M/s. Su-Sampada, Indore V. The ITO 3(2), Indore

CO 80/IND/2013

• Counselvise Citation: [2018] 123 COUNSELVISE.COM (IT) 3868 (ITAT-INDORE)
• Duration Of Justice: 4 year(s) 10 month(s) 23 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 29-06-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: DB
• Assessment Year: 2008-2009
• Appeal Filed On: 05-08-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: RAM PRAKASH MOURYA
• Assessee Lawyers: VISHU JHAVAR
• Keywords: Depreciation
• Section: 72(1); 32; 6; 139

Judgement Text

M/S SU SAMPADA CO 80/2013 1 IN THE INCOME TAX APPELLATE TRIBUNAL INDORE BENCH, INDORE BEFORE SHRI KUL BHARAT, HONBLE JUDICIAL MEMBER AND SHRI MANISH BORAD, HONBLE ACCOUNTANT MEM BER CO NO. 80/IND/2013 A.Y. 2008-09 M/S SU-SAMPADA INDORE ::: APPELLANT VS ITO 3(2)) INDORE ::: RESPONDENT APPELLANT BY SHRI PRAKASH JAIN AND SHRI VISHU JHAVAR RESPONDENT BY SHRI RAM PRAKASH MOURYA DATE OF HEARING 26 .6.2018 DATE OF PRONOUNCEMENT 29 .6.2018 O R D E R PER SHRI MANISH BORAD, AM HON'BLE HIGH COURT OF MADHYA PRADESH VIDE ORDER DATED 22.4.2018 IN ITA NO. 20 OF 2015 DIRECTED THE I NCOME TAX APPELLANT TRIBUNAL, INDORE BENCH, INDORE, TO DECI DE THE FOLLOWING GROUND OF APPEAL, WHICH WAS LEFT TO BE DECID ED IN ITS ORDER DATED 30.4.2014 IN CO NO. 80/IND/2013 :- M/S SU SAMPADA CO 80/2013 2 WHETHER THE ITAT HAS COMMITTED AN ERROR OF LAW IN N OT DECIDING THE ALTERNATIVE GROUND RAISED BY THE APPEL LANT REGARDING SET OFF OF LOSSES AND DEPRECIATION CARRIE D FORWARD FROM EARLIER YEARS AGAINST THE INCOME DETERMINED/ASSESSED ? 2. BEFORE US, THE LEARNED COUNSEL FOR THE ASSESSEE SUBMITTED THAT THE ASSESSEE INCURRED BUSINESS LOSS AND DEPRECIATION LOSS DURING THE ASSESSMENT YEARS 2002-03 TO 2004-05. THESE LOSSES WERE DULY CLAIMED BY WAY OF F ILING THE RETURN OF INCOME WITHIN THE DUE DATES PRESCRIBED U/S 139(1) OF THE ACT. THEREAFTER, DURING THE ASSESSMENT YEARS 2005-06 TO 2008-09 IN THE RETURN OF INCOME FILED BY THE ASSESSEE, THE INCOME DECLARED WAS NIL BUT THE UNABSORBE D LOSSES WERE NOT MENTIONED THEREIN WHICH WERE CARRIED FORWARD. HE FURTHER SUBMITTED THAT AGAINST THE ASSESSED INCOME OF RS.22,96,195/- THE LEARNED ASSESSING OFFI CER SHOULD HAVE GIVEN THE BENEFIT OF SET OFF OF BROUGHT FORWARD LOSSES. ON THE OTHER HAND, THE LEARNED DR STRONGLY OPPOSED THE ABOVE SUBMISSIONS OF THE ASSESSEE. M/S SU SAMPADA CO 80/2013 3 3. WE HAVE HEARD BOTH THE PARTIES AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THE ASSESSEES PLEA THROUGH THE ADDITIONAL GROUND IS THAT THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) ERRED IN DISMISSING THE ADDITION AL GROUND REGARDING SET OFF OF BROUGHT FORWARD BUSINESS LOSSES BY TREATING IT AS INFRUCTUOUS. WE NOTICE THAT DURING T HE