TMI Blog2018 (6) TMI 444X X X X Extracts X X X X X X X X Extracts X X X X ..... - DELHI HIGH COURT] we find merit in assessee’s submissions that u/s. 153A return is deemed to be return u/s 139(1) and that restrictive provisions of section 80 do not apply to this case - thus AO is directed to allow the claim of carry forward of business loss of assessee - Cross Objection is decided in favour of the assessee. - I.T.A. No.2461/DEL/2016 And C.O. NO. 215/DEL/2016 - - - Dated:- 6-6-2018 - SHRI H.S. SIDHU, JUDICIAL MEMBER AND SHRI O.P. KANT, ACCOUNTANT MEMBER For The Department : Sh. S.S. Rana, CIT(DR) For The Assessee : S h . Anil Kr. Chopra, Adv. And Sh. V.K. Garg, Adv. ORDER PER H.S. SIDHU : JM The Revenue has filed this Appeal and Assessee has filed the Cross Objection against the impugned Order dated 19.2.2016 passed by the Ld. CIT(A)-23, New Delhi relevant to assessment year 2010-11. Since the issues involved in the Revenue s Appeal as well as in the Assessee s Cross Objection are inter-connected, hence, the appeal and cross objection were heard together and are being disposed of by this common order for the sake of convenience. 2. The grounds raised in the Revenue s Appeal read as under:- 1. The order of Ld. CIT( ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessment order, the assessee appealed before the Ld. CIT(A), who vide his impugned order dated 19.2.2016 has observed that non-allowance of carry forward of business loss was restricted to ₹ 2,78,08,927/- being business loss (excluding depreciation). Carry forward of depreciation of ₹ 40,35,877 was allowed and partly allowed the appeal of the assessee. Against the impugned order, the Revenue is in appeal before the Tribunal on the issue of carry forward of depreciation of ₹ 40,35,877/- and the assessee has filed Cross objections on the issue of non-allowance of carry forward of business loss of ₹ 2,78,08,927/-. 5. Ld. DR relied upon the order of the AO and reiterated the contentions raised in the grounds of appeal of the Revenue. He relied upon the decision of Hon ble Delhi High Court in the case of CIT Vs Kabul Chawla [2015] 380 ITR 573 (Delhi) and ITAT Kolkata decision in the case of Tantia Constructions Ltd Vs DCIT 2016-TIOL- 2027-ITAT-KOL. 6. On the contrary, the Ld. AR of the assessee has relied upon the order of the Ld. CIT(A) as far as issue of allowance of c/f of unabsorbed depreciation is concerned, Ld. AR has also filed synopsis on 08.05.2018 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... filed against the order. Thereafter, consequent upon search and seizure operation conducted on 22.03.2013 and 23.03.2013 against the assessee, reassessment u/s 153A r.w.s. 143(3) of the Act was made on 31.03.2015 at the same income assessed u/s 143(3) dt. 11.03.2013 by disallowing the carry forward of loss once again. Subsequently, as mentioned above, the reassessment order was rectified on 08.05.2015. Admittedly, no fresh addition has been made in the present reassessment under consideration. In terms of the provisions of s. 153A of the Act the AO was duty bound to issue notice u/s 153A of the Act and make reassessment by considering any new incriminating material found as a result of the connected search, and since the AO did not find any new incriminating material she completed the assessment at the earlier assessed income. The action of the AO is also in consonance with the order of the Hon ble High Court of Delhi in Kabul Chawla (2015) 234 Taxman 300 (Del). Thus, in my view there is no grievance which need to be addressed in this appeal, which being infructuous is dismissed. 4.3.3 However, even in this order the carry forward of loss of ₹ 3,18,44,804/- was not allo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ,78,08,927/- raised in the Assessee s Cross Objection is concerned, at the time of argument in the Cross Objection, ld. Counsel of the assessee has filed the following written submission and reiterated the contents thereof:- ASSESSE S SUBMISSION IN CROSS OBJECTION 1. The issue involved in Cross Objections of Appellant in AY 2010-11 relates to carry forward of business loss claimed in 153A return. The business loss suffered by the appellant in AY 2010-11 as claimed in 153A return is duly allowable to be carried forward even if the same was not allowed to be carried forward in original assessment u/s 143(3) for AY 2010-11 on account of delayed filing of original return. It is appellant s case that return under section 153A is deemed to be return under section 139(1) and as such section 80 does not apply. Extract from Section 153A is as under: ( 1) Notwithstanding anything contained in section 139, section 147, section 148. Section 149, section 151 and section 153, in the case of a person where a search is initiated under section 132 or books of account, other documents or any assets are requisitioned under section 132A after the 31st day of May 2003, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... return will be treated as the original return filed under Section 139. On similar lines, the Gujarat High Court in the case of Kirit Dahyabhai Patel v. Asstt. CIT [2015] 280 CTR 216, held that: In view of specific provision of s. 153A of the I.T. Act. the return of income filed in response to notice under s. 153A of the I.T. Act is to be considered as return filed under s. 139 of the Act, as the AO has made assessment on the said return and therefore, the return is to be considered for the purpose of penalty under s. 271(1)(c) of the I.T. Act and the penalty is to be levied on the income assessed over and above the income returned under s. 153A, if any. 21. Thus, it is clear that when the A.O. has accepted the revised return filed by the assessee under Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes, including for the purpose of levying penalty under Section 271(1)(c) of the Act, the return that has to be looked at is the one filed under Section 153A 5. In the case of ACIT, Central Circle -1(3), Chennai Vs. V.N. Devadoss [2013] 32 taxmann.com 133 (Chennai Trib.) Hon ble ITAT Chennai Bench has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der section 153A is deemed to be a return under section 139(1) and that accordingly, it is not hit by section 80. As seen from the above, the claim of the appellant is duly covered by direct case laws of High Courts and Tribunal in favor. As such, the same deserves to be followed in appellant s favour. In view of the above, it is prayed that the order of the Ld. AO disallowing the carry forward and order of Ld. CIT(A) sustaining the same deserves to be quashed. 8.1 Ld. Counsel of the assessee vehemently argued that the business loss suffered by the assessee in AY 2010-11 as claimed in 153A return is duly allowable to be carried forward and set off even if the same was not allowed to be carried forward in original assessment u/s 143(3) for AY 2010-11 on account of delayed filing of original return. He further stated that it is assessee s case that return under section 153A is deemed to be return under section 139(1) and as such provisions of section 80 do not apply. In support of this contention, he reiterated the contents of the aforesaid written submission and relied upon the case laws cited therein and stated that the issue in dispute is squarely covered by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 153A, no occasion arises to refer to the previous return filed under Section 139 of the Act. For all purposes of the Act, the return that has to be looked at is the one filed under Section 153A. In assessee s case also, the return filed u/s 153A was accepted and assessed by the Ld. AO. Although carry forward of loss was not allowed in 143(3) assessment as the original return u/s 139 was belated, we are inclined to follow the ratio in the above decision of jurisdictional High Court to accept the contentions of the assessee that it is the return u/s 153A which is to be considered for allowability of carry forward of loss rather than the original return u/s 139. 9.1 We note that Ld. Counsel of the assessee also relied upon the decision of Hon ble Bombay High Court in the case of CIT vs B.G Shirke Construction Technology Pvt Ltd [2017] 79 taxmann.com 306 (BOM) and of Chennai ITAT in the case of ACIT, Central Circle - 1(3), Chennai Vs. V.N. Devadoss [2013] 32 taxmann.com 133 wherein claim of deduction made for the first time in 153A return was duly allowed holding that returns filed by the assessee under Section 153A are to be treated as returns filed under Section 139(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Pune) ITA No 771 to 774/PN/2010 vide its dated 23.12.2011 has adjudicated the similar issue in favour of the assessee as under:- 4. The relevant facts are that the assessee had filed return of income u/s 139(1) of the Act for the years under the appeals declaring losses for the A.Ys. 2002-03, 2003-04 and 2005-06 and declaring nil income for the A.Y. 2004-05. The assessee had again filed returns of income for the years under consideration in response to the notices issued u/s. 