ITO WARD -1(3) , GWALIOR V. SMT. PRIYA SADANA, PROP. SADANA WARE HOUSE, DABRA

MA 30/AGR/2020

AI Insights

The case revolves around a dispute concerning the allowance of unabsorbed depreciation claimed by Smt. Priya Sadana, a proprietor of a warehousing business, in her revised income tax return for the Assessment Year 2012-13. Initially, the Income Tax Officer (ITO) disallowed the carry forward of the unabsorbed depreciation and other deductions, leading to an increased assessed income. The CIT(A) later allowed some deductions and the carry forward of losses, which the Department appealed against. The Tribunal initially dismissed the Department's appeal due to the low tax effect. However, the Department filed a Miscellaneous Application arguing that the tax effect was actually over Rs. 50 lakhs, seeking a re-evaluation of the case.

• Counselvise Citation: [2025] 140 COUNSELVISE.COM (IT) 779456 (ITAT-AGRA)
• Duration Of Justice: 5 year(s) 2 month(s) 25 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 15-10-2025
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: DB
• Assessment Year: 2012-2013
• Appeal Filed On: 20-07-2020
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: ANIL KUMAR
• Assessee Lawyers: RAMAKANT GUPTA
• Keywords: Set aside; Revised return; Reassessment proceedings; Depreciation; Tax effect; Capital expenditure; Audit objection; Competent authority; Unabsorbed depreciation
• Section: 147; 143(3); 142(1); 80IB

Judgement Text

"IN THE INCOME TAX APPELLATE TRIBUNAL AGRA BENCH, DB: AGRA (Through Physical / Virtual Hearing) BEFORE SHRI SUNIL KUMAR SINGH, JUDICIAL MEMBER AND SHRI BRAJESH KUMAR SINGH, ACCOUNTANT MEMBER M.A. No.- 30/Agr/2020 Arising Out of ITA No.- 254/Agr/2019 [Assessment Year: 2012-13] Income Tax Officer, Ward -1(3), Gwalior. VS Smt. Priya Sadana, Prop. Sadana Ware House, Dabra, Gwalior. PAN- ADFPS3491R Assessee Revenue Revenue By Shri Anil Kumar, Sr. DR Assessee By Shri Ramakant Gupta, Adv. Date of Hearing 18.07.2025 Date of Pronouncement 15.10.2025 ORDER PER BRAJESH KUMAR SINGH, AM, This Miscellaneous Application (hereinafter referred to as the ‘M.A’), has been field by the Revenue against the order dated 19.08.2019 in ITA No.- 254/Agr/2019 & Ors. This appeal of the Department was dismissed by the Tribunal vide its order dated 19.08.018, on account of tax effect being less than Rs. 50 lakhs. In Printed from counselvise.com MA- 30/Agr/2020 Priya Sadana 2 this Miscellaneous Application in the ‘Statement of Facts’ attached to the M.A. the Department has submitted that the tax effect in this case was actually more than Rs. 50 lakhs and to be exact, it was Rs. 1,79,15,458/-, for Assessment Year (A.Y.) 2012-13. 2. The dispute is with respect to the allowance of unabsorbed depreciation amounting to Rs. 5,75,91,545/-, claimed by the assessee in her revised return of income filed on 31.12.2013 for A.Y. 2012-13 allowance which as per the submissions made in the MA states that the Ld. CIT(A), Gwalior accepted the incorrect facts represented by the assessee and set aside the matter directing the AO to grant appropriate relief. The relevant contents of the MA, in its ‘Statements of Facts’ is reproduced as under: “ 1. In this case, the assessee is an individual and engaged in the business of Warehousing and Grading Unit. The assessee has filed it's return of income on 21/09/2012 declaring total return income of Rs. 2,54,560/-. The assessee on the said return had not claimed any unabsorbed depreciation. Later on, the assessee revised her ITR on 31.12.2013 and claimed unabsorbed depreciation allowance of Rs. 5,75,91,545/-/s 73A related to A.Y. 2011-12. The case of the assessee was selected for scrutiny through CASS on the issue \"Large deduction claimed under chapter VI-A\" and Notice u/s 143(2) issued on 03.09.2014. 