ESSEL INFRAPROJECTS LTD, MUMBAI V. DCIT CIR 7(3)(1), MUMBAI

ITA 1251/MUM/2017

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 6798 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 28-02-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: E
• Assessment Year: 2011-2012
• Appeal Filed On: 22-02-2017
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: R MANJUNATHA SWAMY
• Keywords: Depreciation; Earning of tax free income; Unabsorbed depreciation; Rule 8D
• Section: 43B; 143(3); 14A; 139(1)

Judgement Text

IN THE INCOME-TAX APPELLATE TRIBUNAL E B ENCH MUMBAI BEFORE SHRI G.S. PANNU, VICE- PRESIDENT AND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 1251/MUM/2017 (ASSESSMENT YEAR 2011-12) ESSEL INFRAPROJECTS LIMITED 135, CONTINENTAL BUILDING, DR. ANNIE BESANT ROAD, WORLI, MUMBAI- 400018. P AN: AAACP6095M VS. DCIT-CIRCULE-7(3)(1), (BEFORE RESTRUCTURING DCIT, CIRCLE-8(1), MUMBAI) ROOM NO.12, GROUND FLOOR, AAYAKAR BHAVAN, M.K. ROAD, MUMBAI-400020. APPELLANT RESPONDENT APPELLANT BY : SHRI K. SHIVRAM (AR) RESPONDENT BY : SHRI R. MANJUNATHA SWAMY (DR) DATE OF HEARING : 21.01.2019 DATE OF PRONOUNCEMEN T : 28.02.2019 ORDER UNDER SECTION 254(1)OF INCOME TAX ACT PER PAWAN SINGH, JUDICIAL MEMBER; 1. THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE ORD ER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-56, MUMBAI (THE LD. CIT(A) DATED 30.10.2016 FOR ASSESSMENT YEAR 2011-12. THE ASSESSEE HAS RAISE D THE FOLLOWING GROUNDS OF APPEAL: ISSUE NO.1 1. THE LEARNED CIT(A) ERRED IN LAW AND FACTS IN UPH OLDING THE DISALLOWANCE MADE BY THE ASSESSING OFFICER AS PER SECTION 14A OF THE INCOME-TAX ACT,1961 R.W.R. 8D OF RS. 10,36,00,403/-; WITHOUT APPRECIATI NG THAT NO ACTUAL EXPENDITURE WAS INCURRED ON EARNING TAX EXEMPT INCO ME IN THE FORM OF DIVIDEND DURING THE YEAR. 2. WITHOUT PREJUDICE TO ANY OTHER GROUND TAKEN IN T HE APPEAL, THE LEARNED CIT(A) ERRED IN INCLUDING FOR THE PURPOSES OF RULE 8D(II) AND RULE 8D(III) THE ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 2 INVESTMENTS IN SPVS THAT WERE MANDATORY FOR THE CON DUCT OF THE BUSINESS OF THE APPELLANT AND HAD NEITHER YIELDED ANY DIVIDEND INCOME IN THE PREVIOUS YEAR UNDER CONSIDERATION OR ANY PRIOR ASSESSMENT YE AR. 3. WITHOUT PREJUDICE TO ANY OTHER GROUND TAKEN IN T HE APPEAL, THE LEARNED CIT(A) ERRED IN INCLUDING FOR THE PURPOSES OF RULE 8D(II) THE GROSS INTEREST EXPENDITURE INSTEAD OF NET INTEREST EXPENDITURE. 4. WITHOUT PREJUDICE TO ANY OTHER GROUND TAKEN IN T HE APPEAL, THE LEARNED CIT(A) ERRED IN SUSTAINING DISALLOWANCE U/S 14A R.W . R. 8D(II) OF THE INCOME- TAX ACT,1961, EVEN THOUGH THE ASSESSEE HAD SUFFICIE NT INTEREST FREE FUNDS/RESERVES THAT WERE UTILIZED FOR INVESTMENTS Y IELDING TAX EXEMPT INCOME. 