M/s International Fresh Farm Products (India) Limited, Chandigarh V. ITO, Ward 2(1), Chandigarh

ITA 630/CHANDI/2022

AI Insights

The case involves M/s International Fresh Farm Products (India) Limited appealing against the order of the CIT(A)/NFAC, Delhi, which upheld the CPC's decision to disallow the carry forward of business losses under section 35AD of the Income Tax Act, 1961. The primary contention was whether the CPC had the authority to disallow the carry forward of losses in the assessment year 2019-20, despite the losses being incurred in a specified business. The Tribunal considered various precedents and statutory provisions, ultimately deciding that the carry forward of losses should be allowed as the CPC's action was not in accordance with the law.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127676 (ITAT-CHANDIGARH)
• Duration Of Justice: 10 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 06-08-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 13-06-2023
• Assessment Year: 2019-2020
• Appeal Filed On: 21-09-2022
• Other Referred Cases: CIT Vs. Manmohan Das, Burda Druck India Pvt. Ltd. Vs. ACIT, DCIT Vs. Instant Traders Pvt. Ltd., M/s Orra Fine Jewellery Pvt. Ltd. Vs. DCIT, Rajiv Gupta Vs. CIT, Rajiv Gupta Vs. ITO
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Depreciation; Rectification of order; Set aside
• Section: 154; 139; 143(3); 143(1); 139(1)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “ए” , च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “A”, CHANDIGARH ी आकाश द प जैन, उपा य एवं ी #व$म &संह यादव, लेखा सद+य BEFORE: SHRI. AAKASH DEEP JAIN, VP & SHRI. VIKRAM SINGH YADAV, AM आयकर अपील सं./ ITA NO. 630/Chd/ 2022 नधा रण वष / Assessment Year : 2019-20 M/s International Fresh Farm Products (India) Limited, C/o Parikshit Aggarwal, Chartered Accountant H.No. 3035, Sector 27D, Chandigarh बनाम The ITO Ward 2(1) Chandigarh थायी लेखा सं./PAN NO: AAACI5038D अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Parikshit Aggarwal, CA राज व क! ओर से/ Revenue by : Shri Rohit Sharma, CIT DR स ु नवाई क! तार&ख/Date of Hearing : 14/06/2023 उदघोषणा क! तार&ख/Date of Pronouncement : 07/08/2023 आदेश/Order PER VIKRAM SINGH YADAV, A.M. : This is an appeal filed by the Assessee against the order of the Ld. CIT(A)/ NFAC, Delhi dt. 26/08/2022 pertaining to Assessment Year 2019-20 wherein the assessee has raised the following revised grounds of appeal: 1. That on the facts, circumstances and legal position of the case, the Worthy CIT(A), NFAC in Appeal No. NFAC/2018-19/10097032 dated 01.10.2021 has erred in passing that order in contravention of provisions of S. 250(6) of the Income Tax Act, 1961. 2. That on law, facts and circumstances of the case, the impugned order passed by Worthy CIT(A) deserves to be quashed since he has erred in confirming the addition on account of disallowance of carry forward losses claimed u/s 35AD amounting to Rs. 8,36,02,091/- made by Ld. AO(CPC) in the order passed u/s 143(1) even when the Ld. AO lacked powers to do so. 3. That on the facts, circumstances and legal position of the case, the Worthy CIT(A) has erred in confirming the action of Ld. AO of not allowing carry forward of loss of Rs. 8,36,02,091/- claimed u/s 35AD. 4. That the appellant craves leave for any addition, deletion or amendment in the grounds of appeal on or before jhe disposal of the same. 2. Briefly, the facts of the case are that the assessee filed its return of income declaring total income at NIL and claiming carry forward of current year business losses to the tune of Rs. 2 8,57,53,970/-. The return was filed on 30/09/2020 as against the original due date of 30/09/2019 and extended due date of 31/10/2019. The CPC Bengaluru while processing the return of income vide its order dt. 24/12/2020 under section 143(1) has restricted the carry forward of current year business losses to Rs. 21,51,879/- which is the unabsorbed depreciation of the current year. The current year business losses of specified business under section 35AD amounting to Rs. 8,36,02,090/- was however not allowed to be carry forward. 3. Against the intimation passed by the CPC under section 143(1), the assessee moved an appeal before the Ld. CIT(A) who has upheld the action of the CPC, Bengaluru in not allowing the carry forward of current year business losses of specified business claimed by the assessee under section 35AD of the Act. Against the said findings and the direction of the Ld. CIT(A) NFAC, the assessee is in appeal before us. 4. During the course of hearing, the Ld. AR submitted that the assessee has incurred the business losses under the specified business amounting to Rs. 83,60,20,90/- under section 35AD of the Act and since the same could not be set off during the year, the assessee has claimed only the carry forward of the current year business loss to the subsequent year. It was submitted that there was no claim of set off in the year under consideration and all the assessee has done was that it has claimed the carry forward of the current year business losses for being set off in the subsequent year as and when there is a profit which is eligible against which the set off is possible as per the provisions of the Act. 5. It was submitted that it is a settled position that it is for the AO dealing with the assessment for the subsequent year to determine whether loss of the previous year may be set off against the profit of subsequent year. It was submitted that there is no basis for the CPC, Bengaluru to disallow the carry forward of the current year business loss which has only been claimed to be carry forward and there was nothing on record that the assessee has sought any set off the said losses in the year under consideration. 