Dy. C.I.T., Range-6, Lucknow V. U.P State Food & Essential Commodities Ltd., Lucknow

ITA 189/LKW/2019

AI Insights

The case involves the Deputy Commissioner of Income Tax, Range-6, Lucknow as the appellant and U.P. State Food & Essential Commodities Corp. Ltd. as the respondent. The dispute centered on the correct interpretation of the directions given by the ITAT in a previous case regarding the carry forward of losses for the Assessment Year 2003-04. The CIT(A) had allowed the full claim of brought forward losses as per the assessee's records, which was contested by the revenue. The ITAT upheld the CIT(A)'s decision, emphasizing that any adjustments to the carry forward losses should only be considered in future proceedings if it is determined that the losses were wrongly claimed.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 136109 (ITAT-LUCKNOW)
• Duration Of Justice: 3 year(s) 11 month(s) 6 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 19-02-2023
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 27-11-2022
• Assessment Year: 2003-2004
• Appeal Filed On: 13-03-2019
• Laws Referred To: Income-tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SHEELA CHOPRA
• Keywords: Depreciation; Wrong claim
• Section: 147; 143(3)

Judgement Text

। आयकर अपीलीय अिधकरण Ɋायपीठ, लखनऊ । IN THE INCOME TAX APPELLATE TRIBUNAL “B” BENCH, LUCKNOW BEFORE SHRI MAHAVIR SINGH, HON’BLE VICE PRESIDENT & SHRI GIRISH AGRAWAL, HON’BLE ACCOUNTANT MEMBER ITA No. 189/LKW/2019 Assessment Years: 2003-04 Dy. Commissioner of Income Tax, Range-6, Lucknow Vs. U.P. State Food & Essential Commodities Corp. Ltd. 17, Gokhley Marg Lucknow- 226001 [PAN: AAACU3257G] (Appellant) (Respondent) Assessee by : Shri S.C. Dixit, Advocate Revenue by : Smt. Sheela Chopra, CIT D/R सुनवाई की तारीख/Date of Hearing : 28/11/2022 घोषणा की तारीख/Date of Pronouncement : 20/02/2023 O R D E R PER BENCH: This appeal by the revenue is directed against the order passed by the learned Commissioner of Income Tax (Appeals) - 2, Lucknow, (hereinafter the “ld. CIT(A)”) dated 06/12/2018 for Assessment Year 2003-04 against the assessment order passed u/s 143(3) read with section 254 of the Income-tax Act, 1961 (hereinafter referred to as ‘the Act’) passed by Dy. Commissioner of Income Tax, Range-II Lucknow, dated 27/11/2008. 2. Grounds taken by the revenue are reproduced as under:- “1. The Commissioner of Income Tax (Appeal)-2, Lucknow has erred in law and on facts in deleting the computation of set off of brought forward of losses by the A.O. without appreciating the facts that the assessment order u/s 143(3) r.w.s. 254 of the I.T. Act, 1961 had been passed on 27.11.2008 when the assessment proceedings u/s 147 r.w.s. 143(3) of the I.T. Act, 1961 were already completed for A.Y. 2000-01 and A.Y. 2002-03. ITA No. 189/LKW/2019 Assessment Years: 2003-04 U.P. State Food & Essential Commodities Corp. Ltd. 2 2. The appellant craves leave to add or amend any one or more of the grounds of appeals, as stated above, as and when need to do so arises with the prior permissions of the Court.” 3. Brief facts of the case are that assessee filed its return of income declaring total income of Rs.5,14,39,005/- on 30/11/2013, wherein income was computed as under:- Net profit as per P&L A/c 16,86,03,617 Add: Provision for Income Tax 1,90,00,000 Prior period income 12,561 Depreciation for separate consideration 17,46,762 18,93,62,940 Less: Depreciation claimed (-)17,47,796 18,76,15,144 Less: Unabsorbed Loss b/f & set off (-)13,61,76,139 5,14,39,005 Assessment u/s 143(3) r.w.s. 144A of the Act was completed on 02/03/2006 and income was computed as under:- Returned income 5,14,39,005 Add: Wrong claim of carried forward losses 13,61,76,139 Disallowed Advertisement Exp. 66,106 Disallowed Printing & Stationary Exp. 36,387 Disallowed Dead Stock 25,000 Disallowed Repair & Maintenance Exp. 11,318 18,77,53,955 3.1. The Hon'ble ITAT, vide order dtd. 07-09-2007 in appeal vide ITA No. 198/Luc/07 filed by the assessee, has given finding on point of carry forward of losses of earlier years as under:- “41. Therefore in the present proceedings, the A0 has to adjust the brought forward losses from earlier years as per records. However, if on subsequent action u/s 147 or any other proceedings, it is found that losses had wrongly been claimed then consequential adjustment