5. WITHOUT PREJUDICE TO ANY OTHER GROUND TAKEN IN T HE APPEAL, THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS ERRED IN SUSTA INING THE DISALLOWANCE AS PER SEC. 14A R.W.R. 8D OF THE INCOME-TAX ACT,1961, WITHOUT APPRECIATING THAT THE DISALLOWANCE MADE BY THE ASSESSING OFFICER OF R S. 10,36,00,403/- WAS MUCH HIGHER THAN THE TAX EXEMPT INCOME IN THE FORM OF DIVIDENDS WHICH WAS ONLY RS. 2,80,36,580/- AND WAS RECEIVED ONLY FROM L ISTED SHARES IN ZEE ENTERTAINMENT ENTERPRISES LTD. ISSUE NO.2 6. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN DISALLOWING THE 'EMPLOYEES CONTRIBUTION TOWARDS PROVIDENT FUND' ON ACCOUNT OF PAYMENTS MADE AFTER THE DUE DATE OF PAYMENT BUT BEFORE THE D UE DATE OF FILING THE RETURN OF INCOME U/S 139(1). ISSUE NO.3 7. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT PASSING A SPEAKING ORDER WITH REGARDS OF THE CLAIM OF THE APPELLANT WI TH REGARD TO THE SET OFF OF THE PREVIOUS YEARS CARRIED FORWARD LOSS AND UNABSOR BED DEPRECIATION WHICH WAS INADVERTENTLY NOT ADJUSTED WHILE FILING THE RET URN OF INCOME U/S 139(1) BUT WAS SOUGHT TO BE SET OFF DURING THE ASSESSMENT PROC EEDINGS. ISSUE NO.4 8. THE LEARNED CIT(A) HAS ERRED IN LAW AND IN FACTS IN NOT DELETING THE INTEREST CHARGED U/S 34C OF THE INCOME-TAX ACT, 1961, BY THE ASSESSING OFFICER IN THE ASSESSMENT ORDER U/S 143(3) OF THE ACT. ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 3 2. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-COMPA NY IS ENGAGED IN THE BUSINESS OF DEVELOPMENT OF INFRASTRUCTURE, APC, CON TRACT OF ROAD, AIRPORTS, HOTELS AND SPECIAL PURPOSE VEHICLE. THE A SSESSEE FILED ITS RETURN OF INCOME FOR ASSESSMENT YEAR 2011-12 ON 30.09.2011 DECLARING TOTAL INCOME OF RS. 4,06,35,080/-. THE RETURN OF INCOME W AS SELECTED FOR SCRUTINY. DURING THE ASSESSMENT PROCEEDING, THE ASS ESSING OFFICER NOTED THAT ASSESSEE HAS RECEIVED DIVIDEND INCOME OF RS. 2 .80 CRORE WHICH IS CLAIMED EXEMPTED INCOME. NO SUO MOTO DISALLOWANCE WAS MADE BY ASSESSEE AGAINST EARNING OF SUCH EXEMPT INCOME. THE ASSESSING OFFICER ASKED THE ASSESSEE TO FURNISH THE WORKING OF DISALL OWANCE AS PER SECTION 14A R.W.S. RULE 8D AND ISSUED SHOW-CAUSE NOTICE AS TO WHY THE DISALLOWANCE SHOULD NOT BE MADE AS PER THE RULE 8D. THE ASSESSEE FURNISHED ITS REPLY DATED 10.02.2012. IN REPLY THE ASSESSEE CONTENDED THAT NO INTEREST EXPENDITURE WAS INCURRED IN RELATION TO INVESTMENT FROM WHICH EXEMPT INCOME WAS EARNED. THE ASSESSEE ALSO CONTEND ED THAT ENTIRE DIVIDEND OF RS. 2.80 CRORE WAS RECEIVED FROM INVEST MENT IN ZEE ENTERTAINMENT PVT. LTD. AND NOT FROM ANY OTHER INVE STMENT WHICH WERE MADE IN SPECIAL PURPOSE VEHICLE (SPV). THE FUNDS US ED FOR INVESTMENT OF SHARE OF ZEE ENTERTAINMENT PVT. LTD. WERE FROM I SSUE OF ITS OWN SHARE, SALE OF INVESTMENT AND REFUND OF LOANS AND NO BORRO WED FUND WERE USED FOR ACQUIRING THE SAID INVESTMENT. THE ASSESSEE FUR THER CONTENDED THAT THERE WERE SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH THE ASSESSEE AND ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 