2. During the course of assessment proceedings, sufficient opportunities were provided to the assessee to file the reply in respect of queries raised by the assessing officer, but the assessee could not file the relevant documents in respect of the queries raised. Hence, the Printed from counselvise.com MA- 30/Agr/2020 Priya Sadana 3 Assessment order u/s 143(3) of the Income Tax Act, 1961 was passed in the case on 27/03/2015 and deduction u/s 801B of the Income Tax Act of Rs. 14,31,479/- and deduction u/s 35AD of the Income Tax Act of Rs. 14,45,258/-were disallowed by the Assessing officer which resulted the total addition of Rs. 28,76,687/- and total assessed income at Rs. 31,31,250/. The assessing officer had also not allowed the carry- forward of allowance of Rs. 5,75,91,545/-/s73A for A.Y. 2011-12 3. Being aggrieved with the AO's order, the assessee preferred appeal before CIT(A)-Gwalior. The CIT(A), Gwalior vide his appeal order Appeal No. 28/1T/2015-16/Gwl Dated-05.04.2019 has allowed the deduction of Rs. 6,19,449 u/s 801B & Rs. 14,45,258/ u/s 35AD of the Income Tax Act and also allowed the benefit of \"carry forward of unabsorbed allowance of deduction u/s 35AD r.w.s. 73A\" and directed the AO grant the appropriate relief as per law on this point and accepted all the facts submitted by the assessee during the course of the appellate proceedings. 4. The Department had preferred the further appeal to Hon'ble ITAT on the both issues, In reference of first issue related to allowability of deduction u/s 35AD and 801B, the Revenue Audit Party has pointed out the same objections in the case of assessee for the A.Y. 2013-14 and the same was accepted by the department. Subsequently, the case was reopened for A.Y. 2013-14 taking the note of the audit objections and after getting the approval from competent authority. During the course of reassessment proceedings u/s 147 of the Income Tax Act, 1961 for A.Y. 2013-14, the assessee was again provided numerous opportunities vide notices u/s 142(1) dated 26.06.2018, Show cause notice dated 10/12/2018 and note sheet entry dated 17.12.2018 to submit the evidences in respect of issues raised by the Audit party but the assesse had not submitted any evidences in support of above- mentioned issues. Therefore, the claim of deduction u/s 35AD and 801B are also disallowed for A.Y. 2013-14. 5. In respect of second issue related to carry forward of allowance of losses of Rs. 5,75,91,545/-, It in stated that as per the information available in the system, the assessee had not claimed any unabsorbed depreciation in her ITR filed for A.Y. 2011-12 and for A.Y. 2010-11 on dates 30/09/2011 and 14/10/2010 respectively. For AY 2012-13, the assessee filed her ITR on 21/09/2012 and also not claimed any unabsorbed depreciation u/s 73A on this ITR related to A.Y. 2011-12. Later on this ITR was processed u/s 143(1) on 16/01/2013 and refund Printed from counselvise.com MA- 30/Agr/2020 Priya Sadana 4 was paid on 29/05/2013. After that, on date 31/12/2013 (after passing period about 1 year), the assessee has revised her ITR on 31/12/2013. In her revised return, the assessee had claimed unabsorbed depreciation allowance of Rs. 5,75,91,545/- u/s 73A related to A.Y. 2011-12. The above said revised return was processed on date 25/02/2014. The CIT(A), Gwalior has accepted the incorrect facts represented by the assessee and accepted the appeal of the assessee and set aside the matter directing the AO to grant the appropriate relief. The decision of Ld. CIT(A) is in contravention of provision of