loss was incurred and claimed to be carried forward) has denied such claim for the reason that the retur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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