4 INVESTMENTS WERE MADE FROM INTEREST FREE FUNDS. THE SHARE CAPITAL OF ASSESSEE IS OF RS. 45.15 CRORE AND RESERVE AND SURP LUS OF RS. 1409 CRORE. THE CONTENTION OF ASSESSEE WAS NOT ACCEPTED BY ASSE SSING OFFICER HOLDING THAT HE IS NOT SATISFIED WITH THE CLAIM OF ASSESSEE NO EXPENDITURE FOR EARNING EXEMPT INCOME WAS MADE BY ASSESSEE. THE ASSESSING OFFICER INVOKED THE PROVISION OF RULE 8D AND MADE DISALLOWA NCE UNDER RULE 8D(2)(II) OF RS. 7,89,22,542/- AND DISALLOWANCE UND ER RULE 8 D 2)(III) OF RS. 2,46,77,861/- THEREBY MADE TOTAL DISALLOWANCE O F RS. 10,36,00,403/-. ON APPEAL BEFORE LD CIT(A) THE ACTION OF THE ASSESS ING OFFICER WAS CONFIRMED. 3. THE ASSESSING OFFICER ALSO NOTED THAT THE ASSESSEE HAS PAID EMPLOYEES CONTRIBUTION OF PROVIDENT FUND BEYOND THE DUE DATE OF DEPOSIT OF THE SAID CONTRIBUTION. IN REPLY, THE SHOW CAUSE, THE ASSESSE E CONTENDED THAT ALL PAYMENTS WERE MADE BEFORE THE DUE DATE OF FILING OF RETURN; THEREFORE, THE ASSESSEE IS ENTITLED FOR DEDUCTION IN RESPECT OF CO NTRIBUTION TO EMPLOYEE PROVIDENT FUND. THE ASSESSING OFFICER DISALLOWED TH E CLAIM UNDER SECTION 36(1)(VA). THE LD. CIT(A) UPHELD THE ACTION OF ASSESSING OFFICER BY REFERRING THE DECISION OF HONBLE GUJARAT HIGH C OURT IN CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION. 4. FURTHER, DURING THE ASSESSMENT THE ASSESSEE CLAIMED THAT ASSESSEE FAILED TO ADJUST THE CARRY FORWARD THE LOSS IN CURRENT YEAR W HILE FILING THE RETURN OF INCOME. THE ASSESSEE MADE APPLICATION BEFORE THE AS SESSING OFFICER TO ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 5 ALLOW ADJUSTING THE CARRY FORWARD BUSINESS LOSSES O F PREVIOUS YEAR. THE ASSESSING OFFICER NOT DEALT WITH THE ISSUE IN THE A SSESSMENT PROCEEDING. BEFORE THE LD. CIT(A), THE ASSESSEE RAISED ITS GRIE VANCES. THE ASSESSING OFFICER HELD THAT AS PER SECTION 139(3), IF THERE I S LOSS ARISEN UNDER THE HEAD CAPITAL GAIN OR UNDER PROFIT AND GAIN FROM BUSINESS AND PROFESSION, THE FILING OF RETURN WOULD BE MANDATOR Y, IF THIS LOSS IS TO BE CARRIED FORWARD FOR THE NEXT YEAR AND SET OFF OF AG AINST THE FUTURE INCOME. THE LD. CIT(A) DIRECTED THE ASSESSING OFFICER TO VE RIFY THE CLAIM WITH RESPECT TO THE SAID DIRECTION AND THEREBY PARTLY AL LOWED THE RELIEF TO THE ASSESSEE. 5. THUS, FURTHER AGGRIEVED BY THE ORDER OF LD. CIT(A) , IN CONFIRMING THE DISALLOWANCE UNDER SECTION 14A, DISALLOWANCE UNDER SECTION 36(1)(VA) AND PARTIAL RELIEF ON SETOFF OF CARRY FORWARD LOSS ES, THE ASSESSEE HAS FILED THE PRESENT APPEAL BEFORE US. 6. WE HAVE HEARD THE SUBMISSION OF LD. AUTHORIZED REPR ESENTATIVE (AR) OF THE ASSESSEE AND LD. DEPARTMENTAL REPRESENTATIVE (D R) FOR THE REVENUE AND PERUSED THE MATERIAL AVAILABLE ON RECORD. GROUN D NO.1 TO 5 RELATES TO DISALLOWANCE UNDER SECTION 14A R.W.RULE 8D. THE LD. AR OF THE ASSESSEE SUBMITS THAT NO INTEREST DISALLOWANCE UNDER SECTION 14A R.W.RULE 8D(2)(II) IS WARRANTED