RADHEY SHYAM AGARWAL (DECEASED) THROUGH LEGAL HEIR, JAIPUR V. ITO, WARD 7(1), , JAIPUR

ITA 409/JPR/2022

AI Insights

The case revolves around the dispute concerning the disallowance of the set off of a carried forward business loss of Rs. 12,15,434 from the assessment year 2013-14 against the income earned in the specified business during the assessment year 2018-19. The Income Tax Officer (ITO) initially disallowed this set off due to the belated filing of the return for the earlier year. However, the Tribunal, referencing a previous decision in the assessee's own case for the assessment year 2017-18 and the consistent practice of the department in subsequent years, allowed the appeal. The Tribunal's decision emphasized that the legal requirements for the carry forward and set off of losses as stipulated in the Income Tax Act did not mandate timely filing of the return for the year in which the loss was incurred, at least for the years prior to the amendment in 2016.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 132485 (ITAT-JAIPUR)
• Duration Of Justice: 5 month(s) 11 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 14-02-2023
• Assessment Year: 2018-2019
• Appeal Filed On: 21-11-2022
• Other Referred Cases: ITA No. 51/JP/2022, ITA No. 52-JP-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 2; 143(1); 73; 72

Judgement Text

vk;djvihyh; vf/kdj.k] t;iqjU;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR JhlaanhixkslkbZ]U;kf;dlnL; ,oaJhjkBksMdeys'kt;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: SHRI SANDEEP GOSAIN, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;djvihy la-@ITA No. 409/JP/2022 fu/kZkj.ko"kZ@AssessmentYear :2018-19 Shri Radhey Shyam Agarwal (Deceased) Through: Legal Heir 161, Sanghiji Ka Chok, Tehsil-Chomu, Chomu Distt. Jaipur cuke Vs. ITO Ward 7(1) Jaipur LFkk;hys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAYPA 6176 B vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj ls@Assessee by : Shri Mukesh Khandelwal, CA jktLo dh vksj ls@Revenue by: Mrs. Monisha Choudhary, Addl. CIT-DR lquokbZ dh rkjh[k@Date of Hearing : 15/02/2023 mn?kks"k.kk dh rkjh[k@Date of Pronouncement: 03 /05/2023 vkns'k@ORDER PER: SANDEEP GOSAIN, JM This appeal filed by the assessee is directed against order of the ld. CIT(A) dated 25-11-2021, National Faceless Appeal Centre, Delhi [ hereinafter referred to as (NFAC) ] for the assessment year 2018-19 wherein the assessee has raised the following solitary ground of appeal. ‘’ That the ld. CIT(A) has erred seriously in law in sustaining the action of the AO in disallowing claim of the assessee for set off of the carried forward loss of specified business of Rs.12,15,434/- for the A.Y. 2013-14 out of income 2 ITA NO.409/JP/2022 RADHEY SHYAM AGRWAL (DECEASED) THROUGH: LEGAL HEIR VS ITO, WARD 7(1), JAIPUR earned from specified business in the A.Y. 2018-19. He has erred further in holding that the amendment in Section 139(3) about allowing loss from specified business is applicable in the instant case also whereas the amendment was applicable in the instant case also whereas the amendment was applicable w.e.f. 01-04-16 and was not applicable for the AY 2013-14. Relief may please be granted to the appellant by allowing his claim. 2.1 Apropos solitary ground of the assessee, the facts as emerges from the order of the ld. CIT(A) are as under:- 5. Finding and decision: 5.1 The primary contention of the appellant relates to the disallowance of the claim of the appellant for set off the carried forward business loss from specified business for Rs.12,15,434/- from the income from specified business for the year under consideration 5.2. The assessment order, the submissions of the appellant and the provisions of law have been examined and considered. It is seen that the appellant had claimed deduction of capital expenditure u/s 35AD of Rs. 8,48,58,578/- in AY 2013-14 after adjusting with the profit of that year of Rs. 24,58,004/- the loss u/s 35AD was carried forward by the appellant to be adjusted with the profit of any subsequent year in the specified business. The appellant declared profit of Rs. 12,15,434/- during the relevant year (AY 2018-19) and sought to set off the loss of AY 2013-14. The Assessing Officer disallowed the setting off of the loss of AY 2013-14 with that of the profit of the current year since the return of income for AY 2013-14 was as belated return. 5.3 During the course of the appellate proceedings, the appellant claimed that the phrase "or sub-section (2) of section 73A" was inserted in section 139(3) through the Finance Act, 2016 w.e.f01-04-2016 and therefore, the loss return of AY 2013-14 is not covered by the provisions of section 139(3) of the Act. 5.4 Having considered the submissions of the appellant, it is seen that there is no dispute that the return of income of the appellant for AY 2013-14 was filed on 27-03-2014 and it is a belated return. The issue is whether a loss return not filed within the specified time us 139 (1) for A.Y. 2013-14 can be set off off against the profit of the 2013-14 can be current year i.e., AY 2018-19. As per the provisions of section 139(3),- 3 ITA NO.409/JP/2022 RADHEY SHYAM AGRWAL (DECEASED) THROUGH: LEGAL HEIR VS ITO, WARD 7(1), JAIPUR 3) If any person who has sustained a loss in any previous year under the head "Profits and gains of business or profession" or under the head "Capital gains" and claims that the loss or any part thereof should be carried forward under sub-section (1) of section 72, or sub-section (2) of section 73, or sub- section (2) of section 73A or sub-section (1) or sub- section (3) of section 74, or sub-section (3) of section 74A, he may furnish, within the time allowed under sub-section (1), a return of loss in the prescribed form and verified in the prescribed manner and containing such other particulars as may be prescribed, and all the provisions of this Act shall apply as if it were a return under sub- section (1). The provisions of section 80 reads as - Submission of return for losses. 