2018 (12) TMI 1931 - HC - Income Tax

Loss aggravated for the purpose of showing reduced profit on adjustment - whether the assessed profit and assessed loss could be adjusted in the same year in accordance with law under sections 70(1) and 71(1) of the Income Tax Act 1961? - HELD THAT - At this stage there is no scope of going into this question of fact that the loss was enhanced so as to reduce profit. Regrettably that stage of fact finding is over. The assessee now is entitled to this adjustment as prayed for. In those circumstances we find no merit in the appeal of the revenue. It is dismissed.

Summary

Issues:
Adjustment of assessed profit and loss under sections 70(1) and 71(1) of the Income Tax Act, 1961.

Analysis:
The High Court of Calcutta, comprising Hon'ble Justice I.P. Mukerji and Hon'ble Justice Abhijit Gangopadhyay, JJ., addressed the issue of whether the assessed profit and loss could be adjusted in the same year under sections 70(1) and 71(1) of the Income Tax Act, 1961. The appellant's advocate contended that the loss was aggravated by the assessee to show reduced profit on adjustment. However, the Court noted that the question of whether the loss was enhanced to reduce profit could not be established by the revenue, as the case had already been through three tiers from the assessing officer to the tribunal. The Court emphasized that at this stage, there was no scope to delve into the factual aspect of the loss being increased to decrease profit, as that fact-finding stage had passed. Consequently, the assessee was deemed entitled to the adjustment as requested. Therefore, the Court found no merit in the revenue's appeal and dismissed it. The question posed was answered affirmatively and in favor of the assessee. The Court also ruled that there would be no order as to costs and allowed for the certified photocopy of the order to be supplied to the parties upon fulfilling all necessary formalities.