Bara Machines Private Limited, Ahmedabad V. The Income Tax Officer, Ward-1(1)(2), Ahmedabad

ITA 578/AHD/2022

AI Insights

Bara Machines Pvt. Ltd. appealed against the order of the CIT(Appeals), which confirmed the disallowance of a business loss of Rs. 14,51,031 claimed by the appellant for the Assessment Year 2012-13. The loss was initially disallowed by the Assessing Officer during reassessment proceedings under Section 143(3) following a notice under Section 148. The appellant argued that similar expenses had been allowed in a previous assessment year (A.Y. 2010-11) under identical circumstances. The Tribunal noted that the business loss could be set off against income from house property under Section 71, despite the non-filing of the return under Section 139(1) as required for carry forward under Section 80.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 299989 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 02-03-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Next Hearing Date: 27-02-2023
• Assessment Year: 2012-2013
• Appeal Filed On: 26-12-2022
• Other Referred Cases: ITA No. 1509/Ahd/2014 A.Y. 2010-11
• Laws Referred To: Income Tax Act
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business expenditure; Reassessment proceedings; TDS
• Section: 148; 139; 143(3); 139(1); 13; 22

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL “SMC” BENCH, AHMEDABAD BEFORE MS. SUCHITRA KAMBLE, JUDICIAL MEMBER I .T .A . No .5 78 /A h d / 20 22 ( A s se ss m e nt Y e a r : 20 12- 13 ) B ar a M a c h in e s P vt . Lt d. 5- 6 , M a ni c h a n dr a S oc i et y, Nr . S ur dh a r a C ir cl e , T ha lt ej , Ah me da bad - 3 80 05 9 V s . I T O War d - 1 ( 1) ( 2 ) , A h me da ba d [P AN N o.A A BC B 8 6 9 6F] (Appellant) .. (Respondent) Appellant by : Shri P. D. Shah, A.R. Respondent by: Shri Sanjay Jain, Sr. D.R. D a t e of H ea r i ng 28.02.2023 D a t e of P r o no u n ce me nt 03.03.2023 O R D E R The appeal filed by the assessee is against the order passed by the Ld. CIT(Appeals), National Faceless Appeal Center (in short “NFAC”), Delhi on 28.10.2022 for A.Y. 2012-13. 2. The grounds of appeal raised by the assessee are as under: “1. That the notice issued under section 148 of the Act and subsequent reassessment proceedings and the assessment order passed under section 143(3) by the learned AO is against the law and direction/instruction of the ld. Hon’ble Board and therefore the order passed by the learned AO is required to be quashed and accordingly the learned AO be direct to quash the assessment order and if not agreeable, direct the learned AO to accept the return of income. 2. That the learned National Faceless Appeal Centre, has erred in law and facts by confirming the disallowance of Business Loss of Rs.14,51,031/- claimed by the appellant and therefore the learned AO should be directed to allow the said business loss claimed. 3. That the learned National Faceless Appeal Centre, has erred in law and facts by not allowing set off and carried forward of Business Loss of Rs.14,51,031/- and accordingly by the ld.AO be directed. 4. That your appellant craves a leave to add, alter or amend any grounds at the time of hearing.” ITA No. 578/Ahd/2022 Bara Machines Pvt. Ltd. vs. ITO Asst.Year–2012-13 - 2 - 3. The assessee company has not furnished the return of income for A.Y. 2012-13 under Section 139(1) of the Act. As per 26AS details of ITS available in the case of assessee company, the Assessing Officer observed that the assessee received total amount of Rs. 29,88,735/- from Claris Lifesciences Ltd. and LIC of India on which TDS under Section 194I and 194D of the Act was deducted respectively. The case of the assessee was reiterated under Non-filers Monitoring System (NMS) for the A.Y. 2012- 13. Considering the above fact the assessment was reopened by issuing a notice under Section 148 of the Act dated 13.03.2019 after recording the reasons for the same and obtaining necessary statutory approval. In response to the notice under Section 148 of the Act the assessee filed a return of income for Assessment Year in question on 30.09.2019. The assessee has shown income from house property and income from other sources during the year under consideration. The assessee company was strike off by the Registrar of Company and the assessee company filed petition before the NCLT for revival of the company. The assessee company has claimed loss from business or profession against income from house property. The Assessing Officer after taking cognizance of the submissions made by the assessee disallowed Rs. 14,51,031/- which was claimed by the assessee on account of loss from business or profession. 