9911796707
TMI Blog2025 (3) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... nce with the provision.
Assessee is entitled for set off of the carried forward losses incurred during the A.Ys. 2012-13 and 2013-14 for which period the assessee filed their return of income in time.
As a result we set aside the order of the lower authorities and allowed the grounds raised by the assessee and directed the AO to allow the set off of loses incurred during the A.Ys 2012-13 and 2013-14.
At the time of argument, the AR also brought to our notice that some mistakes have crept in the calculation of the losses and we have also perused the said details and satisfied ourselves that there are some mistakes in the calculation of the losses and therefore the same should be rectified and the correct amount of loss should be given set off during the A.Y. 2017-18.
In order to quantify the correct amount of losses, we are remitting this issue to the file of the AO with the direction to quantify the exact amount of loss incurred after adjusting the profits earned during the subsequent years and thereafter grant the set off for the carried forward of losses incurred during the A.Ys. 2012-13 and 2013-14. X X X X Extracts X X X X X X X X Extracts X X X X ..... ant stay Inn. Thereafter, the case of the assessee was selected for scrutiny under CASS and notices u/s. 143(2) and 142(1) were issued. Thereafter, the assessee had suomoto offered a sum of Rs. 3 Lakhs as his unexplained money u/s. 69A of the Act. The AO stated that the assessee had made a claim of setting off of brought forward losses of Rs. 45,18,838/- which was originally accepted by the CPC while processing the return. Now the AO made an allegation that the assessee is not entitled for set off the above said losses for the reason that the assessee had filed their return of income for the A.Y. 2016-17 belatedly. Therefore the AO disallowed the said set off. As against the said order, the assessee filed an appeal before the Ld.CIT(A) and contended that the losses brought forward and set off during A.Y. 2017-18 is not related to the losses of 2016-17 whereas it relates to the A.Y 2012-13 and 2013-14 for which periods the assessee had filed their return of income in time. The assessee therefore claimed that the finding of the AO is not correct and prayed to allow the appeal. The Ld.CIT(A) without considering the various records submitted before him, had come to a wrong conclusion t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowed the set off of loses of Rs. 45,18,838/- but before disallowing the set off, it seems that the AO had not issued any show cause notice but made the assessment. Therefore, we are of the view that the AO had not put on notice about the disallowance before passing the assessment order. 8. In any event, the issue to be decided in this appeal is about the disallowance made by the AO which was confirmed by the Ld.CIT(A) in respect of the set off of losses during the assessment year 2017-18. In order to appreciate the correct workings related to the brought forward of losses it is found place in the synopsis given by the assessee which is extracted below for easy reference: 9. As seen from the above statement, the assessee had incurred a loss of Rs. 44,78,802/- for the A.Y 2012-13 which was accepted by the AO since the return was filed on 01/10/2012 well before the last date for filing the returns. Similarly, the assessee had incurred a loss of Rs. 44,89,220/- in respect of the A.Y. 2013-14 for which also, the assessee filed their return of income in time and therefore both the losses of Rs. 89,68,022/- were available for brought forward and set off against any profits arose in the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erefore the losses carried forward was not determined during the A.Y. 2016-17 and therefore the losses could not be carried forward and set off against the profits available during the A.Y. 2017-18. Both the authorities failed to consider the fact that the AO had determined the losses in respect of the said A.Ys. based on the return filed by the assessee and therefore the loses were correctly determined by the AO during the relevant assessment years and therefore the said losses can be carried forward and set off against the profits available in the subsequent years. The authorities had also failed to note that the losses are not related to the A.Y. 2016-17 whereas it related to the A.Ys. 2012-13 and 2013-14 which was properly determined by the AO since the returns were filed in time. If the assessee had claimed the losses incurred during the A.Y. 2016-17, for which period the return was belatedly, then the authorities are correct in disallowing the said losses whereas in the present case, the losses related to the A.Ys. 2012-13 and 2013-14 which were properly determined by the AO by considering the returns filed in time and therefore the AO as well as the Ld.CIT(A) had decided the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for that previous year , or owing to the profits or gains chargeable being less than the allowance, then, subject to the provisions of sub- section (2) of section 72 and sub-section (3) of section 73, the allowance or the part of the allowance to which effect has not been given, as the case may be, shall be added to the amount of the allowance for depreciation for the following previous year and deemed to be part of that allowance, or if there is no such allowance for that previous year, be deemed to be the allowance for that previous year, and so on for the succeeding previous years.] Carry forward and set off of business losses. 72. [(1) Where for any assessment year, the net result of the computation under the head "Profits and gains of business or profession" is a loss to the assessee, not being a loss sustained in a speculation business, and such loss cannot be or is not wholly set off against income under any head of income in accordance with the provisions of section 71, so much of the loss as has not been so set off or, [* * *] where he has no income under any other head, the whole loss shall, subject to the other provisions of this Chapter, be carried forward to the fol ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub-section (1) [or sub- section (3)] of section 74, [or sub-section (3) of section 74A], he may furnish, within the time allowed under sub- section (1) [***], a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub-section (1). We have observed that admittedly the assessee filed its return of income for the impugned assessment year 2012-13, on 29.03.2014 , which return of income was filed belatedly beyond the time prescribed u/s 139(1) of the 1961 Act. The assessee declared business loss of Rs. 2,15,19,363/- in the return of income filed with Revenue, while the AO in proceedings conducted u/143(3) read with Section 143(2) of the 1961 Act, assessed income of the assessee at Rs. 27,20,480/-. The AO denied the benefit of set off of brought forward business losses ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of subsequent assessment years. However so far as unabsorbed depreciation is concerned , in view of Section 32(2) of the 1961 Act, if the full effect cannot be given to depreciation u/s 32(1) allowable for the year owing to there being no profits or gains chargeable for the year under consideration under Chapter IV-D, or owing to profits or gains chargeable to tax under Chapter IV-D being less than depreciation allowance u/s 32(1), than, inter- alia, subject to provisions of Section 72(2), the unabsorbed depreciation of the current previous year shall be added to the depreciation allowable u/s 32(1) of the succeeding previous year and deemed to be part of the succeeding previous year to be set off against business income of the succeeding previous year and so on. There is no provision of the 1961 statute which is brought to our notice by rival parties which prohibits carry forward of unabsorbed depreciation even if return of income is filed belatedly for the current year beyond the due date stipulated u/s 139(1) of the 1961 Act. Reference is drawn to decision of ITAT, Delhi Bench decision in ITA No. 504/Del/2017 for ay: 2012-13, vide order dated 23.07.2020 in the case of Addl. CIT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s earlier decision in the case of General Motors India Private Limited(supra). Further, needless to say that all the earlier year brought forwards business losses which assessee is seeking to set off and carry forward, should be assessed business losses and the return of income for those years ought to have been filed by the assessee within the time stipulated u/s 139(1) and ought not to be belated return of income filed beyond the due date prescribed u/s 139(1), otherwise it will be hit by provision of Section 80 and 139(3) of the 1961 Act. So far as quantum of brought forward business losses and unabsorbed depreciation which were assessed to be carried forward to subsequent years and its period of allowability is concerned, we are of the considered view that these facts requires verification by Assessing Officer from the record , and the material on record available before us is not sufficient to give conclusive finding on these facts, and hence we are setting aside this matter to the file of AO for verification of facts and quantum of allowability of brought forward business losses and unabsorbed depreciation, and while allowing the carry forward of business losses , the AO shal ..... X X X X Extracts X X X X X X X X Extracts X X X X
|
