DCIT, CIRCLE 4(2), NEW DELHI V. BANSAL STEELS POWER LTD, NEW DELHI

ITA 4891/DEL/2024

AI Insights

The case involves an appeal by the Revenue against the order of the CIT(Appeals) which allowed the carry forward of business losses for the Assessment Year 2018-19. The primary contention from the Revenue was the application of Section 79 of the Income Tax Act, which restricts the carry forward of losses in cases of change in shareholding. The Assessee argued that there was no change in shareholding during the relevant period and that the tax effect was below the monetary limits set by the CBDT. The Tribunal agreed with the Assessee, noting no change in shareholding and dismissing the Revenue's appeal based on the monetary threshold.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 782852 (ITAT-DELHI)
• Duration Of Justice: 1 year(s) 9 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2018-2019
• Appeal Filed On: 21-10-2024
• Other Referred Cases: Checkmate Services Pvt. Ltd. vs. CIT, Commissioner of Income Tax vs. Manmohan Das
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: JITENDER SINGH
• Assessee Lawyers: SANJAY SEHGAL
• Keywords: Tax effect; Carry forward of business losses
• Section: 143(3); 10

Judgement Text

"ITA No.4891/Del/2024 & CO No.230/Del/2024 1 IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH “A” NEW DELHI BEFORE SHRI CHALLA NAGENDRA PRASAD, JUDICIAL MEMBER AND SHRI AVDHESH KUMAR MISHRA, ACCOUNTANT MEMBER आ.अ.सं/.I.T.A No.4891/Del/2024 िनधा रणवष /Assessment Year:2018-19 DCIT, Circle 4(1), New Delhi. बनाम Vs. BANSAL STEELS POWER LTD. 35, Jhandewalan, Motia Khan, New Delhi. PAN No.AAACG1010F अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent & CO No.230/Del/2025 (Arising out of ITA No.4891/Del/2024) िनधा रणवष /Assessment Year: 2018-19 BANSAL STEELS POWER LTD. 35, Jhandewalan, Motia Khan, New Delhi. PAN No.AAACG1010F बनाम Vs. DCIT, Circle 4(1), New Delhi. अपीलाथ\u0014 Appellant \u0016\u0017यथ\u0014/Respondent Assessee by Shri Sanjay Sehgal, CA Revenue by Shri Jitender Singh, CIT DR सुनवाईक\bतारीख/ Date of hearing: 15.10.2025 उ\u000eोषणाक\bतारीख/Pronouncement on 30.10.2025 आदेश /O R D E R PER C.N. PRASAD, J.M. This appeal is filed by the Revenue against the order of the Ld. CIT(Appeals)-NFAC, Delhi dated 26.08.2024 for the AY 2018-19 in Printed from counselvise.com ITA No.4891/Del/2024 & CO No.230/Del/2024 2 allowing carry forward of current year losses. The assessee filed cross objection contending that the tax effect in the appeal of the Revenue is below the monetary limits as fixed by the CBDT vide Circular No.9/2024 dated 17.09.2024. Assessee also contended in the cross objection that CIT(A) has rightly allowed carry forward of losses. 2. Heard rival contentions, perused the orders of the authorities below. On perusal of the assessment order, we noticed that the AO while completing the assessment made disallowance in respect of PF & ESI contributions relating to employees contributions and also denied carry forward of current year losses. On appeal the Ld. CIT(A) sustained the disallowance so far as the PF & ESI contributions are concerned following the decision of the Hon’ble Supreme Court in the case of Checkmate Services Pvt. Ltd. vs. CIT and allowed carry forward of current year losses. 3. We noticed that the carry forward of losses were denied by the AO on the ground that there is a change in the share holding pursuant to the order of the NCLT, Delhi Bench dated 04.12.2018 under IBC Code and thus the provisions of section 79(2)(c) of the I.T. Act are applicable to the assessee company pursuant to which since no approval has been taken from the Pr. CIT or CIT provisions of section Printed from counselvise.com ITA No.4891/Del/2024 & CO No.230/Del/2024 3 79(2)(c) of the Act are attracted. However, the Ld. CIT(A) taking note of the fact that there is no change in share holding during the year under consideration directed the AO to allow the business losses to be carry forward to subsequent years observing as under: “8.1 In the said ground, the Appellant has challenged the denial of carry forward of business loss by the AO by invoking the provisions of Section 79 of the Act. I have considered the submission made by the appellant and have also gone through the material available. I have also gone through the case law relied upon by the appellant. Claim for carry forward of business loss was denied invoking the provision of Section 79 of the Act. Section 79 of the Act reads as under: “79. Carry forward and set off of losses in the case of certain companies Notwithstanding anything contained in this Chapter, where a change in shareholding has taken place in a previous year in the case of a company, not being a company in which the public are substantially interested, no loss incurred in any year prior to the previous year shall be carried forward and set off against the income of the previous year unless on the last day of the previous year the shares of the company carrying not less than fifty-one per cent, of the voting power were beneficially held by persons who beneficially held shares of the company carrying not less than fifty-one per cent, of the voting power on the last day of the year on years in which the loss was incurred.” 