80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed in accordance with the provisions of sub-section (3) of section 139, shall be carried forward and set off under sub- section (1) of section 72 or sub-section (2) of section 73 or sub-section (2) of section 73A or sub-section (1) or sub-section (3) of section 74 or sub-section (3) of section 74A. Therefore, as per the provisions of section 80 of the Income Tax Act, it is very clear that the loss which has not been determined in pursuance of a return filed in accordance with the provisions of section 139(3) can be carried forward and set off. The claim by the appellant that the phrase "sub-section (2) of section 73A" inserted by the Finance Act of 2016, w.e.f 01-04-2016 will not come to the rescue of the appellant since we are concern with carry forward and set off of loss during the assessment of income/loss for the assessment of AY 2018-19. 5.5 In view of the above discussion, I am of the considered opinion that in view of the provisions of section 139(3) read with section 80 of the Income Tax Act, 1961, the claim of the appellant cannot be accepted. 6. Accordingly, the appeal of the Appellant for A.Y. 2018-19 stands dismissed.’’ 2.2 During the course of hearing, the ld. AR of the assesse submitted that the reliance of the ld. CIT(A) on Section 80 is wrong as he forgot to take into account that in Section 80 also, Section 2 of Section 73A was inserted vide Finance Act, 2016 w.e.f. 01-04-2016. The amendment in Section 139(3A) and Section 80 were 4 ITA NO.409/JP/2022 RADHEY SHYAM AGRWAL (DECEASED) THROUGH: LEGAL HEIR VS ITO, WARD 7(1), JAIPUR made w.e.f. 01-04-2016 and, therefore his reliance to Section 80 is misconceived. The ld. AR further submitted that for the A.Y. 2020-21 and 2021-22, the CPC has allowed set off of such loss without any question from the assessee for which the ld. AR of the assessee filed the copy of order u/s 143(1) for the A.Y. 2020-21 at PBPB 5-11 and that for A.Y. 2021-22 at APB 12-14. The ld. AR of the assessee further submitted that the issue in question is covered by the decision of ITAT Jaipur Bench in assessee’s own case in ITA No. 51/JP/2022 dated 26-04-2022 for the assessment year 2017-18. 2.3 On the other hand, the ld. DR supported the order of the ld. CIT(A). 2.4 We have heard both the parties and perused the materials available on record. The Bench noted that the issue in question is squarely covered by the decision of Coordinate Bench in assessee’s own case for the assessment year 2017- 18 wherein the Bench has allowed the brought forward of specified business loss of earlier year even though the return of income for the first year is not filed in time. The relevant observation of the ITAT Jaipur Bench in the case of the assessee for the assessment year 2017-18 is reproduced as under:- ‘’10. We have heard the rival contentions and perused the material available on record. We find that the when the return of income for A. Y. 2013-14 being the first year of claim there was no such requirement under section 139(3)/73A and even the department has consistently allowed such claim for 5 ITA NO.409/JP/2022 RADHEY SHYAM AGRWAL (DECEASED) THROUGH: LEGAL HEIR VS ITO, WARD 7(1), JAIPUR the three subsequent year. Not only that the same has been allowed in A. Y. 2020-21. The Ld. AR brought our notice for that year intimation u/s 143(1) as filed in his paper book. 11. In light of aforesaid discussions and in the entirety of facts and circumstances of the case we allow the brought forward of specified business loss of earlier year even though the return of income for the first year is not filed in time as there was no such requirement in the law for that year and so ground no. 1 raised by the assessee is allowed. 12. The fact of the case in ITA No. 52-JP-2022 is similar to the case in ITA No. 51-JP-2022 and we have heard both the parties and persuaded the materials available on record. The bench has noticed that the issues raised by the assessee in this appeal No. 52/JP/2022 is equally similar on set of facts and grounds. Therefore, it is not imperative to repeat the facts and various grounds raised by both the parties. Hence, the bench feels that the decision taken by us in the case of Shri Radhey Shayam Agarwal in ITA No. 51/JPR/2022 for the Assessment Year 2017-18 shall apply mutatis mutandis in the case of Rukmani Devi Agarwal in ITA No. 52-JP-2022 for the Assessment Year 2018-19. ‘’ Since the issue in question is squarely covered by the decision of ITAT Jaipur Bench in the case of the assessee for the assessment year 2017-18, therefore the 6 ITA NO.409/JP/2022 RADHEY SHYAM AGRWAL (DECEASED) THROUGH: LEGAL HEIR VS ITO, WARD 7(1), JAIPUR decision taken therein shall also apply mutatis mutandis in the case of the assessee for the 2018-19. In view of the above deliberation, the appeal of the assessee is allowed. 3.0 In the result, the appeal of the assessee is allowed Order pronounced in the open court on 03/05/2023. Sd/- Sd/- ¼jkBksMdeys'kt;UrHkkbZ ½ ¼lanhi xkslkbZ½ (Rathod Kamlesh Jayantbhai) (Sandeep Gosain) ys[kklnL;@Accountant Member U;kf;dlnL;@Judicial Member Tk;iqj@Jaipur fnukad@Dated:- 03/05/2023 *Mishra vkns'k dh izfrfyfivxzsf’kr@Copy of the order forwarded to: 1. The Appellant- Shri Radhey Shyam Agrwal, Jaipur 2. izR;FkhZ@ The Respondent- The ITO, Ward 7(1) Jaipur 3. vk;djvk;qDr@ The ld CIT 4. foHkkxh; izfrfuf/k] vk;djvihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur 5. xkMZQkbZy@ Guard File (ITA No. 409/JP/2022) vkns'kkuqlkj@ By order, lgk;diathdkj@Asstt. Registrar