AGAINST THE ASSESSEE AS THE ASSESSEE OWNED SUFFICIENT INTEREST FREE FUNDS AVAILABLE WITH THE A SSESSEE FOR MAKING INVESTMENT FOR EARNING THE EXEMPT INCOME. IN SUPPOR T OF HIS SUBMISSIONS ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 6 THE LD AR FOR THE ASSESSEE RELIED ON THE DECISION O F HONBLE BOMBAY HIGH COURT IN CIT VS HDFC BANK 366 ITR 505 (BOM). I N SECOND ALTERNATIVE SUBMISSION, THE DISALLOWANCE UNDER SECT ION 14A SHOULD BE RESTRICTED TO 5% OF EXEMPT INCOME FOLLOWING THE REA SONING LAID DOWN BY TRIBUNAL IN ASSESSEES CASE FOR ASSESSMENT YEAR 200 9-10 IN ITA NO. 3663/MUM/2016 DATED 10.01.2018. IT WAS SUBMITTED TH AT THE FACT FOR THE YEAR UNDER CONSIDERATION ARE ALMOST SIMILAR AS OF A .Y. 2009-10. IN THIRD ALTERNATIVE SUBMISSION, THE LD. AR OF THE ASSESSEE FURTHER WITHOUT PREJUDICE TO HIS EARLIER SUBMISSION, THE DISALLOWAN CE UNDER SECTION 14A SHOULD BE RESTRICTED TO 10% OF EXEMPT INCOME FOLLOW ING THE REASONING OF THE DECISION OF TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2006-07 & 2007-08. IN FOURTH ALTERNATIVE SUBMISSION , THE LD. AR OF THE ASSESSEE SUBMITS THAT ONLY THOSE INVESTMENT THAT HA VE YIELDED EXEMPT INCOME CAN BE CONSIDERED FOR THE PURPOSE OF RULE 8D (2)(III). THE INVESTMENT MADE IN SPVS HAVE NOT YIELDED DIVIDEND I NCOME. THUS, THOSE INVESTMENTS CANNOT BE CONSIDERED FOR THE PURPOSE OF WORKING OF RULE 8D. IN SUPPORT OF HIS SUBMISSION, THE LD. AR OF THE ASS ESSEE RELIED UPON THE FOLLOWING DECISIONS: (I) PCIT VS. BALLAPUR INDUSTRIES LTD. (BOM. HC)(PAPER B OOK NO.- II PG. NO. 193- 94 (194). (II) ACB INDIA LTD. V. ACIT [2015] 374 ITR 108 (DEL HC). (III) ACIT VS. VIREET INVESTMENT P. LTD. [2017] 165 ITD 2 7 (DELHI TRIB.)(SB). (IV) CIT V. DELITE ENTERPRISES, ITA NO. 110 OF 2009 DATE D 26.02.2019. (BOM HC). (V) CIT V. SHIVAM MOTORS (P.) LTD. [2014] 272 CTR 277 ( ALL. HC). ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 7 7. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPO RTED THE ORDER OF LOWER AUTHORITIES. 8. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THERE IS N O DISPUTE THAT ASSESSEE HAS SHOWN DIVIDEND INCOME OF RS. 2.80 CRORE. THE AS SESSING OFFICER BY INVOKING THE PROVISION OF RULE 8D MADE DISALLOWANCE OF RS. 10,36,00,403/- WHICH CONSIST OF RS. 7,89,22,542/- U NDER RULE 8D(2)(II). AND RS. 2,46,77,861/- UNDER RULE 8D(2)(III) BEING . 5% AVERAGE VALUE OF INVESTMENT. FROM THE FINANCIAL STATEMENT, WE HAVE S EEN THAT THE ASSESSEE HAS RESERVE AND SURPLUS OF RS. 1409 CRORE. THE AVER AGE VALUE OF INVESTMENT DURING THE FINANCIAL YEAR IS OF RS. 493. 