section 139(3) of the Income Tax Act, 1961. As per provision of section 139(3), the ITR (return of loss in the prescribed form) should be filed as per section 139(1) in case of loss as per section 73A(2). The department had appealed on the same issue before the Hon'ble ITAT, Agra. 6. The Hon'ble Income Tax Appellate Tribunal, Bench- Agra has rejected the appeal of the Department, filed against order the Ld. CIT(A), Gwalior [Appeal No. 28/IT/2015-16/Gwl Dated - 05.04.2019 of CIT(A), Gwalior] in a combined order taking the note of CBDT Circular dated 8th August, 2019 and considering the fact that the tax effect involved in the case is less than Rs. 50,00,000/- in each of these appeals. 7. Since, the issue related to carry forward of allowance of losses is having tax effect i.e. Rs. 1,79,15,458/- is more than the prescribed limits as per Circular no. 17/2019 dated 8th August, 2019, it is respectfully submitted that the Hon'ble ITAT, Agra Bench may please recall its order dated 19.08.2019 for rectifying the mistake and pass a fresh order by deciding the issue on merit.” 3. Regarding this claim of unabsorbed depreciation allowance of Rs. 5,75,91,545/-, the Ld. CIT(A) asked the assessee to explain for allowance of this loss, wherein after considering the reply of the assessee, it was noted by the Ld. CIT(A), that above amount was a typographical error, and the actual figure was Rs. 57, 59,155/-, and Printed from counselvise.com MA- 30/Agr/2020 Priya Sadana 5 not Rs. 5,75,91,545/-. The above finding of the Ld. CIT(A) as noted in para no. 3.2 of his order dated 05.04.019, is reproduced as under: “ In view of the above, the assessee was asked to explain as to why carry forward of allowance of Rs.5,75,91,545 u/s 35(4) for A.Y. 2011- 12 should not be disallowed as it was not claimed in the return filed for A.Y. 2011-12. Assessee was also asked to explain why deduction claimed u/s 80IB & 35AD in A.Y. 2012-13 should not be disallowed. In response, neither the assessee nor her authorized representative produced any details/documents before the AO nor anybody attended the proceedings. According to the AO, assessee had not fulfilled the conditions laid down for grant of deduction u/s 80IB and 35AD claimed for A.Y. 2012-13. Hence, deduction of Rs.14,31,479 claimed u/s 80IB and Rs.14,45,258 claimed u/s 35AD for Α.Υ. 2012-13 was disallowed by the 1d AO and the same was added to the total income of assessee while passing the assessment order u/s 143(3) of I.T. Act. Ld AO also rejected the claim of carry forward of allowance of Rs.5,75,91,545/- u/s 35(4) pertaining to Α.Υ.2011-12. However, later on, ld AR of the appellant has clarified that actual figure is Rs.57,59,155/- not Rs.5,75,91,545/- wrongly adopted due to typographical error.” 3.1 Further, on perusal of the order of the Ld. CIT(A), it is observed that the Ld. CIT(A) allowed relief of Rs. 6,19,449/- under Section 80IB of the Act and Rs. 14,45,258/- under Section 35AD of the Act. 3.2 Further, the Ld. CIT(A) has reiterated the fact in para no. 9 of his order that correct figure of carry forward of allowance was Rs. 57,59,155/- and not Rs. 5,75,91,545/- and further, claimed that the same was prima facie found acceptable and directed the AO to verify the correctness of the data / details available and grant the Printed from counselvise.com MA- 30/Agr/2020 Priya Sadana 6 appropriate relief as per law. The above finding of the Ld. CIT(A) in para no. 6.4 and 9 are reproduced as under: “6.4 Appellant has very vehemently contended that she has fulfilled all the conditions specified in Section 8018 & 35AD of the Act, maintained separate books of accounts for each Unit for which separate licenses have