KHAJRANA GANESH PROPERTIES P.LTD, MUMBAI V. DCIT CIR 3(2), MUMBAI

ITA 2629/MUM/2014

• Counselvise Citation: [2017] 127 COUNSELVISE.COM (IT) 0042 (ITAT-MUMBAI)
• Duration Of Justice: 3 year(s) 4 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2017
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Assessment Year: 2010-2011
• Appeal Filed On: 17-04-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SAURABH DESH
• Assessee Lawyers: ARVIND SONDE
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A, MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAM LAL NEGI , JUDICIAL MEMBER ITA NO. 2629/MUM/2014 : A.Y : 20 10 - 11 KHAJRANA GANESH PROPERTIES PRIVATE LIMITED G - 4, GROUND FLOOR, KHETAN BHAVAN, 198, JAMSHEDJI TATA ROAD, MUMBAI 400 020 PAN : AACCK6483A (APPELLANT) VS. DCIT, CIRCLE - 3( 2 ), MUMBAI (RESPONDENT) APPELLANT BY : SHRI ARVIND SONDE RESPONDENT BY : SHRI SAURABH DESHPANDE DATE OF HEARING : 07 /0 9 /2017 DATE OF PRONOUNCEMENT : 07 /09/2017 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE ASSESSEE IS DIRECTED AGAINST THE ORDER OF CIT(A) - 4 , MUMBAI DATED 10.02.2014 , PERTAINING TO THE ASSESSMENT YEAR 2010 - 11 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER, MUMBAI DATED 24.01.2013 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. AT THE TIME OF HEARING, THE ONLY GRIEVANCE RAISED BY THE ASSESSEE WAS AGAINST THE DENIAL OF CARRY FORWARD OF LOSS OF RS.7,96,21,402/ - FOR SET - OFF IN THE SUBSEQUENT YEARS BASED ON SEC. 79 OF THE ACT. 2 ITA NO. 2629/MUM/2014 KHAJRANA GANESH PROPERTIES PVT. LTD. 3. IN BRIEF, THE RELEVANT FACTS ARE THAT THE APPELLANT IS A PRIVATE LIMITED COMPANY INCORPORATED UNDER THE PROVISIONS OF THE COMPANIES ACT , 1956 AND IS, INTER - ALIA , ENGAGED IN THE BUSINESS OF CONSTRUCTION, DEVELOPMENT, OPERATION AND MAINTENANCE OF AN INFORMATION TECHNOLOGY PARK. FOR THE ASSESSMENT YEAR UNDER CONSIDERATION, IT FILED A RETURN OF INCOME DECLARING A LOSS OF RS.19,50,79,979/ - UN DER THE NORMAL PROVISIONS OF THE ACT, WHICH WAS SUBJECT TO A SCRUTINY ASSESSMENT. IN THE ASSESSMENT FINALISED U/S 143(3) OF THE ACT, THE ASSESSING OFFICER ACCEPTED THE LOSS AS RETURNED, BUT NOTED THAT THERE WAS A CHANGE IN THE SHAREHOLDING OF THE ASSESSEE - COMPANY DURING THE YEAR, WHICH ATTRACTED THE PROVISIONS OF SEC. 79 OF THE ACT. THEREFORE, THE ASSESSING OFFICER DIRECTED THAT THE BUSINESS LOSS OF RS.7,96,21,402/ - COMPRISED IN THE TOTAL LOSS WAS NOT ALLOWED TO BE CARRIED FORWARD AND SET - OFF IN THE FUTUR E YEARS. THE SAID ACTION OF THE ASSESSING OFFICER HAS BEEN AFFIRMED BY THE CIT(A), AGAINST WHICH ASSESSEE IS IN FURTHER APPEAL BEFORE US. 4. THOUGH IN THE MEMO OF APPEAL, ASSESSEE HAS CHALLENGED THE MERITS OF THE DECISION OF THE INCOME TAX AUTHORITIES IN INVOKING SEC.79 OF THE ACT, SO HOWEVER, A PRELIMINARY ISSUE WAS RAISED WHICH IS AS FOLLOWS. ACCORDING TO THE LEARNED REPRESENTATIVE, THE JUSTIFICATION OR OTHERWISE FOR CARRY FORWARD OF LOSS AND SET - OFF AGAINST THE INCOME OF THE FUTURE YEARS IS TO BE DETE RMINED BY THE ASSESSING OFFICER WHO DEALS WITH THE ASSESSMENT OF THE YEAR IN WHICH ASSESSEE ACTUALLY CLAIMS THE SET - OFF IN THE SUBSEQUENT YEAR AND THUS, IN THE IMPUGNED ASSESSMENT, THE ASSESSING OFFICER COULD NOT HAVE CONSIDERED AND DIRECTED FOR