153A of the Act. In these returns, the assessee had claimed interest expenditure on loan from a Credit Co-Operative Society which was not claimed in the returns of income filed u/s. 139(1) of the Act. The A.O. allowed the said expenditure while assessing loss and allowed carry forward of the loss only to the extent declared in the original return. The increase in loss as per returns filed in response to notices u/s. 153A was not allowed to be carried forward by the A.O. in view of the provisions of Section 80 of the Act. The A.O held that as per Section 80 of the Act, the loss which is not determined as per the provision of Section 139(3) of the Act cannot be carried forward. The Ld CIT(A) has upheld ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar. He emphasized that returns filed in response to the notice issued u/s. 153A were filed beyond the time limit prescribed u/s. 139(5) of the Act. The ld D.R. pointed out that returns in response to notice issued u/s. 153A on 11.7.2008 have been filed after 9 months on 30.3.09. He placed reliance on the following decisions : 1. Steri Mould Pvt. Ltd. Vs. DCIT, ITA No.3637/DEL/2009 2. Koppind (P) Ltd. Vs. CIT (1994) 207 ITR 228 (Cal). 7. In rejoinder, Ld. A.R. also clarified that provisions of Section 153A provide for fresh assessment of the income and the Ld A.R. also clarified that provisions of Section 153A provide for fresh assessment of the income and the assessee can also make a fresh claim. In this regard he relied upon the decision of Mumbai Bench of the Tribunal in the case of Eversmile Construction Co. Pvt. Ltd, ITA No. 4238/Mum/2010., A.Y. 2001-02 decided on 30th August 2011. A copy of this decision has been furnished for the perusal of the Bench and the other side. 8. Having gone through the decision of Mumbai Bench of the Tribunal in the case of DCIT Vs. Eversmile Construction Co. Pvt. Ltd. (Supra), we find that an identical issue has been deci ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... alled for, he will obviously make addition and vice versa. We find that in the above discussion after discussing the issue in detail, the Mumbai Bench has come to the conclusion that there is difference in wordings u/s. 158B(b) and Section 153A of the Act. Provisions u/s. 153A are successor of the special procedure for assessment of search cases under Chapter XIV B starting with Section 158B. Chapter XIV-B required the assessment of undisclosed income as a result of search, which has been defined in Section 158B(b) whereas Section 153A dealing with assessment in case of search w.e.f. 1.6.2003 requires the A.O to determine total income and not undisclosed income under these background, the Bombay Bench of the Tribunal has held that when the A.O has to compute the total income of the assessee on the basis of return filed after considering the submissions made during the course of hearing before him, there cannot be any scope for arguing that the assessee has been rendered powerless to even lodge a claim in respect of which deduction was not allowed earlier. The A.O fully empowered to consider the question of deductibility as per the provision of the Act. If after going t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (5) thereof again within the prescribed time limit, the A.O is bound to take cognizance of the revised return because the original return is replaced by the revised return, held the Tribunal. In the present case before us, undisputedly, the assessment u/s. 153A r.w.s. 143(3) of the Act has been framed on the basis of return filed in response to notice issue u/s. 153A of the Act. Hence, now it is not open to raise contention by the revenue that return was filed beyond the prescribed time period mentioned in the notice issued u/s. 153A of the Act. The return of income filed in response to the notice u/s. 153A on the basis of which assessment in question has been framed thus has replaced the original return for determining the net income in the assessment u/s. 153A of the Act. Thus, in a sense, return filed in response to the notice issued u/s. 153A was a revised return and the assessment was reassessment. For the purpose of levy of penalty u/s. 271(1)(c) of the Act, excess income in difference to the originally assessed income may be subject matter under the facts and circumstances of the case that the same was due to concealment of particulars of income or furnishing inaccurate part ..... X X X X Extracts X X X X X X X X Extracts X X X X
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