5 CRORE, THEREFORE, THE INVESTMENT FREE FUNDS AVAILABLE WITH THE ASSESSEE I S MORE THAN THE VALUE OF INVESTMENT. THUS, AS PER THE DECISION OF HONBLE BOMBAY HIGH COURT IN HDFC BANK LTD. (366 ITR 505), NO INTEREST DISALL OWANCE IS CALLED FOR. 9. WE HAVE NOTED THAT THE ASSESSING OFFICER HAS DISALL OWED RS. 7.89 CRORE ON ACCOUNT OF INTEREST DISALLOWANCE. THUS, RESPECTI VELY FOLLOWING THE DECISION OF HONBLE HIGH COURT, THE INTEREST DISALL OWANCE UNDER RULE 8D(2)(II) IS DELETED. SO FAR AS DISALLOWANCE OF ADM INISTRATIVE EXPENSES ARE CONCERNED. WE HAVE NOTED THAT ASSESSEE HAS RECE IVED DIVIDEND FROM INVESTMENT IN ZEE ENTERTAINMENT ENTERPRISES LTD. ON LY (PAGE 92 OF PAPER BOOK). THE LD. AR OF THE ASSESSEE HAS STRONGLY RELI ED UPON THE DECISION OF ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 8 TRIBUNAL IN ASSESSEES OWN CASE FOR ASSESSMENT YEAR 2009-10 AND SUBMITTED THAT THE FACTS OF THE CASE FOR THE YEAR U NDER CONSIDERATION ARE NOT AT VARIANCE. PERUSAL OF ORDER REVEALS THAT IN A .Y. 2009-10, THE ASSESSEE HAS RECEIVED DIVIDEND INCOME FROM TWO COMP ANIES AND ONE MUTUAL FUND. THE ASSESSEE FURTHER MADE FRESH INVEST MENT IN ITS SUBSIDIARY AND IN TWO MUTUAL FUNDS. FOR A.Y. 2009-10, THE TRIB UNAL RESTRICTED THE DISALLOWANCE @ OF 5% OF THE DIVIDEND INCOME RECEIVE D DURING THE FINANCIAL YEAR. FOR THE YEAR UNDER CONSIDERATION, T HE ASSESSEE HAS RECEIVED DIVIDEND INCOME OF RS. 2.80 CRORE FROM ZEE ENTERTAINMENT LTD. THEREFORE, CONSIDERING THE FACTS AND CIRCUMSTANCES OF THE CASE AND CONSIDERING THE SECOND ALTERNATIVE SUBMISSION THAT DISALLOWANCE UNDER SECTION 14A SHOULD BE RESTRICTED TO 10% OF EXEMPT I NCOME. WE FIND CONVINCING FORCE IN THE SUBMISSION OF LD. AR OF THE ASSESSEE, THEREFORE, WE ACCEPT THE CONTENTION OF LD. AR OF THE ASSESSEE AND DIRECT THE ASSESSING OFFICER TO RESTRICT THE DISALLOWANCE @ 10 % OF THE DIVIDEND INCOME EARNED BY THE ASSESSEE. AS WE HAVE ACCEPTED THE SECOND ALTERNATIVE SUBMISSION OF ASSESSEE, THEREFORE, THE DISCUSSION ON OTHER ALTERNATIVE SUBMISSION MADE BY LD. AR OF THE ASSESS EE ON THE ISSUE HAVE BECOME ACADEMIC. 10. IN THE RESULT, GROUND NOS.1 TO 5 OF THE APPEAL ARE PARTLY ALLOWED. 11. GROUND NO.6 RELATES TO DISALLOWANCE OF EMPLOYEE PRO VIDENT FUND. THE LD. AR OF THE ASSESSEE SUBMITS THAT THIS GROUND OF APPEAL IS COVERED BY ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 9 THE DECISION OF JURISDICTIONAL HIGH COURT IN CIT VS . GHATGE PATIL TRANSPORTS (53 TAXMANN.COM 141). ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUPPORTED THE ORDER OF AUTHORITIES BELOW. 12. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. THE ASSESS ING OFFICER DISALLOWED THE CONTRIBUTION TOWARD PROVIDENT FUND AS DEPOSITED BEYOND THE STIPULATED TIME. THE LD. CIT(A) CONFIRMED THE ACTIO N OF ASSESSING OFFICER BY REFERRING THE DECISION OF HONBLE GUJARAT HIGH C OURT IN CIT VS. GUJARAT STATE ROAD TRANSPORT CORPORATION (SUPRA). 