4. Being aggrieved by the assessment order the assessee filed appeal before the CIT(A). The CIT(A) partly allowed the appeal of the assessee. 5. The Ld. A.R. submitted that the required documentation related to business loan was available before the Assessing Officer and before the CIT(A). The same issue on the identical facts in assessee’s own case has ITA No. 578/Ahd/2022 Bara Machines Pvt. Ltd. vs. ITO Asst.Year–2012-13 - 3 - been decided by the Tribunal and the said expenses were allowed as business expenses (ITA No. 1509/Ahd/2014 A.Y. 2010-11 order dated 24.04.2019). Therefore, the Ld. A.R. submitted that disallowance of business expenses is bad in law and therefore, the AO should be directed to allow the same by computing the total income. The Ld. A.R. further submitted that said expenses are allowable as business expenses as the same was incurred in respect of business itself. As regards, Ground No. 3 related to allowance of set off of current year business loss against the property income, the Ld. A.R. submitted that the assessee’s case is covered under Section 71 of the Act and said section state that barring exception losses, business loss can be set off against other heads (as “Inter Head Adjustment”) for the Assessment Year under consideration. The Ld. A.R. submitted that the department has restricted it as per Section 80 of the Act where the restriction is carry forward of business loss of the return of income not filed in time under Section 139 of the Act. The judgment relied upon by the CIT(A) is for the right of carry forward of the business loss and Section 80 of the Act has been made applicable. The Ld. A.R. submitted that the Assessing Officer should be directed to allow set off of business loss against the property income for the year under consideration. 6. The Ld. D.R. submitted that the assessee at one point of time states that the same is a business loss and is claiming it to set off of against the property income which is not justifiable. The Ld. D.R. relied upon the assessment order and the order of the CIT(A). 7. Heard both the parties and perused all the relevant material available on record. The Ld. A.R. submitted that for A.Y. 20101-11 on the identical ITA No. 578/Ahd/2022 Bara Machines Pvt. Ltd. vs. ITO Asst.Year–2012-13 - 4 - facts the issue was held in assessee’s favour. At that time the assessee has set off his business income against the income from house property which has been allowed by the Tribunal. The Ld. D.R. remark that the return of income was not filed and Section 139(1) will not allow the assessee to take set off of business expenses to income from house property, as incorrect as the assessee has genuinely invoke the Section 71 of Income Tax Act and has set off against the other head the business loss. The Section does not state that the assessee has to file the return under Section 139 only. Thus, appeal of the assessee is allowed. 8. In result, the appeal of the assessee is allowed. This Order pronounced in Open Court on 03/03/2023 Sd/- (SUCHITRA KAMBLE) JUDICIAL MEMBER Ahmedabad; Dated 03/03/2023 TANMAY, Sr. PS TRUE COPY आदेश क त ल प अ े षत/ Copy of the Order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent. 3. संबं धत आयकर आय ु त / Concerned CIT 4. आयकर आय ु त(अपील) / The CIT(A)- 5. वभागीय त न ध, आयकर अपील!य अ धकरण, अहमदाबाद / DR, ITAT, Ahmedabad 6. गाड' फाईल / Guard file. आदेशान ु सार/ BY ORDER, उप/सहायक पंजीकार (Dy./Asstt.Registrar) आयकर अपील य अ धकरण, अहमदाबाद / ITAT, Ahmedabad 1. Date of dictation 28.02.2023 2. Date on which the type draft is placed before the Dictating Member 28.02.2023 3. Other Member..................... 4. Date on which the approved draft comes to the Sr.P.S./P.S 02 .03.2023 5. Date on which the fair order is placed before the Dictating Member for pronouncement .03.2023 6. Date on which the fair order comes back to the Sr.P.S./P.S 03.03.2023 7. Date on which the file goes to the Bench Clerk 03 .03.2023 8. Date on which the file goes to the Head Clerk.......................................... 9. The date on which the file goes to the Assistant Registrar for signature on the order.......................... 10. Date of Despatch of the Order..........................................