TMI Blog2014 (2) TMI 684X X X X Extracts X X X X X X X X Extracts X X X X ..... e as damages/penalty for non-execution of sale deed of land was income assessable under the head of income from other sources. The claim of the assessee for set off against this income for business loss/unabsorbed depreciation requires a thorough examination and verification at the end of Assessing Officer - the order is set aside and the issue of allowability of set off of income from other sources against business losses/unabsorbed depreciation is restored to the AO for examination – Decided in favour of Revenue. - I.T.A. No. 346/Del/2012 - - - Dated:- 31-1-2014 - Shri G. D. Agrawal And Shri Chandramohan Garg,JJ. For the Appellant : Shri B. Srinivas Kumar, Sr.DR For the Respondent : Shri Ankit Gupta ORDER Per Ch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment after making appropriate inquiry. During the fresh assessment, notice u/s 143(2) and 142(1) along with questionnaire were served on the assessee. The Assessing Officer observed that the assessee has shown income of Rs.2,05,20,000 in the form of penalty/damages for not executing sale of agriculture land measuring 19 bighas situated in Sanganer, Jaipur. The assessee has shown this income as its business income. The Assessing Officer also observed that the assessee has claimed and carried forward losses and its set-off against this business income. The Assessing Officer observed that land transaction of the company which resulted in impugned income is not a business activity and the same cannot be treated as business income and the As ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssessee and the assessee has not filed any appeal or cross objection against this finding of Commissioner of Income Tax(A) and thus, finding of Commissioner of Income Tax(A) in this regard has attained finality. 6. Coming to the issue of set off of carried forward business loss/unabsorbed depreciation, we observe that the CIT(A) has allowed set off of unabsorbed depreciation/business loss against the income from other sources and the balance unabsorbed depreciation/business loss have also to be allowed to be carried forward. Ld. DR submitted that the assessee has accepted the verdict of the Commissioner of Income Tax(A) that the impugned income was income from other sources and income under the head of other sources cannot be allowed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r prior to AY 1997- 98 or to the AY 2002-03 and thereafter. It is also to be noted that depreciation pertaining upto AY 1996-97 can only be allowed to be set off against income under any head for a maximum period of eight assessment years starting from AY 1997-98. We, therefore, hold that the AO shall allow assessee s claim of set off of unabsorbed depreciation arose in the AY 1997-98 to 2001-02 only against the income under the head profits and gains of business or profession . However, the AO shall be entitled to allow set off of unabsorbed depreciation pertaining upto the AY 1996-97 against income under any head for a maximum period of eight years starting from AY 1997-98. The AO may allow set off of unabsorbed depreciation pertaining t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation and verification at the end of Assessing Officer in the light of ITAT C Bench, Delhi in the case of ACIT vs M/s HRJ Steel Pvt. Ltd. (supra). Under these circumstances, the impugned order is set aside and the issue of allowability of set off of income from other sources against business losses/unabsorbed depreciation is restored to the file of Assessing Officer with a direction that the Assessing Officer shall examine and verify the issue and claim of the assessee in the light of ratio laid down by ITAT C Bench Delhi in the case of ACIT vs M/s HRJ Steel (supra). Needless to mention that the Assessing Officer shall decide the issue after affording due opportunity of hearing for the assessee and assessee is also directed to cooperat ..... X X X X Extracts X X X X X X X X Extracts X X X X
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