INCOME TAX OFFICER, ITO, NEW DELHI V. ELENTEC POWER INDIA (EPI) PRIVATE LIMITED, DELHI

ITA 4629/DEL/2024

AI Insights

The case involves the Income Tax Officer (Revenue) appealing against the order of the CIT(A) which allowed Elentec Power India (EPI) Private Limited (Respondent) to set off brought forward losses from AY 2021-22 against the income of AY 2022-23. The primary contention was whether the assessee was eligible to carry forward the losses, which were initially disallowed in the assessment for AY 2021-22. The CIT(A) had reversed the initial assessment, allowing the carry forward based on the assessee's compliance with the extended due date for filing the ROI due to the COVID-19 pandemic. The Tribunal upheld the CIT(A)'s decision, agreeing that the assessee met the necessary conditions to carry forward the losses.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 31013 (ITAT-DELHI)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-03-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2022-2023
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rejection of books of accounts
• Section: 143(3); 139(1); 2

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL (DELHI BENCH ‘B’’ : NEW DELHI) BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT AND SHRI MANISH AGARWAL, HON’BLE ACCOUNTANT MEMBER ITA No. 4629/Del/2024 Asstt. Year : 2022-23 INCOME TAX OFFICER, VS. | ELENTEC POWER INDIA (EPI) ROOM NO. 413B, C.R. BUILDING, PRIVATE LIMITED, LP. ESTATE, A-15/31, LGF, VASANT VIHAR, NEW DELHI DELHI — 57 (PAN: AAFCE7588K) (APPELLANT) | (RESPONDENT) Department by : Shri Surender Pal, CIT(DR) Assessee by : Shri S.K. Chaturvedi, CA Date of hearing : 19.03.2025 Date of pronouncement : 19.03.2025 ORDER PER MAHAVIR SINGH, VP : This appeal filed by the Revenue is directed against the order dated 07.08.2024 of the Ld. CIT(A)/NFAC, New Delhi relating to assessment year 2022-23. The only issue in this appeal of the Revenue is relating to allowing the set off of brought forward losses for AY 2021-22 amounting to Rs. 10,00,22,035/- against the income of the year under appeal, where the loss of AY 2021-22 was disallowed and income was determined as per assessment order u/s. 143(3) dated 16.12.2022 for AY 2021-22. 2, At the outset, Ld. Counsel for the assessee pointed out that assessment framed in AY 2021-22 was reversed by the Ld. CIT(A) by allowing the carry forward losses for next year, vide his following findings:- “4(a). I have gone through the facts and circumstances of the case. I have also gone through the assessee's submissions. As per facts of the case, the assessee started its business activities on 02.11.2020 and for the current AY, it has only ce conducted manufacturing activities for 5 months. Therefore, being the first year of operations, the asssessee incurred huge loss of Rs. 12, 44,36, 763/- which also included the depreciation loss and business loss. The assessee is eligible to carry forward the business loss for 8 years other than unabsorbed depreciation. However, carry forward of business loss is only allowable if the assessee filed the ROI within the due date as specified w/s. 139(1) r.w.s 139 (3). In the instant case, the assessee being a company, the due date for filing ROI is 31.10.2021 as per clause (a) of explanation 2 to Section 139(L). However, due to Covid pandemic, the CBDT as per Circular No. 01/2022 extended the due date from 31.10.2021 to 15.02.2022. In this case, the assessee filed the ROI on 12.02.2022, therefore, the assessee complied with the extended time lines as fixed by the CBDT. Thus, the assessee complied with the provisions of section 139(1) r.w.s 139(3) in filing ROI within the due date, therefore, the assessee company is eligible to carry forward loss for subsequent assessment years. Accordingly, the loss as shown by the assessee.” 2.1. Ld. AR for the assessee further submitted that Ld. CIT(A) in the instant assessment year 2022-23 by relying upon the aforesaid findings of AY 2021-22, allowed the claim of the assessee by observing as under:- “T have considered the assessment order and the material on record. In the instant case, for the current AY, the AO rejected the books of accounts and denied the benefit of carry forward loss to the assessee. However, for the AY 2021-22, appeal has been allowed by the Ld. CIT(A) restoring the book loss as arrived by the assessee. Further, the assessee was also eligible to carry forward loss because of the CBDT's extended time lines of due date from 31st October, 2021 to 15th February, 2022 for the concerned AY 2021-22. Since, the assessee filed ROI on 12.02.2022, the Ld. CIT(A) allowed the carry forward loss for subsequent years and the assessee's grounds were allowed. Accordingly, the assessee has sufficient brought forward loss to set off with the current years income. Therefore, the AO is directed to compute assessee's actual income after setting off of brought forward losses pertaining to AY 2021-22. The assessee's appeal is hereby allowed.” 3: Per contra, Ld. DR relied upon the order of the AO. 4. We have heard both the parties and perused the records. We find that in the instant assessment year, the AO rejected the books of accounts and denied the benefit of carry forward loss to the assessee. However, for the AY 2021-22, appeal has been allowed by the Ld. CIT(A) restoring the book loss as arrived by the assessee. Further, the assessee was also eligible to carry forward loss because of the CBDT's extended time lines of due date from 31st October, 2021 to 15th February, 2022 for the concerned AY 2021-22. Since, the assessee filed ROI on 12.02.2022, the Ld. CIT(A) allowed the carry forward loss for subsequent years and the assessee's grounds were allowed. Accordingly, Ld. CIT(A) is correct in holding that 2 ee ES the assessee has sufficient brought forward loss to set off with the current years income. Hence, Ld. CIT(A) rightly directed the AO to compute assessee's actual income after setting off of brought forward losses pertaining to AY 2021-22. In view of the aforesaid factual matrix, we do not find any infirmity in the order of the ld. CIT(A), hence, we uphold the same and reject the grounds raised by the Revenue. 5. In the result, the Revenue’s appeal is dismissed in the aforesaid manner. Order pronounced in the Open Court on 19/03/2025. . cll— a (MANISH AGARWAL) (MAHAVIR SINGH) ACCOUNTANT MEMBER VICE PRESIDENT SRBhatnagar % Copy forwarded to: - 1; Appellant 2. Respondent 3. DIT 4. CIT (A) 5; DR, ITAT TRUE COPY By Order, Assistant Registrar, ITAT, Delhi Bench "