RUKMANI DEVI AGARWAL, JAIPUR V. ITO, WARD 7(1), JAIPUR, JAIPUR

ITA 52/JPR/2022

• Counselvise Citation: [2022] 105 COUNSELVISE.COM (IT) 3853 (ITAT-JAIPUR)
• Duration Of Justice: 2 month(s) 24 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-04-2022
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2018-2019
• Appeal Filed On: 01-02-2022
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Section: 139; 143(1); 139(4); 73; 72

Judgement Text

vk;dj vihyh; vf/kdj.k] t;iqj U;k;ihB] t;iqj IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHES,”SMC” JAIPUR Mk0 ,l- lhrky{eh] U;kf;d lnL; ,oa Jh jkBksM deys'k t;UrHkkbZ] ys[kk lnL; ds le{k BEFORE: DR. S. SEETHALAKSHMI, JM & SHRI RATHOD KAMLESH JAYANTBHAI, AM vk;dj vihy la-@ ITA. No. 51/JP/2022 fu/kZkj.k o"kZ@Assessment Years : 2017-18 Radhey Shyam Agrawal 161, Sanghiji Ka Chok, Tehsil- Chomu, Jaipur cuke Vs. ITO, Ward 7(1), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AAYPA 6176 B vihykFkhZ@Appellant izR;FkhZ@Respondent vk;dj vihy la-@ ITA. No. 52/JP/2022 fu/kZkj.k o"kZ@Assessment Years : 2018-19 Rukmani Devi Agrawal 161, 161, Sanghiji Ka Mohalla, Chomu Bapu Bazar, Chomu, Jaipur cuke Vs. ITO, Ward 7(1), Jaipur LFkk;h ys[kk la-@thvkbZvkj la-@PAN/GIR No.: AFBPA 5419 F vihykFkhZ@Appellant izR;FkhZ@Respondent fu/kZkfjrh dh vksj l s@ Assessee by : Shri Mukesh Khandelwal (C.A.) jktLo dh vksj ls@ Revenue by : Smt. Monisha Choudhary (JCIT) a lquokbZ dh rkjh[k@ Date of Hearing : 19/04/2022 mn?kks"k.kk dh rkjh[k@Date of Pronouncement : 26/04/2022 vkns'k@ ORDER PER: RATHOD KAMLESH JAYANTBHAI, AM These two appeals filed by the assessee are arising out of an order passed by the National Faceless Appeal Centre [ here in ITA Nos 51 & 52/JP/2022 Radhey Shyam Agarwal, Jaipur vs. ITO, Jaipur 2 after referred to as NFAC ] by dated 17-12-2021 & 21-12-2021 for the assessment years 2017-2018 & 2018-19. 2. The hearing of the appeal was concluded through audio- visual medium on account of Government guidelines on account of prevalent situation of Covid-19 Pandemic, both the parties have placed their written as well as oral arguments during this online hearing process. 3. Since, the facts of both the cases are identical, we have heard these cases together and passing the order together. The facts and grounds are taken from the folder of Shri Radhey Shyam Agarwal in ITA No. 05/JP/2022 and this case is taken as lead case. In this appeal the assessee has raised following grounds:- “That the ld. CIT (A), NFAC has erred seriously in law in sustaining the action of the CPC in disallowing claim of the appellant for set off of the carried forward loss of specified business (u/s 35AD) of Rs. 16,95,003 for the AY 2013-14 out of income earned from specified business in the AY 2017-18. 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 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.” 4. Briefly stated, facts of the case are that the assessee has claimed deduction of capital expenditure in respect of specified business u/s 35AD of Rs. 8,48,58,578 in AY 2013-14 and after deducting the profit of 24,58,004 the loss of 8,24,00,574 had been ITA Nos 51 & 52/JP/2022 Radhey Shyam Agarwal, Jaipur vs. ITO, Jaipur 3 carried forward. The return of income was filed on 27.03.2014 claiming carry forward of loss as the carry forward of loss was allowable u/s 73A even though the return of income filed u/s 139(4) and up to the AY 2016-17. Accordingly, the set off of income u/s 35AD of specified business against brought forward loss of specified business has been allowed to the assessee. The section 139(3) has been amended by the Finance Act 2016 w.e.f. 01.04.2016 to file the return within time allowed in case of loss claimed to be carried forward for set off u/s 73A. The Provision of section 143(1)(iii) is not applicable as the carry forward of loss relates to year before amendment. During this year the appellant claimed set off of the brought forward business loss of specified business for Rs. 16,95,003 from the income of the specified business which was disallowed u/s 143(1). In an application filed u/s 154 a request was made to allow such claim on the basis of above facts. The same was denied by the CPC. 5. Against that order passed under section 154 of the Act the assessee has preferred an appeal before the Commissioner of Income Tax, Appeals-3, Jaipur. Subsequently, the appeal was migrated to the NFAC in terms of notification no. 76/2000 dated 25.09.2020. 