been obtained & bank loans obtained as well as filed Audit Report in From 10CCB and most importantly assessee was engaged in \"specified business\" i.e. setting up and operating Warehousing facility, so, the business is eligible for deduction u/s 80IB & 35AD of the Act. In view of above discussion, I am of considered view that Id AO was not justified in rejecting the legitimate claim of deduction Rs.6,19,449 u/s 80IB in respect of Unit-I and Rs.14.45,258 in respect of Unit-II. However, it is seen that while filing Revised Return, the claim of deduction u/s 801B has been enhanced to Rs.14,31,479 from Rs.6,19,449 claimed in original return by making adjustment for depreciation. I am of considered view that assessee has committed an error of adding back of depreciation to the profit as determined in P & L A/C. Hence, assessee will be eligible for deduction u/s 801B to the tune of Rs.6,19,449 as certified by Chartered Accountant in the report filed in Form 10CCB. Hence, I hereby direct the AO to grant the deduction of Rs.6,19,449 u/s 80IB & Rs.14,45,258 u/s 35AD of the Act. Ground#2 is partly allowed and ground#3 is fully allowed. 9. Although appellant has not raised any specific ground of appeal in respect of carry forward of unabsorbed allowance of deduction u/s 35AD r.w.s. 73A of specified business. At the outset, it is apparent that appellant has wrongly claimed the carry forward of allowance of Rs.5,75,91,545 which is a totally incorrect figure shown in 'Revised Return' instead of Rs.57.59.155. Appellant has unequivocally admitted this mistake. Appellant has provided the details of actual eligible set-off and carry forward of loss as under:- Particulars Amount Warehousing building-2 & 3 Capital expenditure as on 31.03.2010 Rs.92,77,706 Less: Depreciation on capital expenditure for A.Y. 2010-11 Rs.4,63,885 Loss c/f for A.Y. 2010-11 Rs.86,13,821 Printed from counselvise.com MA- 30/Agr/2020 Priya Sadana 7 Less: Deduction u/s 35AD for A.Y. 2011-12 Rs. 13,26,666 (includes depreciation of 8,81,382) Loss c/f for A.Y. 2011-12 Rs.74,87,155 Less: Deduction u/s 35AD for A.Υ. 2012-13 Rs.14,45,258 (includes depreciation of Rs.11.57,664) Loss c/f for A.Y. 2012-13 Rs.60,41,897 On perusal of details, claim of the appellant is prima facie found acceptable. However, 1d AO is directed to verify the correctness of the claim on the basis of data/details available with him or to be obtained from the assessee and thereafter grant the appropriate relief to the appellant as per law on this point.” (emphasis supplied by us) 3.3 Thus, from the above facts, it is seen that the Ld. CIT(A) allowed the following reliefs to the assessee vide his order dated 05.04.2019 for A.Y. 2012-13.  Deduction u/s 80IB: Rs. 6,19,449/-  Deduction u/s 35AD: Rs. 14,45,258/-  Carry forward of loss: Rs. 57,59,155/- (subject to verification by the AO) Total Rs. 78,23,862/- 3.4 Therefore, in view of the above total relief allowed to the assessee, by the Ld. CIT(A), the total tax effect will be less than Rs. 50 lakhs, and therefore, the Tribunal had correctly dismissed the appeal of the department on the ground that the tax effect was below Printed from counselvise.com MA- 30/Agr/2020 Priya Sadana 8 the monetary limit prescribed by the CBDT. Hence, the M.A. filed by the Department is not maintainable and is, therefore, dismissed. 4. In the result, M.A. filed by the Revenue is dismissed. Order pronounced in the open court on 15th October, 2025. Sd/- Sd/- [SUNIL KUMAR SINGH] [BRAJESH KUMAR SINGH] JUDICIAL MEMBER ACCOUNTANT MEMBER Dated 15.10.2025. Pooja Copy forwarded to: 1. Assessee 2. Respondent 3. CIT 4. CIT(A) 5. DR Asst. Registrar, ITAT, AGRA, Printed from counselvise.com "