8.2 In accordance with the provisions of section 79 of the Act, loss incurred by a company in any year prior to the, previous year shall not be allowed to be carried forward and set off against the income of the previous year if the said company is not a company in which public are substantially interested and there is a change in the shareholding of that company. 8.3 The provisions of section 79 are attracted only in the year in which the loss is sought to be set off. The Hon’ble Supreme Court of India in case of Commissioner of Income Tax vs. Manmohan Das (59 ITR 699) held that the question of allowability of losses was to be determined for the assessment Printed from counselvise.com ITA No.4891/Del/2024 & CO No.230/Del/2024 4 year in which such losses were claimed. The relevant part of the order is reproduced as under: \"Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and gains of the same business, profession or vocation under s. 24(2) has to be determined by the ITO 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. A decision recorded by the ITO who computes the loss in the previous year under s. 24(3) that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. Taking into consideration that nature of the duties performed, the obligations undertaken, together with the right remuneratuion subject to compensation for loss arising to the bank from his own acts and omissions or of servants introduced by him into business of the bank, the assessee may be regarded as following a vocation. The remuneration must, therefore, be computed u/s 10 of the IT Act 1922 and loss of profit suffered in that vocation any year may be carried forward to the next year and be set off against the profit of the succeeding year.” 8.4 As stated herein above, the appellant had incurred a loss during the year and as such question of claiming set off of brought forward losses of earlier year does not arise. In view of above facts and legal proposition, the order passed by AO u/s 143(3) of the Act rejecting the claim for carry forward of business losses of earlier year invoking the provisions of section 79 of the Act is contrary to the law. The provisions of section 79 of the Act are not applicable to the appellant for the year under consideration and AO ought not to have made any reference to carry forward of loss of earlier years. The question of allowability of carried forward losses arises in the year when the set off of such losses is claimed by the assessee. It is for the AO in that year to decide whether the set off of loses is allowable or not as per provisions of relevant sections of the Act including section 79. It may be possible that there is further change in the shareholding in any subsequent year and accordingly, the issue of eligibility of set off as per section 79 of the Act will be decided on that basis in that year and the observations or reference made in the order for Printed from counselvise.com ITA No.4891/Del/2024 & CO No.230/Del/2024 5 current year will not be relevant at all. In view of these facts and legal position, the findings given by the AO that earlier business loss is not allowed to be carry forward is not sustainable in the eyes of law. Therefore, the AO is directed to allow the business losses of earlier years to be carried forward to subsequent years. Accordingly, Ground No.3 is allowed.” 4. We also find from the following details furnished before us at page 1 of the PB that there is no change in the shareholding as on 31.03.2017 and also as on 31.03.2018 which is relevant to the AY 2018-19, the appeal under consideration. Printed from counselvise.com ITA No.4891/Del/2024 & CO No.230/Del/2024 6 5. On careful perusal of the order of the Ld. CIT(A), we find no good reason to interfere with the findings of the Ld. CIT(A) in directing the AO to allow carry forward of losses. Thus, we sustain the order of the Ld. CIT(A) on this issue. 6. Even otherwise, since the revenue effect in the appeal of the Revenue is NIL the same is liable to be dismissed in view of the Circular of CBDT No.9/2024 dated 17.09.2024. 7. Coming to the cross objection filed by the Assessee ground no.1 is in respect of monetary limit is less than Rs.60 lakhs and the same is allowed. 8. Ground nos. 2 & 3 are only in support of the order of the Ld. CIT(A) in directing the AO to allow carry forward of losses and since Printed from counselvise.com ITA No.4891/Del/2024 & CO No.230/Del/2024 7 we have sustained the order of the Ld. CIT(Appeals) these grounds need not be adjudicated. 9. Lastly coming to the ground no.4 of the cross objection which is in respect of the employees contribution to PF & ESI, we find no infirmity in the order passed by the Ld. CIT(A) in sustaining the disallowance following the decision of the Hon’ble Supreme Court in the case of Checkmate Services Ltd. Vs. CIT (supra). Thus, this ground is rejected. 10. In the result, appeal of the Revenue is dismissed and cross objection of the Assessee is partly allowed as indicated above. Order pronounced in the open court on 30.10.2025 Sd/- Sd/- (AVDHESH KUMAR MISHRA) (C.N. PRASAD) ACCOUNTANT MEMBER JUDICIAL MEMBER Dated: 30.10.2025 *Kavita Arora, Sr. P.S. Copy forwarded to: 1. Appellant 2. Respondent 3. CIT 4. CIT(Appeals) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI Printed from counselvise.com "