TMI Blog2021 (1) TMI 163X X X X Extracts X X X X X X X X Extracts X X X X ..... In our considered view, therefore, the set off of the loss claimed by the assessee, at this stage, cannot indeed be declined. Refund becoming due to the assessee even as a related assessment , having crucial bearing on the refund, is in progress. When one carefully looks at the scheme of Section 240, the apprehensions seem to be perhaps ill conceived. In the present case, the coordinate bench decision, by virtue of which the assessment under section 143(3) was remanded to the Assessing Officer, was passed on 4th October 2019, whereas the related income tax returns for the present assessment years were filed by the assessee much before that date. The refunds, if any due to the assessee, have thus become due as a result of the appellate order dated 4th October 2019 and, to borrow the words of section 240, by the order aforesaid, an assessment is set aside or cancelled and an order of fresh assessment is directed to be made . A view is indeed possible that even though the assessment set aside and directed to made afresh may be of an year other than the assessment year in which the refund has arisen, refund will become due only on such fresh assessment being made. There does, t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... company incorporated in Cayman Islands and is engaged, inter alia, in the business of providing drilling services in connection with exploration and production of mineral oil. In the income tax return filed by the assessee for the assessment year 2014-15, the assessee had claimed a loss of ₹ 80,99,58,751 but, as a result of the additions made by the Assessing Officer, by rejecting the books of accounts in the course of scrutiny assessment proceedings under section 143(3) of the Income Tax Act, 1961, the income finally assessed in the hands of the assessee was a positive income of ₹ 6,55,22,160. Aggrieved, assessee carried the matter in appeal before a coordinate bench of this Tribunal. While the coordinate bench did not uphold the rejection of books of accounts, as was done by the Assessing Officer, the coordinate bench nevertheless remitted the matter to the file of the Assessing Officer for framing the assessment de novo. As on now, this remanded assessment proceedings are pending before the learned Assessing Officer. In the meantime, however, the question arises whether, during the pendency of these remanded proceedings, the set off of loss, as claimed in the income ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the unabsorbed business losses pertaining to AY 2014-15. (Assessment year 2017-18) 4. Aggrieved, assessee raised the grievance before the Dispute Resolution Panel but without any success. Learned Dispute Resolution Panel confirmed the action of the Assessing Officer and made identical observations for both the assessment years as follows: 11. We have considered the submission of the assessee. As regards to the assessee's contention of non granting of carry forwarding and setting off of the brought forward losses pertaining to A.Y. 2014-15, it is pertinent to note that the relevant assessment was quashed by the ITAT in its order in ITA No. 7415/Mum/2017 dated 04.10.2019 and restored the case for fresh adjudication to the file of the AO. Since, the relevant assessment is pending before the AO by virtue of the ITAT order (supra), therefore, the claimed carry forward and set off of the brought forward losses pertaining to AY 2014-15 was rightly denied by the AO. The objection no (iv) is disposed off accordingly. 5. It was in this backdrop that the set off of the losses carried forward has been declined to the assessee. The assessee is aggrieved and is in ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... etically be justified, it does not exist in the law. The action of the Assessing Officer, in declining the set off of the carried forward losses, is thus without the authority of law, and must be vacated. Learned counsel for the assessee also refers to certain judicial precedents which, for the reasons we will set out in a short while, are not really required to be referred to in the present context. Learned Departmental Representative, on the other hands, submits that in case the assessee is to be allowed the set off of this loss in the subsequent years, i.e. the assessment years before us, the assessee will become eligible for refund of taxes and, therefore, legitimate interests of the revenue will be prejudiced by allowing such refunds. He urges us to defer a decision on this matter till the time the remanded assessment is finalized. Even on merits, learned Departmental Representative defends the action of the authorities below. In a short note emailed to us after the hearing, learned Departmental Representative submits as follows: 3 The ground of appeal of the assessee claiming set off of unabsorbed losses pertaining to AY 2014-15 against the income for AY 2016-17 implies ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Head Salaries or Business. Thereafter, the question of carry forward and set off of unabsorbed losses in subsequent years arises. The Hon. Supreme court held that the services are in the nature of vocation and therefore the losses can be carried forward and set-off in subsequent years. Thus facts are neither identical nor similar. 10.2 In the decision rendered by Hon. Madras High court in the case of Kanaka films (P) Ltd, the issue was whether the losses of AY 1965-66 can be carried forward and set off in AY 1970-71 1971-72 after the limitation u/s 154 expires.[para 8 of the Hon. HC order]. Thus facts are neither identical nor similar. To sum up It is humbly submitted, that the claim of the assessee is strongly objected on the ground that Hon ble ITAT in its order for AY 2014-15 has not directed the AO to delete the additions made and therefore unabsorbed losses do not exist pending conclusion of fresh assessment proceedings. The claim of unabsorbed losses as per ROI as well as total income determined u/s 143(3) rws 144C(13) are in suspended animation. Further the decisions relied upon by the assessee are on a different set of facts and are therefore ne ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... set aside or cancelled and an order of fresh assessment is directed to be made . It would appear to us that the law does not provide that the assessment in which the refund has arisen must be the assessment set aside or cancelled. Therefore, a view is indeed possible that even though the assessment set aside and directed to made afresh may be of an year other than the assessment year in which the refund has arisen, refund will become due only on such fresh assessment being made. There does, therefore, seem to be a prima facie valid school of thought that in such a situation, as in the present case, refund of taxes for the present assessment years must wait the finalization of the assessment for the assessment year 2014-15 because of which the refund may arise. Viewed thus, the apprehension of the learned Departmental Representative, therefore, does not seem valid. In any case, the remanded assessment is to be finalized, as learned Departmental Representative himself accepts, within less than three months from today, and, therefore, this situation of uncertainty is too transitory and too short by any standard. As soon as the remanded assessment is finalized, any variations in the a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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