6. In this regard, reference was drawn to the provisions of Section 80 of the Act which talks about the fact that where the losses have not been determined in pursuance of the return filed in accordance with the provisions of Section 139(3), the losses shall not be allowed to be carry forward and set off under section 73A as applicable in the instant case. It was submitted that the language which has been provided in the statute is “carry forward and set off” and therefore both these phrases have to be co-jointly read and cannot be segregated and therefore it is only in the year in which the set off is claimed by the assessee that the provisions of Section 80 may 3 be invoked by the AO in the subsequent assessment year. In support, reliance was placed on the Hon’ble Supreme Court decision in the case of CIT Vs. Manmohan Das reported in 59 ITR 699. It was further submitted that the decision of Hon’ble Supreme Court has subsequently been followed by the Coordinate Delhi Benches in case of Burda Druck India Pvt. Ltd. Vs. ACIT (in ITA No. 3895/Del/2019 dt. 05/12/2022), and Coordinate Mumbai Benches in case of DCIT Vs. Instant Traders Pvt. Ltd. (in ITA No. 7364/Mum/2016 dt. 20/06/2018) and M/s Orra Fine Jewellery Pvt. Ltd. Vs. DCIT (in ITA No. 2926/Mum/2018 dt. 25/09/2020). It was accordingly submitted that in light of the aforesaid settled position in law, there is no basis for the AO/CPC to restrict the carry forward of current year business losses from specified business claimed by the assessee under section 35AD of the Act and for the ld CIT(A) to sustain the same. 7. Per contra the Ld. CIT DR submitted that the provisions of Section 139(3) are clear to the effect that if any person has sustained the losses in any previous year under the head “Profit & Gains of the Business & Profession” and claim that all loss or any part thereof should be carry forward under sub section (2) of Section 73A as applicable in the instant case, it is required to furnish the return income of loss in the prescribed form and verified in the prescribed manner within the time allowed under sub section (1) of Section 139 of the Act. It was further submitted that Section 80 also provides that the losses which has not been determined in pursuance of the return filed in accordance with the provisions of Section 139(3) shall not be allowed to be carry forward and set off under section 73A of the Act. 8. It was submitted that in the instant case, the assessee has admittedly filed its return of income much after the due date and claimed carry forward of current year business losses of Rs. 8,36,02,091/- which is clearly not allowable in terms of the provisions of Section 139(3) read with Section 80 of the Act. It was accordingly, submitted that there was no infirmity in the action of the CPC/AO in disallowing the claim of the assessee which is clearly in accordance with the provisions of Law. It was further submitted that practically, there is no mechanism where the AO for the subsequent assessment year can verify whether the return of previous assessment year has been filed within the prescribed due date and therefore, where the AO for the impugned assessment year is examining the return of income and gives a finding that the return has not been filed in time and thus, the assessee is not allowed to carry forward the business losses, there is no infirminity in the said action of the AO. Further, reliance was placed on the decision of Hon’ble Punjab & Haryana High Court in case of Rajiv Gupta Vs. CIT [2014] 51 taxmann.com 53 wherein the matter was decided in favour of the Revenue upholding the decision of the Coordinate Chandigarh Benches in case of Rajiv Gupta Vs. ITO [2008] 114 ITD 346. 4 9. We have heard the rival contentions and purused the material available on record. The limited issue under consideration relates to carry forward of current year business loss of specified business u/s 35D to the subsequent assessment year. The same has been denied by the AO/CPC and confirmed by the ld CIT(A)/NFAC for the reason that return of income has been filed much after the due date as prescribed u/s 139(1) of the Act and necessary guidance has been drawn from the provisions of Section 139(3) read with Section 80 of the Act. 10. Section 73A contains provisions relating to carry forward and set off of losses of specified business and the same reads as under: “(1) Any loss, computed in respect of any specified business referred to in section 35AD shall not be set off except against profits and gains, if any, of any other specified business. (2) Where for any assessment year any loss computed in respect of the specified business referred to in sub-section (1) has not been wholly set off under sub-section (1), so much of the loss as is not so set off or the whole loss where the assessee has no income from any other specified business, shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year, and— (i) it shall be set off against the profits and gains, if any, of any specified business carried on by him assessable for that assessment year; and (ii) if the loss cannot be wholly so set off, the amount of loss not so set off shall be carried forward to the following assessment year and so on." 11. Sub-section (2) to Section 73A provides that any loss, computed in respect of any specified business referred to in section 35AD which has not been wholly set off under sub- section (1), shall, subject to the other provisions of this Chapter, be carried forward to the following assessment year and it shall be set off against the profits and gains, if any, of any specified business carried on by him assessable for that assessment year. Thus, the right of the assessee to carry forward and set off of losses has been made subject to provisions of Section 80 of the Act. 12. Section 80 provides that no loss which has not been determined in pursuance of a return filed in accordance with section 139(3) shall be carried forward and set off under section 73A(2). 13. Sub-section (3) to Section 139 provides that where a person has incurred a loss in any previous year under the head “profits and gains of business or profession” and claims that such loss should be carried forward in terms of section 73A(2), he may furnish the return of income within the time prescribed u/s 139(1) of the Act. 14. In the instant case, the assessee has incurred certain losses in respect of its specified business u/s 35D for the impugned assessment year and claims that such loss be allowed to be carried forward for being set off against income of the specified business of the subsequent 5 assessment year. The return of income for the impugned assessment year, however, has been filed beyond the prescribed due date as provided u/s 139(1) of the Act. There is thus a violation by way of not filing the return of income within the prescribed due date, a condition precedent for allowing the assessee’s claim. In the said background, the contention which has been raised by the ld AR is that the language which has been provided in the statute is “carry forward and set off” and therefore both these phrases have to be co-jointly read and cannot be segregated and therefore it is only in the year in which the set off is claimed by the assessee that the provisions of Section 80 may be invoked by the AO in the subsequent assessment year. In other words, it is for the AO, examining the return of income for the subsequent year where the assessee seeks set off of brought forward losses from the impugned assessment year, to take appropriate decision to allow or deny such claim of set off, however, as far as the impugned assessment year is concerned, where the assessee is only claiming carry forward of losses of specified business, the AO has no jurisdiction to deny such carry forward. 15. In case of Manmohan Das (Supra), the Hon’ble Supreme Court held that it is for the ITO dealing with assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year and a decision recorded by the ITO who computes the loss in the previous year that loss cannot be set off against the income of the subsequent year is not binding on the assessee and the relevant findings are contained in para 3 of its order which read as under: “3. The second question presents little, difficulty. In making his order of assessment for the year 1950-51, the ITO declared that the loss computed in that year could not be carried forward to the next year under s. 24(2) of the IT Act, as it was not a business loss. The ITO has under s. 24(3) to notify to the assessee the amount of loss as computed by him, if it is established in the course of assessment of the total income that the assessee has suffered loss of profits., Sec. 24(2) confers a statutory right (subject to certain conditions which are not material) upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward the loss as is not set off under sub-s. (1) to the following year, and to set it off against his profits and gains, if any, from the same business, profession or vocation for that year. Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and gains of the same business, profession or vocation under s. 24(2) has to be determined by the ITO who deals with the assessment of the subsequent year. It is for the ITO dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. A decision recorded by the ITO who computes the loss in the previous year under s. 24(3) that the loss cannot be set off against the income of the subsequent year is not binding on the assessee.” 16. Following the same, the Coordinate Delhi Benches in case of Burda Druck India Pvt Ltd (Supra) has held in para 6 & 7 as under: 6 “6. We have given a thoughtful consideration to the orders of the authorities below. The undisputed fact is that while concluding assessment the AO declared that the loss computed is not allowed to be carried forward. In our considered opinion all that the AO is required is to notify the assessee the amount of loss as computed by him. Whether the loss in any year may be carried forward to the following year and set off against the profits has to be determined by the AO who deals with the assessment of the subsequent year. It is for the ITO dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. For this proposition we place strong reliance on the decision of the Hon’ble Supreme Court in the case of CIT Vs. Manmohan Das 59 ITR 699 wherein:- “It was held by the Hon'ble Supreme Court that it is for the Assessing Officer dealing with the assessment in the subsequent year who has to determine whether the loss of the previous year may be set off against the profits of that assessment year. The Hon'ble Supreme Court further held that a decision recorded by the Assessing Officer who computes the loss in the previous year that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. 23. The ratio of the decision of the Hon’ble Supreme Court in the case of CIT Vs. Manmohan Das (supra) applied squarely to the facts of the assessee’s case.” 7. In the light of aforementioned discussion and respectfully following the ratio laid down by the Hon’ble Supreme Court in the case of Manmohan Das (supra). We have no hesitation in directing the AO to expunge the concluding remark “brought forward loss is not allowed to be carry forward as per para 3,4 and 5.” 17. Similarly, the Coordinate Mumbai Benches in case of Instant Traders Pvt Ltd (Supra) has held in para 5-7 of its order which read as under: “5. After having carefully considered the rival submissions, we find that the limited plea of the assessee before us is to the effect that the dispute regarding the denial of the carry forward of loss on the basis of prohibition contained in section 79 of the Act be considered by the Assessing Officer in accordance with law in the subsequent year where the assessee claims actual set off. An identical situation has been considered by our co- ordinate Bench in the case of Khajrana Ganesh Properties Private Limited (supra), wherein one of us is part of the Bench. The Tribunal, by relying the judgment of Hon'ble Supreme Court in the case of Manmohan Das (Deceased) (supra), noted that whether or not loss in any year can be carried forward and set off in the subsequent year is liable to be determined by the Assessing Officer who deals with the assessment of such subsequent year. In fact, the Hon'ble Supreme Court specifically noted that the decision recorded by the Assessing Officer, who computes the loss in preceding year that loss cannot be set off in the subsequent year is not binding on the assessee in the subsequent actual year of set off. Considered in this light, the co-ordinate Bench in the case of Khajrana Ganesh Properties Private Limited (supra) came to conclude that it is only the Assessing Officer dealing with the assessment of the assessment year where the assessee has claimed set off of the loss is competent and not the Assessing Officer of the earlier year. The relevant decision of the Co-ordinate Bench is as under: "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 Court, 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 Supreme Court further noted that a decision recorded by the Assessing Officer who computes the loss in a previous year that 7 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 the income of the subsequent year. Therefore, such 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 of 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 purposes." 6. Considering in the aforesaid light, in our view, so far as the instant assessment year is concerned, the Assessing Officer is not competent to give a finding that the loss cannot be carry forward and set off against the income of the subsequent year. Accordingly, the matter is remanded back to the file of the Assessing Officer to remove the direction relating to denial of carry forward and setoff of loss. However, our direction should not be interpreted to be any reflection on the merits of invoking section 79 of the Act, which prohibits carry forward and set off of loss in specified situations. The same shall be open to be considered by the Assessing Officer in the subsequent year of actual set-off while evaluating the claim of the assessee for set off of the impugned business loss. 7. As a consequence of our aforesaid discussion, we set aside the order of the CIT(A) and direct the Assessing Officer to expunge the directions so far as it relates to denial of carry forward and set off of loss. Thus, on this aspect the assessee succeeds for statistical purposes only.” 18. Similarly, the Coordinate Mumbai Benches in case of M/s Orra Fine Jewellery Pvt Limited (Supra) has held in para 18-23 of its order which read as under: “18. We have heard the rival submissions, perused the orders of the authorities below and the case laws relied on. The substantial issue for consideration now before us for the A.Y. 2012-13 is whether the provisions of section 79 of the Act can be invoked and examined in the assessment year in which the assessee claimed for carry forward of losses or in the assessment year in which the assessee actually claimed set off of carry forward losses against the profits of that year. The assessee contends that the Assessing Officer can examine the applicability of the provisions of section 79 of the Act only in the year in which the loss is set off and not in the year in which the assessee claims the loss to be carried forward. In the present case during the A.Y. 2006-07 the Assessing Officer invoking the provisions of section 79 of the Act denied carry forward of losses prior to the A.Y. 2006-07. Assessee carried the matter unsuccessfully before the appellate authorities and the matter is now pending before the Hon'ble High Court. 19. In the case of CIT v. Manmohan Das [59 ITR 699] the following question which came up before the Hon'ble Allahabad High Court has been examined by the Hon'ble Supreme Court in the appeal preferred by the revenue. “Whether the assessee could claim a set off of the loss suffered by him in the preceding year 1950-51 against his profits in the year under consideration, i.e., 1951-52, having failed to prefer an appeal against the refusal by the Income-tax 8 Officer making the assessment for the year 1950-51 to allow the assessee to carry forward the loss under section 24(2) of the Act ?" 20. The Hon'ble Supreme Court held as under: - “3. The second question presents little difficulty. In making his order of assessment for the year 1950-51, the Income-tax Officer declared that the loss computed in that year could not be carried forward to the next year under section 24(2) of the Income-tax Act, as it was not a business loss. The Income-tax officer has under section 24(3) to notify to the assessee the amount of loss as computed by him, if it is established in the course of assessment of the total income that the assessee has suffered loss of profits. Section 24(2) confers a statutory right (subject to certain conditions which are not material) upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward the loss as is not set off under sub-section (1) to the following year, and to set off against his profits and gains, if any, from the same business, profession or vocation for that year. Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and against the same business, profession or vocation under s. 24(2) has to be determined by the Income-tax Officer who deals with, the assessment of the subsequent year. It is for the Income- tax Officer dealing with the assessment in the subsequent year to determine whether the loss of the previous year may be set off against the profits of that year. A decision recorded by the Income-tax Officer who computes the loss in the previous year under s. 24(3) that the loss cannot be set off against the income of the subsequent year is not binding on the assessee.” 21. As could be seen form the above, the Hon'ble Apex Court held that the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and against the same business, profession or vocation under section 24(2) has to be determined by the Assessing Officer who deals with, the assessment of the subsequent year. It was held by the Hon'ble Supreme Court that it is for the Assessing Officer dealing with the assessment in the subsequent year who has to determine whether the loss of the previous year may be set off against the profits of that assessment year. The Hon'ble Supreme Court further held that a decision recorded by the Assessing Officer who computes the loss in the previous year that the loss cannot be set off against the income of the subsequent year is not binding on the assessee. 22. Following this decision of the Hon'ble Supreme Court, the Chandigarh Bench of the Tribunal in the case of Rajiv Gupta v. ITO [114 ITD 346] held that, the Assessing Officer was justified in refusing set off of the long-term capital loss suffered in A.Y. 1996-97, in A.Y. 1997- 98 as well as in A.Y. 1999-2000. It was observed by the Tribunal that there was a glaring and patent mistake committed by the Assessing Officer originally while making the assessments for the said assessment years under section 143(3) of the Act which was rightly modified, the assessment orders by rectifying the mistake of law by denying set off of long term capital loss claimed by the assessee. The facts in this case were that the assessee claimed carry forward of long term capital loss of A.Y.1996-97 in its return of income filed belatedly. This loss was set off during the A.Y. 1997-98 and A.Y. 1999-2000 by the assessee in the return of income filed. The Assessing Officer originally while completing the assessments u/s. 143(3) of the Act allowed the claim for set off. However, subsequently by passing rectification order u/s. 154 of the Act Assessing Officer denied the claim for set off which was upheld by the Tribunal, relying on the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra) wherein it has been held that the claim of the assessee has to be examined by the Assessing Officer in the year in which such claim for set off was made by the assessee in the return of income. Following the decision of the Hon'ble Apex Court, the Tribunal in this case decided the appeals against the assessee. 