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2018 (7) TMI 1753 - AT - Income TaxRectification order under section 154 - validity of returns filed under section 139(5) - CIT(A) rectifying the mistake under section 154 of the Act and disallowing the carry forward and set off of the long term capital loss incurred on sale of the property in Netherlands by observing that the assessee is not entitled to claim for carry forward of long term capital loss relying on section 80 r.w.s 139(1) - Held that:- Where the assessee has filed a positive return of income, it cannot be said that the return is a loss return and the return of income is to be treated as a return under section 139 of the Act. The long term capital loss has no effect on the positive total income of the assessee for the current assessment year and hence all the returns of income filed by him need to be considered as a return of income filed under section 139(1) of the Act. Here, the returns filed under section 139(5) of the Act and claim made therein in the revise return, which has no effect on the positive total income as reflected in the return filed under section 139(1) of the Act, should be allowed to be carried forward and set off. We direct the AO accordingly. Both the orders of CIT(A) are quashed on the above issue. Ad hoc disallowance - Held that:- AO to restrict the disallowance at a 10% on all the items above mentioned and recompute the disallowance accordingly. For this we are of the view that neither the AO nor CIT(A) has doubted the genuineness of expenses or unreasonableness of expenses. Just to make it reasonable, we cannot rule out some personal element in some of the expenses, hence, a reasonable disallowance of 10% is restricted. This issue of assessee’s appeal is partly allowed.
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