6. The said appeal of the assessee was decided by the NFAC vide its order dated 17.12.2021 and the NFAC has dismissed the appeal of the assessee. The finding of the NFAC is extracted here in below for the sake of brevity: ITA Nos 51 & 52/JP/2022 Radhey Shyam Agarwal, Jaipur vs. ITO, Jaipur 4 5.1 The Rectification order the submissions of the appellant and the provisions of law have been examined and considered. For the year under consideration, the appellant filed return of income on 30-07-2017 showing profit of Rs. 16,95,003/-and the appellant set off this income with the loss carried forward for the AY 2013- 14, which was disallowed. The appellant filed rectification application u/s. 154 on 24-01-2019 and the application was rejected vide order u/s. 154 dated 17.04.2019, due to the reason that the return of income for AY 2013-14 was filed beyond the time prescribed u/s 139(1). 5.2. Having considered the submissions of the appellant, it is seen that the due date for filing of the return for AY 2013-14 was 05-08-2013 but the appellant has filed his return of income on 27- 03-2014. The provisions of section 139(3) are reproduced here with - (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 appellant contended that the phrase "or sub-section (2) of section 73A" u/s 139(3) was inserted by the Finance Act, 2016, w.e.f. 01-04-2016 and therefore, the provisions of section 139(3) are not applicable to the losses of AY 2013-14 which was claimed to be set off with this year. It may be stated that the current Year is AY 2017-18 and therefore, the provisions of section 139(3) in the case of the appellant having brought forward specified business loss are applicable. In view of the fact that the amended provisions of section 139(3), being applicable to the present year, i.e., AY 2017-18, I am of a considered view that the order u/s 154 passed by the Assessing Officer is proper and no interference is called for. ITA Nos 51 & 52/JP/2022 Radhey Shyam Agarwal, Jaipur vs. ITO, Jaipur 5 6. Accordingly, the appeal of the Appellant for AX 2017-18 stands dismissed. 7. Aggrieved from the order of the said NFAC the appellant has filed an appeal on the solitary ground to allow the set of loss of brought forward loss against the current year income. The ld. AR appearing on behalf of the asses see has submitted that the section 139(3) has been amended by the Finance Act 2016 w.e.f. 01.04.2016 to file the return within time allowed in case of loss claimed to be carried/brought forward for set off u/s 73A. The Provision of section 143(1)(iii) is not applicable as the carry forward of loss relates to year before amendment. During this year also the appellant claimed set off of the brought forward business loss of specified business for Rs. 16,95,003 from the income of the specified business which was denied u/s 143(1) by the cpc and have also filed the appeal before CIT(A) which was also dismissed. So, the relevant question is that whether the said brought forward loss of A.Y. 2013-14 can be denied to be adjusted against current year income on account of the amendment in section 139(3) of the Act or not? 8. To check this issue, we have persuaded the provision of the Act so amended. Having persuaded the provision of the Act we have the checked the memorandum of change in the provision of the act, as extracted and reproduced to decide applicability of the said change