DENIAL 3 ITA NO. 2629/MUM/2014 KHAJRANA GANESH PROPERTIES PVT. LTD. OF SUCH CARRY FORWARD. FOR THE SAID PROPOSITION, HE HAS RELIED UPON THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF MANMOHAN DAS (DECEASED), 5 9 ITR 699 (SC) . THEREFORE, IT IS SOUGHT TO BE CANVASSED THAT, FOR THE PRESENT, ASSESSEE WOULD BE SATISFIED IF THE DIRECTIONS OF THE ASSESSING OFFICER DENYING THE CARRY FORWARD OF LOSS ARE REMOVED AND THAT THE DISPUTE MAY BE CONSIDERED BY THE ASSESSING OFFICER IN ACCORDANCE WITH LAW IN THE SUBSEQUENT YEAR OF ACTUAL SET - OFF. 5. ON THIS LIMITED PLEA OF THE ASSES SEE, THE LD. DR HAS NOT CONTROVERTED THE FACT THAT THE JUDGEMENT OF HON'BLE SUPREME COURT IN THE CASE OF MANMOHAN DAS (DECEASED) (SUPRA) SUPPORTS THE PROPOSITION. 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND FIND THAT THE ISSUE BEFORE US CAN BE DISPOSED OFF IN THE LIGHT OF THE POINT OF LAW LAID DOWN BY THE HON'BLE SUPREME COURT IN THE CASE OF MANMOHAN DAS (DECEASED) (SUPRA). AS PER THE HON'BLE SUPREME COU RT, WHETHER THE LOSS IN ANY YEAR MAY BE CARRIED FORWARD TO THE FOLLOWING YEAR AND SET - OFF AGAINST THE INCOME OF THE SUBSEQUENT YEAR IS LIABLE TO BE DETERMINED BY THE ASSESSING OFFICER WHO DEALS WITH THE ASSESSMENT OF SUCH SUBSEQUENT YEAR. THE HON'BLE SUPR EME COURT FURTHER NOTED THAT A DECISION RECORDED BY THE ASSESSING OFFICER WHO COMPUTES THE LOSS IN A PREVIOUS YEAR THAT THE LOSS CANNOT BE SET - OFF AGAINST THE INCOME OF THE SUBSEQUENT YEAR IS NOT BINDING ON THE ASSESSEE IN THE SUBSEQUENT ACTUAL YEAR OF SET - OFF . CONSIDERED IN THIS LIGHT, IN OUR VIEW, THE ASSESSING OFFICER IN THE INSTANT YEAR HAD NO JURISDICTION TO GIVE A FINDING THAT THE LOSS OF RS.7,96,21,402/ - CANNOT BE CARRIED FORWARD AND SET - OFF AGAINST 4 ITA NO. 2629/MUM/2014 KHAJRANA GANESH PROPERTIES PVT. LTD. THE INCOME OF THE SUBSEQUENT YEAR. THEREFORE, SUC H OBSERVATIONS/DIRECTIONS OF THE ASSESSING OFFICER, IN OUR VIEW, ARE BEREFT OF JURISDICTION AND ARE ACCORDINGLY DIRECTED TO BE REMOVED. SO HOWEVER, OUR AFORESAID DECISION SHOULD NOT BE UNDERSTOOD AS ANY REFLECTION ON THE MERIT OR OTHERWISE O F INVOKING OF SEC. 79 OF THE ACT PROHIBITING CARRY FORWARD AND SET - OFF OF LOSS IN CERTAIN SITUATIONS. THE APPLICATION OF SEC. 79 OF THE ACT SHALL BE OPEN TO BE CONSIDERED BY THE ASSESSING OFFICER IN THE SUBSEQUENT YEAR WHILE EVALUATING THE CLAIM OF THE ASSESSEE FOR SET - OFF OF THE IMPUGNED BUSINESS LOSS. AS A CONSEQUENCE OF OUR AFORESAID DISCUSSION, WE SET - ASIDE THE ORDER OF CIT(A) AND DIRECT THE ASSESSING OFFICER TO REMOVE THE DIRECTIONS RELATING TO DENIAL OF CARRY FORWARD AND SET - OFF OF LOSS OF RS.7,96,21,402/ - . THUS, ON THIS ASPECT, ASSESSEE SUCCEEDS FOR STATISTICAL PURPOSE S . 7. APART FROM THE AFORESAID, NO OTHER ISSUE HAS BEEN ARGUED BEFORE US AND ACCORDINGLY, THE APPEAL OF THE ASSESSEE IS TREATED AS ALLOWED FOR STATISTICAL PURPOSES, AS ABOVE. THE ABOVE DECISION WAS PRONOUNCED IN THE COURT IN THE PRESENCE OF BOTH THE PARTIES AT THE CONCLUSION OF THE HEARING ON 7 TH SEPTEMBER, 2017. SD/ - SD/ - ( RAM LAL NEGI ) JUDICIAL MEMBER (G.S. PANNU) ACCOUNTANT MEMBER MUMBAI, DATE : 7 T H SEPTEMBER , 201 7 *SSL* 5 ITA NO. 2629/MUM/2014 KHAJRANA GANESH PROPERTIES PVT. LTD. COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI