Haryana State Handloom & Handicraft Corpn. Ltd., Chandigarh V. DCIT, Panchkula

ITA 730/CHANDI/2012

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 63885 (ITAT-CHANDIGARH)
• Duration Of Justice: 1 month(s) 20 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-08-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: SMC
• Assessment Year: 2008-2009
• Appeal Filed On: 09-07-2012
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: N K SAINI
• Assessee Lawyers: SUSHIL KR SINGLA
• Keywords: Depreciation
• Section: 72(1); 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCHES A CHANDIGARH BEFORE SHRI H.L.KARWA, HON'BLE, VICE PRESIDENT AND SHRI T.R.SOOD, ACCOUNTANT MEMBER ITA NO. 730/CHD/2012 ASSESSMENT YEAR: 2008-09 HARYANA STATE HANDLOOM & VS THE DCIT, HANDICRAFT CORPORATION LTD., PANCHKULA CIRCLE, CHANDIGARH PANCHKULA PAN NO. AAACH5712P (APPELLANT) (RESPONDENT) APPELLANT BY : SHRI SUSHIL KR. SINGLA RESPONDENT BY : SHRI N.K. SAINI DATE OF HEARING : 27.08.2012 DATE OF PRONOUNCEMENT : 29.08.2012 ORDER PER H.L.KARWA, VP THIS APPEAL FILED BY THE ASSESSEE IS DIRECTED AGAIN ST THE ORDER OF CIT(A), PANCHKULA DATED 25.4.2012 RELATING TO ASSES SMENT YEAR 2008-09. 2. THE ONLY EFFECTIVE GROUND RAISED IN THE APPEAL R EADS AS UNDER:- 1. ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW, LD. ASSESSING OFFICER ERRED IN IGNORING THE B/F LOSSES AND CURRENT LOSSES. 2 3. BRIEFLY STATED, THE FACTS OF THE CASE ARE THAT T HE ASSESSEE IS A STATE GOVERNMENT COMPANY ESTABLISHED TO PROMOTE HANDLOOMS AND HANDICRAFTS IN THE STATE OF HARYANA. DUE TO CONTINUOUS LOSSES, THE STATE GOVT. ORDERED TO WIND UP THE COMPANY. ACCORDINGLY, THE PROCESS OF R EALIZING THE BUSINESS ASSETS AND SETTLING THE LIABILITIES OF THE BUSINESS IS BEING DONE. THE ASSESSEE FILED ITS RETURN OF INCOME ON 31.3.2009 DECLARING N IL INCOME. HOWEVER, THE RETURN OF INCOME WAS PROCESSED U/S 143(1) ON 13.11. 2009. THEREAFTER, NOTICE U/S 143(2) OF THE INCOME TAX ACT, 1961 (IN SHORT 'T HE ACT') WAS ISSUED TO THE ASSESSEE ON 25.9.2009. THE ASSESSING OFFICER OBSE RVED THAT THE ASSESSEE HAD CLAIMED INTEREST INCOME OF RS. 91,620/- AGAINST WHICH IT HAS CALMED THE FOLLOWING EXPENSES:- ADMINISTRATION & SELLING : RS. 7,75,068/- INTEREST : RS. 84,262/- DEPRECIATION : RS. 9,941/- TOTAL : RS. 8,69,271/- THE ASSESSING OFFICER NOTICED THAT THE ASSESSEE HAS NO BUSINESS ACTIVITY DURING THE YEAR UNDER CONSIDERATION AND THE ONLY IN COME WHICH WAS RECEIVED BY THE ASSESSEE WAS FROM INTEREST ON ADVANCES / BAN K DEPOSITS. SINCE THE ASSESSEE HAS NOT CARRIED OUT ANY REGULAR BUSINESS A CTIVITY DURING THE YEAR, THE ASSESSING OFFICER DID NOT ALLOW THE EXPENSES CLAIME D BY THE ASSESSEE. THE ASSESSING OFFICER TREATED INCOME OF RS. 91,620/- AS INCOME FROM OTHER SOURCES U/S 56 OF THE ACT. HE, THEREFORE, COMPUTED THE TOTAL INCOME OF THE ASSESSEE AT RS. 91,620/-. WHILE FRAMING THE ASSESS MENT, THE ASSESSING OFFICER DID NOT ALLOW SET OFF OF BROUGHT FORWARD LO SSES BECAUSE THERE WAS NO BUSINESS ACTIVITY OF THE ASSESSEE DURING THE ACCOUN TING PERIOD UNDER 3 ASSESSMENT. SIMILARLY, THE CURRENT LOSSES CLAIMED WERE NOT ALLOWED BECAUSE BUSINESS WAS NOT IN OPERATION DURING THE YEAR UNDER CONSIDERATION. 4. ON APPEAL, THE CIT(A) REJECTED THE CLAIM OF THE ASSESSEE STATING THAT IT IS AN ADMITTED FACT THAT APPELLANT HAS NOT UNDE RTAKEN ANY BUSINESS ACTIVITY DURING THIS PERIOD. HE FURTHER HELD THAT CURRENT LOSSES CLAIMED AS BUSINESS LOSS IS NOT ALLOWABLE SINCE THE BUSINESS I S NOT IN OPERATION . 5. WE HAVE HEARD SHRI SUSHIL KR. SINGLA, LD. COUNSE L FOR THE ASSESSEE AND SHRI N.K. SAINI, LD. DR AT LENGTH AND HAVE ALSO PE RUSED THE MATERIALS AVAILABLE ON RECORD. IT IS AN ADMITTED FACT THAT THE ONLY INCOME OF THE ASSESSEE DURING THE YEAR UNDER CONSIDERATION IS ON ACCOUNT OF INTEREST ON BANK DEPOSITS WHICH IS TAXABLE UNDER THE HEAD INCOME FR OM OTHER SOURCES. THERE ARE CONCURRENT FINDINGS OF BOTH THE LOWER AUTHORITI ES THAT THERE WAS NO BUSINESS ACTIVITY OF THE ASSESSEE DURING THE ACCOUN TING PERIOD RELEVANT TO ASSESSMENT YEAR UNDER CONSIDERATION. THE AUTHORITI ES BELOW HAVE ALSO DISALLOWED CURRENT LOSSES ON THE GROUND THAT NO BUS INESS WAS IN OPERATION DURING THE YEAR UNDER ASSESSMENT AND FURTHER HELD T HAT SAME CANNOT BE CONSIDERED AS BUSINESS LOSS. AT THIS STAGE ALSO, N O MATERIAL WAS BROUGHT TO OUR NOTICE TO CONTROVERT THE CATEGORICAL FINDINGS G IVEN BY BOTH THE AUTHORITIES BELOW. SECTION 72(1) OF THE INCOME TAX ACT, 1961 ( IN SHORT 'THE ACT') PERMITS SET OFF OF THE LOSSES COMPUTED UNDER THE HE AD PROFIT AND GAINS OF BUSINESS OR PROFESSION IN EARLIER YEARS AGAINST PR OFITS AND GAINS OF ANY BUSINESS CARRIED ON IN THE PREVIOUS YEAR RELEVANT T O ASSESSMENT YEAR OF SET OFF. WE HAVE ALSO PERUSED THE PROVISIONS OF SECTION 72(1)(I ) OF THE ACT. CONSIDERING THE PROVISIONS OF SECTIONS REFERRED TO ABOVE IN THE CONTEXT OF 4 PRESENT CONTROVERSY, WE FIND THAT THE AUTHORITIES B ELOW WERE JUSTIFIED IN DISALLOWING SET OFF OF BROUGHT FORWARD LOSSES AND C URRENT LOSSES. WE, THEREFORE, UPHOLD THE ORDER OF CIT(A) AND DISMISS T HE APPEAL OF THE ASSESSEE. 6. IN THE RESULT, APPEAL IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON THIS 29 TH DAY OF AUGUST, 2012 SD/- SD/- (T. R. SOOD) (H.L.KARWA) ACCOUNTANT MEMBER VICE PRESIDENT DATED : 29 TH AUGUST, 2012 RKK COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT 4. THE CIT(A) 5. THE DR TRUE COPY BY ORDER ASSISTANT REGISTRAR