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Shri Vipul P. Dalal Versus DCIT - 12 (2) , Mumbai

2016 (7) TMI 262 - ITAT MUMBAI

Set off of business loss not allowed as per law - Mistake apparent from records - Held that:- The assessee is entitled to be allowed set off of business loss as determined by the AO in the order of assessment for A.Y. 2009-10 dated 02.12.2011, against his other eligible heads of income in accordance with law. In our view, failure on the part of the AO to apply these provisions of the Act in respect of set off of determined business losses, while passing the order of assessment, constitutes .....

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lip ORDER Per Jason P. Boaz, A.M. This appeal by the assessee is directed against the order of the CIT(A)- 23, Mumbai dated 02.07.2014 for A.Y. 2009-10. 2. The facts of the case, briefly, are as under: - 2.1 The assessee filed his return of income for A.Y. 2009-10 declaring income of ₹ 25,84,335/- and claimed carry forward of business loss of ₹ 84,83,150/-. The breakup of income is as under: - (a) Salary income ₹ 11,90,000/- (b) Business loss (Rs. 83,84,370/-) (c) Short term ca .....

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leted under section 143(3) of the Act vide order dated 02.12.2011 wherein the income of the assessee was determined at ₹ 29,80,680/- in view of certain additions/disallowances to the returned income. As returned by the assessee, the Assessing Officer (AO) also passed the order of assessment without setting off the current business loss against income from other heads. No appeal was filed by the assessee against the order of assessment for A.Y. 2009-10 dated 02.12.2011 and the matter attain .....

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e property and short term capital gains. A revised computation of income was enclosed and it was submitted that the business loss of ₹ 84,83,150/- incurred during the year is to be allowed to be set off by the Assessing Officer. And (ii) that interest under section 234B of the Act was wrongly charged in the order of assessment. The AO, after considering the averments of the assessee, in his order dated 23.04.2012 observed that as per the return of income filed for A.Y. 2009-10, the assesse .....

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for rectification under section 154 of the Act on both the issues raised. 2.4 Aggrieved by the order under section 154 of the Act dated 23.04.2012 for A.Y. 2009-10 passed by the AO rejecting his rectification application dated 26.12.2011, the assessee filed an appeal before the CIT (Appeals)-23, Mumbai making submissions vide letter dated 13.06.2014 which are extracted in the impugned order of the learned CIT(A). The learned CIT(A) dismissed the assessee s appeal vide the impugned order dated 02 .....

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on carried forward the business toss of ₹ 83,84,370/to the next year choosing not to set-off the same against any other head of income. Under the circumstances, it cannot be said that not claiming the set-off of the business loss constitutes a mistake apparent from the records within the meaning of sec.154 of the I.T. Act, 1961. The assessee did not claim set-off of this loss in the return of income filed. Rather, he has very categorically stated in the return that such loss was being carr .....

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e set-off in a proceedings u/s 154 of the I.T. Act, 1961. In view of the aforesaid reasons, I am of the opinion that the Assessing Officer was correct in rejecting the rectification petition filed by the assessee u/s 154 of the I.T. Act, 1961. The action of the Assessing Officer is, therefore, upheld. The ground of appeal filed by the assessee is dismissed. 3.1 Aggrieved by the order of the CIT(A)-23, Mumbai dated 02.07.2014, the assessee has preferred this appeal before the Tribunal raising the .....

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The learned A.R. for the assessee was heard in support of the grounds raised and reiterated the submissions put forth in proceedings before the CIT(A) vide letter dated 13.06.2014. It was submitted that section 154 of the Act permits rectification of an order either on the suo moto action of the authority concerned or where any such mistake apparent on the fact of the record is brought to the notice of the authority concerned, inter alia, by the assessee. According to the learned A.R. for the as .....

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of income, except income from salary and this request for rectification, if acted on by the AO, would neither require reference to any other documents/orders nor would it be a debatable issue that requires any long drawn discussion or debate. It would be merely be rectifying a mistake apparent from the face of the record since there is no estoppal against operation of the statute. 3.2.2 In support of the above averments, the assessee, inter alia, placed reliance on the following judicial pronou .....

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vs. Sankala Polymers (P) Ltd. (2012) 20 taxmann.com 378 (Karnataka), wherein it has been held that when a specific provision of the Act has not been applied, while passing an order of assessment, it constitutes a mistake apparent from record, and the authorities have the power to rectify the said mistake by invoking the provisions of section 154 of the Act. (iii) ACIT vs. Rupam Impex (2016) 66 taxmann.com 181 (Rajkot - Trib.), wherein assessee filed an application seeking rectification of the o .....

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P) Ltd. (2016) 65 taxmann.com 320 (Ahmedabad - Trib) (v) Circular No. 587 dated 11.12.1990. 3.3 Per contra, the learned D.R. supported the orders of the authorities below. 3.4.1 We have heard the rival contentions of both the parties and perused and carefully considered the material on record. The undisputed facts on record are that the assessee filed its return of income for A.Y. 2009-10 declaring income of ₹ 25,84,335/- comprising business loss of ₹ 83,84,370/-, STCG of ₹ 2,6 .....

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ter dated 26.12.2011, preferred an application for rectification of the order of assessment for A.Y. 2009-10 dated 02.12/2011, submitting that he had realized that while filing the return of income and computation of income he had inadvertently omitted to set off the business loss of ₹ 83,84,370/- against income from other heads (except salary), i.e. STCG, income from other sources and income from house property and that interest under section 234B of the Act was wrongly charged. The AO vi .....

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ised only when there is a mistake apparent from the records of assessment; a mistake that is obvious and patent, and not something that can be established by a long drawn out process of reasoning on points on which there may be conceivably two opinions. The records, not only means the order of assessment but comprises all proceedings and record on which the assessment is based, i.e. the records of assessment, and it is to this which the assessing authorities must confine itself. We find from the .....

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same against other permissible/eligible heads in accordance with law as embedded in the statute. Rather, it is seen that both the authorities below have sought to justify the mistake on record as one attributable to the assessee. 3.4.4 Proceedings under the Act are not adversarial, i.e. who is responsible for the mistake is not material. On the contrary what is material is that, undoubtedly, in the case on hand there has been a mistake. The fact that the mistake is attributed/attributable to the .....

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hand, the assessee admittedly, inadvertently, did not claim set off of business losses against certain heads of income in the return of income. While concluding the order of assessment and computing the assessee s income, the AO after accepting/determining the business loss of the assessee at ₹ 83,84,370/-, was duty bound in accordance with law as laid down in the provisions of the Act to have allowed set off of the business loss to the extent permissible against other heads of income and .....

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