can be made while giving effect to that order. But in the present proceedings, the adjustments as directed by the Addl CIT while issuing directions u/s 144A cannot be made. The Addl. CIT's directions regarding escapement of income are fully justified but the adjustment in the present proceedings if something which is to be finally concluded w/s 147 ITA No. 189/LKW/2019 Assessment Years: 2003-04 U.P. State Food & Essential Commodities Corp. Ltd. 3 cannot be made a subject matter of adjustment at present. The grounds are allowed in terms of above observations. " 3.2. After considering all the directions of Hon’ble ITAT and submissions made by assessee, net total income was computed as under:- Originally assessed income 18,77,53,955 Less: Relief granted by the Ld. CIT(A) (-) 58,422 18,76,95,533 Further relief assessed as per directions of Hon’ble ITAT (44,071+25,000) (-) 69,071 18,76,26,462 Less: Carried forward losses of earlier years (-) 7,69,26,005 11,07,00,457 Or say, Rs.11,07,00,460/- 4. Thus, disallowance of carry forward of loss of Rs.5,92,50,134/- (i.e. Rs.13,61,76,139 minus Rs. 7,69,26,005) against the claim of Rs.13,61,76,139/- was challenged before ld. CIT(A) by assessee. Ld. CIT(A) gave his finding in para 6.1. by observing that issue involved is in respect of correct interpretation of directions given by the Hon’ble ITAT by its order dated 07/09/2007 for Assessment Year 2003-04. Ld. CIT(A) summarized the directions of the Hon’ble ITAT in para 6.2. and 6.3. of his order, which is extracted as under:- “6.2. Thus, the direction of Hon'ble ITAT are as under:- a. AO has to adjust b/f losses from earlier years as per records. b. However, if on subsequent proceedings u/s 147 or any other proceedings, it is found that these losses have been wrongly claimed then consequential adjustment can be made while giving effect to that order. c. But in present proceedings, the adjustment as directed by Addl. CIT while issuing directions u/s 144A cannot be made. d. The Addl. CIT's directions regarding escapement of income are fully justified but adjustment in present proceedings, if something which is ITA No. 189/LKW/2019 Assessment Years: 2003-04 U.P. State Food & Essential Commodities Corp. Ltd. 4 to be finally concluded u/s 147 cannot be made a subject matter of adjustment at present. 6.3. Thus, the directions of Hon'ble ITAT are crystal clear. Adjustment can only be made on subsequent action u/s 147 or any other proceedings when it is found that losses have been wrongly claimed. Only then, consequential adjustments can be made. No adjustment in present proceedings are allowed/justified for something which is to be finally concluded u/s 147. As on date, the AO can only make adjustment if it is found that losses have been wrongly claimed subsequent to proceedings u/s 147 or any other proceedings under the Act.” 5. Ld. CIT(A) then allowed Ground Nos. 1 to 5 taken by assessee in respect of claim of set off of brought forward losses by holding that ld. AO is bound to allow the claim of assessee to the extent of Rs.13,61,76,139/- instead of restricting it to Rs.7,69,26,005/- until and unless ld. AO holds that losses have been wrongly claimed subsequent to proceedings u/s 147 of the Act or any other proceedings under the Act. He, thus, deleted the addition made and negated the action of ld. Assessing Officer in restricting the set off of brought forward losses as against what was claimed in the return filed by the assessee. 5.1. Before us, ld. Counsel for assessee reiterated the submissions made before the ld. CIT(A), to which nothing contrary was furnished by ld. CIT D/R. On perusing the observations and findings of ld. AO, we do not find any reason to interfere with the same. Accordingly, the ground taken by the revenue is dismissed. 6. In the result, appeal of the revenue is dismissed. Order pronounced under Rule 34(4) of the ITAT Rules, 1963, by placing result on the notice board on 20.02.2023. Sd/- Sd/- (MAHAVIR SINGH) (GIRISH AGRAWAL) VICE PRESIDENT ACCOUNTANT MEMBER Lucknow, Dated: 20.02.2023 SC. Sr. P.S. ITA No. 189/LKW/2019 Assessment Years: 2003-04 U.P. State Food & Essential Commodities Corp. Ltd. 5 Copy to: 1. The Appellant: 2. Respondent : 3. The CIT(A)- Lucknow 4. The CIT , Lucknow 5. The DR ITAT, Lucknow //True Copy// By Order Assistant Registrar ITAT, Lucknow Benches, Lucknow