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2022 (8) TMI 681 - AT - Income TaxClaim of set off of brought forward losses - Whether provisions of section 72A will override the applicability of the provisions of section 79? - Whether business loss becomes eligible for the set off ? - AO held that the business loss incurred prior to the previous year 2005-06 is not eligible for carry forward due to the applicability of provisions of section 79 and therefore, no such loss was available to the assessee for set off against its profits in AY 2007-08 - HELD THAT:- Once the AO in the case of Kovalam Hotels Ltd for assessment year 2006-07 has already rejected claim of carry forward of the said business loss in terms of section 79 of the Act, then same cannot be available to the assessee for set off u/s 72A of the Act until and unless said finding of the AO is reversed by the higher appellate authorities. Assessee intimated that appeal against the order of the AO in the case of Kovalam Hotels Ltd. for AY 2006-07 is pending before the Ld. First Appellate Authority. In our considered view, the said business loss becomes eligible for the set off in the year under consideration only subsequent to decision of the allowability of carry-forward in the case of Kovalam Hotel Ltd. under section 79 of the Act in the favour of assessee. As on date, the assessment order in the case of Kovalam Hotels Ltd. for AY 2006-07 is in operation and which has not been reversed by the CIT(A) or ITAT, thus, said business loss has not been carry forwarded to assessment year 2007-08 and therefore same is not available for set off against different heads of the income of the assessee as per the provisions of section 72A the Act for the assessment year under consideration. The issue of set off of business loss in AY 2007-08 u/s 72A of the Act is consequent to the issue of carry forward of loss in AY 2006-07 in Kovalam Hotels Ltd. in terms of section 79 - CIT(A) in the year under consideration is not justified in deciding the question of carryforward of loss in the case of Kovalam Hotels Ltd. for assessment year 2006-07 invoking section 72A of the Act as that issue has to be adjudicated by the appellate authorities having jurisdiction over the case of Kovalam Hotels Ltd. for AY 2006-07. Therefore, we are also not adjudicating on the issue whether carry-forward of the said business loss in the case of Kovalam Hotels Ltd. for AY 2006-07 is permitted under the law. Accordingly, we set aside the finding of the Ld. CIT(A) on the issue in dispute. The Assessing Officer is directed to give effect of set off of business loss in the case of the assessee, consequent to the finding of appellate authorities in the case of Kovalam Hotels Ltd. on the issue of carry forward of business loss under reference. The ground of the appeal of the Revenue is accordingly allowed.
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