in the provision of the Act; Time limit for carry forward and set off of such loss under section 73A of the Income-tax Act The existing provisions of section 73A of the Act provide that any loss, computed in respect of any specified business ITA Nos 51 & 52/JP/2022 Radhey Shyam Agarwal, Jaipur vs. ITO, Jaipur 6 referred to in section 35AD shall not be set off except against profits and gains, if any, of any other specified business. Further, section 80 of the Act inter-alia provides that a loss which has not been determined in pursance of return filed in accordance with the provisions of sub-section (3) of section 130, shall not be carried forward and set-off under sub- section (1) of section 72 or sub-section (2) of section 73 or sub-section (1) or sub-section (3) or section 74 or sub-section 74A. In accordance with the scheme of the Act, this loss is to be allowed if the return is filed within the specified time i.e. by the due date of filing of the return of the income as provided in section 80 for other losses determined under the Act. Accordingly, it is proposed to amend section 80 so as to provide that the loss determined as per section 73A of the Act shall not be allowed to be carried forward and set off if such loss has not been determined in pursuance of a return filed in accordance with the provisions of sub- section (3) of section 139. It is also proposed to amend the said sub-section (3) of section 139 so as to give reference of sub-section (2) of section 73Ain the said sub-section. These amendments will take effect retrospectively from 1stApril, 2016 and will, accordingly, apply in relation to the assessment year 2016-17 and subsequent years. On scrutiny of this change it is clear that the contention of the assessee that the provision was not there while filling the return of income of A. Y. 2013-14. So the loss incurred in A.Y 2013-14 is allowed to be brought forward and set off made in subsequent years and accordingly. The assessee has correctly set off that brought forward loss against the current year income. The ld. AR of the assessee further submitted that the said brought forward of loss has been allowed for 2014-15, 2015-16 and 2016-17. He has further argued that the same CPC has allowed and that such brought forward loss against the income of A. Y. 2020-21 amounting to Rs. 15,95,832/-. The ld. AR further submitted that the return of income for the year under consideration is filed in time. ITA Nos 51 & 52/JP/2022 Radhey Shyam Agarwal, Jaipur vs. ITO, Jaipur 7 9. Per contra, the ld. DR heavily relied upon the finding of the lower authorities and submitted that the purpose of the introducing the amendment is very clear and as assessee has not filed the return of income for A.Y 2013-14 in time, he should not be allowed to brought forward the said loss and claim set off of the same in the year under consideration and thus, he relied upon the findings of lower authorities. 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 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. ITA Nos 51 & 52/JP/2022 Radhey Shyam Agarwal, Jaipur vs. ITO, Jaipur 8 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. 13. In the result, both the appeals of the assessee are allowed. Order pronounced in the open court on 26/04/2022 Sd/- Sd/- ¼ Mk0 ,l- lhrky{eh ½ ¼ jkBksM deys'k t;UrHkkb ½ (Dr. S. Seethalakshmi) (Rathod Kamlesh Jayantbhai) U;kf;d lnL;@Judcial Member ys[kk lnL;@Accountant Member Tk;iqj@ Jaipur fnukad@Dated:- 26 /04/2022. *Ganesh Kr. vkns'k dh izfrfyfi vxzsf’kr@Copy of the order forwarded to: 1. vihykFkhZ@The Appellant- Radhey Shyam Agrawal, Jaipur Rukmani Devi Agarwal, Jaipur 2. izR;FkhZ@ The Respondent- ITO, Ward 7(1), Jaipur 3. vk;dj vk;qDr@ CIT 4. vk;dj vk;qDr@ CIT(A) 5. foHkkxh; izfrfuf/k] vk;dj vihyh; vf/kdj.k] t;iqj@DR, ITAT, Jaipur. 6. xkMZ QkbZy@ Guard File { ITA Nos. 51 & 52/JP/2022} vkns'kkuqlkj@ By order, lgk;d iathdkj@Asst. Registrar