13. WE HAVE NOTED THAT THE HONBLE JURISDICTIONAL HIGH COURT IN CIT VS. GHATGE PATIL (SUPRA) HELD THAT BOTH THE EMPLOYEES A ND EMPLOYERS CONTRIBUTION ARE UNDER THE AMENDMENT TO SECTION 43B AND JUDGMENT OF HONBLE SUPREME COURT IN [ALOM EXTRUSION LTD. (319 ITR 306 (SC)] AND HELD THAT PAYMENT TOWARD THE EMPLOYEE CONTRIBUTION ARE SUBJECT TO THE BENEFIT AND DEDUCTION ARE ALLOWABLE. THEREFORE, RES PECTFULLY FOLLOWING THE DECISION OF JURISDICTIONAL HIGH COURT, WE DIRECT TH E ASSESSING OFFICER TO VERIFY THE FACT, IF THE ASSESSEE HAS PAID EMPLOYEE CONTRIBUTION TO PROVIDENT FUND BEFORE DUE DATE OF FILING OF RETURN OF INCOME AND ALLOW THE RELIEF TO THE ASSESSEE. 14. IN THE RESULT, GROUND NO.6 OF APPEAL IS ALLOWED FOR STATISTICAL PURPOSE. 15. GROUND NO.7 RELATES TO CLAIM OF SET OFF OF CARRY FO RWARD LOSSES AND UNABSORBED DEPRECIATION. THE LD. AR OF THE ASSESSEE SUBMITS THAT WHILE ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 10 FILING RETURN OF INCOME, THE ASSESSEE FAILED TO ADJ UST THE SET OFF OF CARRY FORWARD LOSS IN THE CURRENT YEAR. THE ASSESSEE MADE APPLICATION BEFORE THE ASSESSING OFFICER TO PERMIT TO ADJUST THE CARRY FOR WARD BUSINESS LOSS FROM PREVIOUS YEAR. THE ASSESSING OFFICER NOT DISCUSSED THE CLAIM/ISSUE IN THE ASSESSMENT ORDER. THE LD. CIT(A) HELD THAT PROVISIO N OF FILING OF RETURN OF LOSSES ARE GOVERNED BY SECTION 139(3) WHICH STATES THAT IN CASE A TAX PAYER HAS INCURRED LOS IN PREVIOUS YEAR, IT IS NOT MANDAT ORY FOR HIM TO FILE INCOME TAX RETURN FOR THE SAME. THERE IS LOSS UNDER THE HEAD CAPITAL GAIN OR UNDER THE HEAD PROFIT AND GAIN FROM BUSINESS AND PROFESSION, FILING OF RETURN WOULD BE MANDATORY, IF LOSSES TO THE CARRY F ORWARD TO THE NEXT YEAR AND SET OFF OF AGAINST THE FUTURE INCOME. THE LD. A R OF THE ASSESSEE SUBMITS THAT THERE IS NO CLEAR DIRECTION, IF THE CA RRY FORWARD LOSSES ARE TO BE ALLOWED TO SET OFF OF IN THE CURRENT YEAR. 16. ON THE OTHER HAND, THE LD. DR FOR THE REVENUE SUBMI TS THAT APPROPRIATE DIRECTION MAY BE GIVEN TO THE ASSESSING OFFICER. 17. WE HAVE CONSIDERED THE RIVAL SUBMISSION OF THE PART IES AND HAVE GONE THROUGH THE ORDERS OF AUTHORITIES BELOW. WE HAVE NO TED THAT ASSESSING OFFICER HAS NOT DEALT WITH THE CLAIM OF ASSESSEE DE SPITE RAISING THE ISSUE BEFORE HIM. THE LD. CIT(A) SIMPLY DIRECTED THE ASSE SSING OFFICER TO VERIFY THE CLAIM. CONSIDERING THE SUBMISSION OF LD. AR OF THE ASSESSEE, WE DIRECT THE ASSESSING OFFICER TO VERIFY THE FACT AND PASS THE ORDER IN ACCORDANCE WITH LAW AND FURTHER ALLOW THE CARRY FOR WARD BUSINESS LOSS ITA NO. 1251 MUM 2017 -ESSEL INFRAPROJECTS LIMITED. 11 FROM THE YEAR FOR UNABSORBED DEPRECIATION, IF ANY, IN ACCORDANCE WITH LAW. NEEDLESS TO SAY THAT BEFORE PASSING THE ORDER, THE LD. CIT(A) SHALL GRANT SUFFICIENT OPPORTUNITY TO THE ASSESSEE BEFORE PASSI NG THE ORDER. 18. IN THE RESULT, APPEAL OF THE ASSESSEE IS PARTLY ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 28/ 02/2019. SD/- SD/- G.S. PANNU PAWAN SINGH VICE-PRESIDENT JUDICIAL MEMBER MUMBAI, DATE: 28.02.2019 SK COPY OF THE ORDER FORWARDED TO : 1. ASSESSEE 2. RESPONDENT 3. THE CONCERNED CIT(A) 4. THE CONCERNED CIT 5. DR E BENCH, ITAT, MUMBAI 6. GUARD FILE BY ORDER, DY./ASST. REGISTRAR ITAT, MUMBAI