PROTECH EXIM (INDIA) P LTD., , MUMBAI V. ADIT, CPC, BANGALORE

ITA 1089/MUM/2023

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Protech Exim (India) Pvt. Ltd. appealed against the order of the CIT(A)/NFAC, Delhi, which confirmed the AO's decision denying the set-off of a business loss of Rs.38,487 against other heads of income for the assessment year 2019-20. The Tribunal found that under Section 71 of the Income Tax Act, 1961, the assessee is entitled to set-off the business loss against income from house property or other sources, as there is no restriction in the law against such a claim. Additionally, the Tribunal addressed the issue of disallowance of exempt income from dividends, directing the AO to verify the documents and allow the claim if found valid.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 300074 (ITAT-MUMBAI)
• Duration Of Justice: 2 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-06-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 26-06-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 04-04-2023
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income; Earning of tax free income; Set aside
• Section: 143(1)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, MUMBAI BEFORE SHRI ABY T. VARKEY, JM आयकर अपील सं/ I.T.A. No.1089/Mum/2023 (निर्धारण वर्ा / Assessment Year: 2019-20) Protech Exim (India) Pvt. Ltd. C/O G. P. Mehta & Co. CAS, 807, Tulsiani Chambers, Nariman Point, Mumbai-400021. बिधम/ Vs. ACIT, CPC Bangaluru. स्थधयी लेखध सं./जीआइआर सं./PAN/GIR No. : AAACP3317N (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) सुनवाई की तारीख / Date of Hearing: 27/06/2023 घोषणा की तारीख /Date of Pronouncement: 30/06/2023 आदेश / O R D E R PER ABY T. VARKEY, JM: This is an appeal preferred by the assessee against the order of the Ld. CIT(A)/NFAC, Delhi dated 16.03.2023 for AY. 2019-20. 2. The ground no. 1 is general in nature. 3. The ground no. 2 is against the action of the Ld. CIT(A) confirming the action of the AO denying set-off of business loss of Rs.38,487/- against other head of income for the same assessment year. 4. Brief facts are that the assessee had filed its return of income for AY 2019-20 on 21.10.2019 declaring taxable income of Rs.5,83,870/.- The return was processed by CPC u/s 143(1) of the Income Tax Act, 1961 (hereinafter “the Act”) and assessed the income of the assessee at Rs.15,87,350/- by making disallowance of Rs.10,03,480/- out of which, ground no. 2 emanates i.e. disallowance of Rs.38,481/- which action of CPC has been confirmed by Ld. Assessee by: Shri G. P. Mehta Revenue by: Shri Dharmvir D Yadav (Sr. DR) ITA No.1089/Mum/2023 A.Y. 2019-20 Protech Exim (India) Pvt. Ltd. 2 CIT(A). In the impugned order, the Ld. CIT(A) has noted that while processing the return of assessee, the CPC has disallowed the claim of set-off of business loss of Rs.38,421/- against the income from house property. According to the Ld. CIT(A), the assessee failed to justify as to how it had adjusted the business loss against the income form house property which according to him is not permissible under the Act. Therefore, the Ld. CIT(A) confirmed the action of the CPC disallowing Rs.38,421/-. 5. It is noted that the assessee has shown income from house property as well as income from other sources (income from house property to the tune of Rs.3,34,643/- and income from other sources of Rs.2,87,647/-). As per section 71 of the Act, where in respect of any assessment year, the net result of the computation under any head of income (other than capital gains) is loss, the assessee is entitled to have the amount of such loss set-off against his income, if any assessable for that assessment year under any other head. In the facts of the case as noted, there is no restriction in section 71 of the Act not allowing the claim of set-off of such loss against the income shown by the assessee under any other head. According to the assessee, the net result of the computation under the head of business income is loss of Rs.38,421/- and the assessee has shown income from house property and income from other sources. And the Ld. DR could not point out from the relevant section of the law as to any such restrictions to claim the loss from the surplus from income from other sources or house property. Therefore, the assessee is entitled to set-off of such loss against its income from house property or income from other sources. ITA No.1089/Mum/2023 A.Y. 2019-20 Protech Exim (India) Pvt. Ltd. 3 And the AO is directed to grant such set-off in accordance to law. Thus, ground no. 2 is allowed. 