APPELLANT PROCEEDINGS THE ASSESSEE HAS CONTENDED THAT IT IS ELIGIBLE FOR SET OFF OF BROUGHT FORWARD LOSS AND DEPR ECIATION LOSS PERTAINING TO THE ASSESSMENT YEARS 2002-03 TO 20 04- 05 AGAINST THE INCOME ASSESSED BY THE LEARNED ASSESSING OFFICER U/S 143(2) OF THE ACT AT RS. 22,96,195/-. TH E ASSESSING OFFICER DID NOT ALLOW SET OFF BECAUSE IN TH E RETURN OF INCOME FILED FOR THE ASSESSMENT YEAR 2008-09 THE ASSESSEE HAS NOT MENTIONED THE DETAILS OF BROUGHT FORW ARD LOSSES. IT IS NOT AT THE END OF THE ASSESSEE THAT FOR THE ASSESSMENT YEARS 2005-06 TO 2008-09 NO SUCH DETAILS OF BROUGHT FORWARD LOSSES WERE MENTIONED IN THE RETURN OF M/S SU SAMPADA CO 80/2013 4 INCOME. HOWEVER, IT IS PERTINENT TO MENTION THAT FO R THE ASSESSMENT YEARS 2002-03 TO 2004-05 WHEN THE ASSESSEE INCURRED BUSINESS LOSS AND DEPRECIATION LOSS, THE RET URN OF INCOME WAS FILED WITHIN THE DUE DATE PRESCRIBED U/S 1 39(1) OF THE ACT. THE PROVISIONS FOR CARRY FORWARD AND SET OFF OF BUSINESS LOSS ARE PROVIDED UNDER SECTION 72(1) OF TH E ACT AND FOR CARRYING FORWARD THE LOSS, THE ASSESSEE HAS TO COMPLY WITH THE PROVISIONS OF SECTION 139(3) OF THE ACT WHICH PROVIDES THAT 'THE ASSESSEE IN ORDER TO CARRY FO RWARD THE LOSSES NEEDS TO FILE THE RETURN BEFORE THE DUE DATE AS PROVIDED U/S 139(1) OF THE ACT. FOR THE SAKE OF CONV ENIENCE, WE WOULD LIKE TO REPRODUCE SECTION 72 OF THE ACT WH ICH READS AS UNDER :- CARRY FORWARD AND SET OFF OF BUSINESS LOSSES. 72. (1) WHERE FOR ANY ASSESSMENT YEAR, THE NET RESULT O F THE COMPUTATION UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IS A LOSS TO T HE 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 AN Y OTHER HEAD, THE WHOLE LOSS SHALL, SUBJECT TO THE OTHER PROVISIONS OF THIS CHAPTER, BE CARRIED FO RWARD TO THE FOLLOWING ASSESSMENT YEAR, AND M/S SU SAMPADA CO 80/2013 5 ( I ) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAIN S, IF ANY, OF ANY BUSINESS OR PROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMENT YEAR ; ( II ) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE AMO UNT OF LOSS NOT SO SET OFF SHALL BE CARRIED FORWARD TO THE FOLLOWING ASSESSMENT YEAR AND SO ON : PROVIDED THAT WHERE THE WHOLE OR ANY PART OF SUCH LOSS IS S USTAINED IN ANY SUCH BUSINESS AS IS REFERRED TO IN SECTION 33B WHICH IS DISCONTINUED IN THE CIRCUMSTANCES SPECIFI ED IN THAT SECTION, AND, THEREAFTER, AT ANY TIME BEFORE THE EXPIRY OF T HE PERIOD OF THREE YEARS REFERRED TO IN THAT SECTION, SUCH BUSINESS IS RE-ESTABLISHED, RECONSTRU CTED OR REVIVED BY THE ASSESSEE, SO MUCH OF THE LOSS AS IS ATTRIBUTABLE TO SUCH BUSINESS SHALL BE C ARRIED FORWARD TO THE ASSESSMENT YEAR RELEVANT TO THE PREVIOUS YEAR IN WHICH THE BUSINESS IS SO RE-ES TABLISHED, RECONSTRUCTED OR REVIVED, AND ( A ) IT SHALL BE SET OFF AGAINST THE PROFITS AND GAIN S, IF ANY, OF THAT BUSINESS OR ANY OTHER BUSINESS CARRIED ON BY HIM AND ASSESSABLE FOR THAT ASSESSMEN T YEAR; AND ( B ) IF THE LOSS CANNOT BE WHOLLY SO SET OFF, THE AMO UNT OF LOSS NOT SO SET OFF SHALL, IN CASE THE BUSINESS SO RE-ESTABLISHED, RECONSTRUCTED OR REVIVE D CONTINUES TO BE CARRIED ON BY THE ASSESSEE, BE CARRIED FORWARD TO THE FOLLOWING ASSES SMENT YEAR AND SO ON FOR SEVEN ASSESSMENT YEARS IMMEDIATELY SUCCEEDING. (2) WHERE ANY ALLOWANCE OR PART THEREOF IS, UNDER S UB-SECTION (2) OF SECTION 32 OR SUB-SECTION (4) OF SECTION 35 , TO BE CARRIED FORWARD, EFFECT SHALL FIRST BE GIVE N TO THE PROVISIONS OF THIS SECTION. (3) NO LOSS (OTHER THAN THE LOSS REFERRED TO IN THE PROVISO TO SUB-SECTION (1) OF THIS SECTION) SHALL BE CARRIED FORWARD UNDER THIS SECTION FOR MORE THAN EIGHT ASSESSMENT YEARS IMMEDIATELY SUCCEEDING THE ASSESSMENT YEAR FOR WHICH THE LOSS W AS FIRST COMPUTED. 4. FROM THE PERUSAL OF THE ABOVE PROVISIONS OF SECTIO N 72 OF THE ACT WE FIND THAT THERE IS NO SPECIFIC REQUIREM ENT ON THE PART OF THE ASSESSEE FOR FURNISHING THE DETAILS O F CARRIED FORWARD LOSSES IN THE RETURN OF INCOME FILED SUBSEQUE NTLY. SECTION 72(3)( OF THE ACT TALKS ABOUT THE NUMBER OF Y EARS FOR WHICH THE LOSSES CAN BE CARRIED FORWARD. IN OUR V IEW, ONCE THE ASSESSEE HAS RIGHTFULLY CLAIMED THE BUSINESS LOSS OR DEPRECIATION LOSS AS PER THE PROVISIONS OF SECTIO N 139(3) M/S SU SAMPADA CO 80/2013 6 READ WITH SECTION 139 OF THE ACT THEN THE IMPUGNED L OSSES ARE READY FOR SET OFF AGAINST THE POSITIVE INCOME WITHI N THE PERIOD PROVIDED UNDER THE PROVISIONS OF LAW. IN TH E GIVEN FACTS AND CIRCUMSTANCES OF THE CASE AND IN THE LIGHT OF THE ABOVE DISCUSSION, WE ARE OF THE VIEW THAT IT WOULD BE APPROPRIATE TO SET ASIDE THE ISSUE TO THE FILE OF THE ASSESSING OFFICER. WE, THEREFORE, DIRECT THE ASSESS ING OFFICER TO CARRY OUT NECESSARY VERIFICATION WITH THE ASSISTANCE OF THE ASSESSEE TO VERIFY THE RELATED DOCUME NTS AS TO WHETHER THE ASSESSEE HAS RIGHTFULLY CLAIMED THE BUSINESS AND DEPRECIATION LOSSES FOR THE ASSESSMENT YE ARS 2002-03 TO 2004-05 BY WAY OF FILING THE RETURNS OF INCOME WITHIN THE DUE DATES PRESCRIBED U/S 139(1) OF THE AC T AND IN CASE THERE IS MERIT IN THE CONTENTION OF THE ASSES SEE IN THE LIGHT OF THE ABOVE DOCUMENTS THEN THE ASSESSEE SH OULD BE GIVEN THE BENEFIT OF SET OFF OF UNABSORBED BUSINE SS AND M/S SU SAMPADA CO 80/2013 7 DEPRECIATION LOSSES AGAINST THE INCOME ASSESSED BY THE ASSESSING OFFICER FOR THE ASSESSMENT YEAR 2008-09. 3. IN THE RESULT, THE CO IS ALLOWED FOR STATISTICAL PURPOSES. PRONOUNCED IN OPEN COURT ON 29 TH JUNE, 2017. SD/- SD/- (KUL BHARAT) (MANISH BORAD) JUDICIAL MEMBER ACCOUNTANT MEMBER 29 JUNE, 2017