23. The ratio of the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra) applies squarely to the facts of the assessee’s case. On a reading of the 9 Tribunal order in ITA.No.5760/Mum/2009 dated 05.06.2013 passed for the A.Y. 2006-07 wherein the claim for carry forward of losses were denied invoking provisions of section 79 of the Act, we observed that the decision of the Hon'ble Supreme Court in CIT v. Manmohan Das (supra) was not brought to the notice of the Tribunal and the Tribunal had no occasion to examine the effect of this decision. Therefore, we are of the considered view that in view of the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra) the decision of the Tribunal for the A.Y.2006-07 sustaining the action of the Assessing Officer in not carrying forward the loss to be set off against the profits of the subsequent years has no relevance and the findings given therein has no application for the assessment year under consideration. We are also of the view that the decision of the Tribunal cannot be considered as a binding precedent as the Tribunal did not consider the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra). In the facts and circumstances, thus respectfully following the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra) we hold that the claim for set off of carry forward of losses prior to assessment years 2006-07 against the profits of the current assessment year i.e. A.Y.2012-13 vis-à-vis the provisions of section 79 of the Act has to be examined by the Assessing Officer only in the assessment year in which the assessee claimed such set off of losses in the return of income. In the present case since the assessee has claimed set off of carry forward of losses against the income of the current assessment year i.e. A.Y. 2012-13 and also in the subsequent assessment years this claim of the assessee has to be examined only during the assessment year 2012-13 and subsequent assessment years. Thus, the grounds raised in this regard are restored to the file of the Assessing Officer who shall decide the implication of section 79 of the Act in the light of our above said findings and observations. The grounds raised are disposed off accordingly.” 19. In the last of the aforesaid decisions, the Coordinate Mumbai Benches have also discussed the decision of the Coordinate Chandigarh Benches in case of Rajiv Gupta (Supra) wherein the facts of the case were that the long term capital loss incurred in A.Y 1996-97 was refused to be allowed set off by the AO while passing the rectification order for A.Y 1997-98 to 1999-2000 and which was upheld by the Bench. It was again a case where the AO for the year where the loss was claimed to be set off (and not a case where the AO for the year where the loss was incurred and claimed to be carried forward) has denied such claim for the reason that the return for the previous year was not filed in time. The said decision has since been confirmed by the Hon’ble Punjab and Haryana High Court and we thus find that the said decision support the case of the assessee rather than the Revenue. 20. In light of the aforesaid discussion and in the entirety of facts and circumstances of the case, we are of the considered view that there are two aspects of the matter. Firstly, the determination of loss of the specified business by the AO and secondly, the carry forward of the said losses to the subsequent assessment year. The AO for the impugned assessment year has to determine the loss from the specified business and notify the same to the assessee accepting the loss as claimed by the assessee or suggesting any variation thereof. However, as far as the second aspect of the matter is concerned, there is no legal and justifiable basis for the AO/CPC to deny the assessee the carry forward of current year business loss of specified business u/s 35D as so computed by the AO for being set off against eligible profits in the subsequent years. It is 10 for the AO examining the return of income for the subsequent year where the assessee seeks set off of the brought forward losses to take into consideration whether the return of income for the year of incurrence of losses of the specified business has been filed within prescribed due date or not and then, take appropriate action as per law. We therefore set-aside the order of the ld CIT(A) and direct the AO/CPC to remove the directions as far as it relates to denial of carry forward and set off of losses is concerned. 21. Now, coming to the submission of the ld CIT/DR that practically, there is no mechanism where the AO for the subsequent assessment year can verify whether the return of previous assessment year(s) has been filed within the prescribed due date, we find that appropriate documentation needs to be maintained by the department and in particular, the necessary modification is required in the form for furnishing return of income wherein due date of filing of return of income and actual date of filing of return of income for the relevant assessment years should also be provided along with particulars relating to losses to be carry forward and set off. 22. In the result, the appeal of the assessee is allowed. Order pronounced in the open Court on 07/08/2023. Sd/- Sd/- आकाश द प जैन #व$म &संह यादव (AAKASH DEEP JAIN) ( VIKRAM SINGH YADAV) उपा य / VICE PRESIDENT लेखा सद+य/ ACCOUNTANT MEMBER AG Date: 07/08/2023 FIT FOR PUBLICATION Sd/- Sd/- (A.D.JAIN ) (VIKRAM SINGH YADAV) VICE PRESIDENT ACCOUNTANT MEMBER आदेश क! त,ल-प अ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3. आयकर आय ु /त/ CIT 4. -वभागीय त न2ध, आयकर अपील&य आ2धकरण, च5डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशान ु सार/ By order, सहायक पंजीकार/ Assistant Registrar