6. Ground no. 3 is against the action of the Ld. CIT(A) disallowing the exemption of dividend on equity shares to the tune of Rs.10,03,47/- (Rs.6,24,574/- dividend equity shares and Mutual Funds of Rs.3,78,903/-). 7. The assessee in its return of income has claimed income of Rs.10,03,477/- (Rs.6,24,574/- dividend equity shares and Mutual Funds of Rs.3,78,903/-) as exempt income u/s 10(34) and 10(35) of the Act. The CPC has disallowed the claim by stating as under: - “In schedule BP, Row No.: A3c income/receipt credited to Profit and Loss account considered under other head of income- other source value is more than the sum of row no.: 1 or 1a + 1b + 1c + 1d + 1e and 2a + 2b +2c + 2d + 2e + 8A in other sources Schedule.” 8. Aggrieved by the action of CPC, the assessee preferred an appeal before the Ld. CIT(A) and he first of all gave a finding that the CPC has not provided any discernible reason for making the disallowance and further observed that the CPC might have found some arithmetical error. Therefore, he directed the AO to examine the issue in the light of the supporting/documentary evidences and directed AO to allow the same as per law subject to verification. According to the Ld. AR, the assessee approached the AO to give effect to the direction of the Ld. CIT(A), but, the AO has not bothered to give effect to the order of the Ld. CIT(A) which according to Ld AR, may be on the reason that Ld. CIT(A) does not enjoy the power to set aside the assessment back to the AO; and therefore according to Ld. AR, the ITA No.1089/Mum/2023 A.Y. 2019-20 Protech Exim (India) Pvt. Ltd. 4 AO might not act upon the impugned direction of the Ld. CIT(A). Be that as it may, before this Tribunal, the Ld. AR has filed the paper book from which it is discerned that assessee has filed the supporting/relevant documents to substantiate its claim of excempt income viz dividend certificate which is found placed at page no. 41 to 75 of PB and the ledger extract of dividend account found placed at page no. 36 to 40 of PB as well as the bank statement (Syndicate Bank and ICICI Bank) found placed at page no. 76 to 85 of PB. Based on the aforesaid relevant documents, the assessee claims that exempt income should be allowed. In the light of the aforesaid primary documents produced by the assessee to substantiate its claim of exempt income, this Tribunal is inclined to set aside the impugned order of the Ld. CIT(A) and direct the AO to verify the return of income as well as relevant documents in support of its claim and allow the claim of the assessee (exempt income) after verification in accordance to law. Needless to say, opportunity of hearing may be given to the assessee, if necessary while verifying the relevant documents. 9. In the result, the appeal of the assessee is allowed for statistical purposes. Order pronounced in the open court on this 30/06/2023. Sd/- (ABY T. VARKEY) JUDICIAL MEMBER मुंबई Mumbai; दिनांक Dated : 30/06/2023. Vijay Pal Singh, (Sr. PS) ITA No.1089/Mum/2023 A.Y. 2019-20 Protech Exim (India) Pvt. Ltd. 5 आदेश की प्रनिनलनि अग्रेनर्ि/Copy of the Order forwarded to : 1. अपीलार्थी / The Appellant 2. प्रत्यर्थी / The Respondent. 3. आयकर आयुक्त / CIT 4. दवभागीय प्रदतदनदि, आयकर अपीलीय अदिकरण, मुंबई / DR, ITAT, Mumbai 5. गार्ड फाईल / Guard file. आदेशधिुसधर/ BY ORDER, सत्यादपत प्रदत //True Copy// उि/सहधयक िंजीकधर /(Dy./Asstt. Registrar) आयकर अिीलीय अनर्करण, मुंबई / ITAT, Mumbai