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TMI Blog2025 (3) TMI 916X X X X Extracts X X X X X X X X Extracts X X X X ..... or show cause notice) before such disallowing of set off losses, thus denying the very basic principles of natural justice. 5. The learned CIT(A) and AO had erred grossly by assuming that the losses claimed for set-off were pertaining to AY 2016-17. 6. The provisions of section 80 of the Act have been complied with vis-à-vis the year of losses and therefore the Ld.AO and CIT(A) have erred in law and on facts in not allowing the benefit of carry forward and set-off of losses; 7. The Ld CIT(A) /AO have erred in law and on facts in not appreciating that there is no estoppel against the Appellant from making correct submissions with respect to the quantum of losses. 8. The impugned order is riddled with mistakes apparent from the records and therefore bad in law; 9. The impugned order as such is bad in law in so far not considering the facts of the case, non-applying the principles of natural justice, and hence fit for quashing. (Total tax effect: Rs.14,89,021/-) On the basis of the above grounds and other grounds which may be urged at the time of hearing with the consent of the Honorable Tribunal, it is prayed that the order passed under section 250, to the e ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Further, the Ld.AR submitted that the AO as well as the Ld.CIT(A) had misunderstood the provision and on that basis, rejected the claim of set off which is not correct. The sections 72(1), 73(2), 73A(2), 74(1) or (3) and 74A(3) and 80 of the Act were relied on by the Ld.AR and contended that the losses in respect of the previous years could be set off against the current years profits when the assessee had filed their return of income for the earlier previous years in time. 5. At the time of hearing, the Ld.AR also filed a paper book enclosing a detailed synopsis and the submissions made before the Ld.CIT(A) and also the order of the Hon'ble Allahabad Bench of this Tribunal reported in (2022) 134 taxmann.com 212 and prayed to allow the appeal filed by the assessee. The Ld.AR also pointed out some arithmetical mistakes made in the computation of losses and also prayed to rectify the same and grant the actual loss incurred by the assessee during the previous years. The Ld.DR relied on the orders of the lower authorities and prayed to dismiss the appeal filed by the assessee. 6. We have heard the arguments of both sides and perused the materials available on record. 7. On perusi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring that year but only income was available for set off during that year. We have also perused the relevant extract of ITR for the A.Ys. 2013-14, 2014-15, 2015-16 & 2016-17 and in all the returns, the said losses were properly shown in the returns and a portion of the losses were set off as against the profits earned during the years 2014-15, 2015-16 and 2016-17. After adjusting the losses in the earlier years, the balance loss which is available for set off is about Rs. 37,35,274/- whereas mistakenly, the assessee had shown a sum of Rs. 45,18,838/- as the carry forward loss. The said wrong claim was also accepted by the CPC and the set off was granted in the A.Y. 2017-18. 10. On perusing the details filed by the assessee and the copies of the ITRs filed in respect of the A.Ys. 2013-14, 2014-15, 2015-16 and 2016-17, we are able to ascertain that the losses are only related to the A.Ys. 2012-13 and 2013-14 which was carried forward after adjusting the profits available during the subsequent years. There is no dispute with regard to the fact that the return of income for the A.Ys. 2012-13 and 2013-14 were filed in time and in that A.Ys., the losses were determined by the AO and the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ittedly, in the present case, the loss in respect of the assessment years 2012-13 and 2013-14 were determined by the AO pursuant to the return of income filed during the years and also the returns were filed in time and therefore as per the section 80, the assessee is entitled for carry forward the losses and set off the same against the profits available in the subsequent years. The above provision speaks about the determination of the losses in the earlier previous years and not the determination of loss in the immediately preceding year and therefore the orders of the lower authorities are not in accordance with the provision. 12. We have also perused the order of the Hon'ble Allahabad Bench of this Tribunal reported in (2022) 134 taxmann.com 212 wherein it was clearly held as under: "14. We have considered contentions of both the parties and perused the material on record. The assessee is engaged in the business of manufacturing of Glass. The solitary issue in this appeal is with respect to carry forward and set off of brought forward business losses and unabsorbed depreciation. Before proceeding further, it will be profitable at this stage to reproduce relevant provisions o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ished, reconstructed or revived, and-- (a) it shall be set off against the profits and gains, if any, of that business or any other business carried on by him and assessable for that assessment year ; and (b) if the loss cannot be wholly so set off, the amount of loss not so set off shall, in case the business so re-established, reconstructed or revived continues to be carried on by the assessee, be carried forward to the following assessment year and so on for seven assessment years immediately succeeding.] (2) Where any allowance or part thereof is, under sub-section (2) of section 32 or sub- section (4) of section 35, to be carried forward, effect shall first be given to the provisions of this section. (3) No loss [(other than the loss referred to in the proviso to sub-section (1) of this section)] shall be carried forward under this section for more than eight assessment years immediately succeeding the assessment year for which the loss was first computed. Submission of return for losses. 80. Notwithstanding anything contained in this Chapter, no loss which has not been determined in pursuance of a return filed [in accordance with the provisions of sub- section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill not be eligible to carry forward current year business losses to subsequent years, as the return of income for the impugned ay:2012-13 was filed belatedly beyond the time stipulated for filing of return of income u/s 139(1) of the 1961 Act . Conjoint reading of Section 80 and 139(3) of the 1961 Act , in our considered view will clearly reveals that it requires for current year business losses to be carried forward to subsequent years for being eligible to be set off against business income of subsequent years, the return of income for the current year has to be mandatorily filed within time stipulated u/s 139(1) of the 1961 Act. In our considered view, the aforesaid provisions u/s 80 and 139(3) cannot be stretched to debar already existing assessed business losses of preceding years to be also hit and not allowed to be set off against the business income of the current year or in case of shortfall of business income of the current year, to be carried forward to subsequent years merely because the current year return of income was filed belatedly beyond the time prescribed u/s 139(1).However, obviously the conditions u/s 80 and 139(3) has to be met in each of the earlier relevan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... belatedly beyond the time prescribed u/s 139(1) of the 1961 Act. However, the overall carry forward of business losses shall be subject to period of eight assessment years immediately succeeding the assessment year for which the loss was first computed, as is stipulated u/s 72(3) of the 1961 Act, while there is no bar so far as period of carry forward of unabsorbed depreciation as mandated u/s 32(2) of the 1961 Act, after its amendment by Finance Act, 2001. Reference is drawn to the decision(s) of Hon'ble Gujarat High Court in the case of General Motors India Private Limited v. DCIT , reported in (2012) 25 taxmann.com 364(Guj. HC), Hon'ble Madras High Court decision in the case of CIT v. KMC Speciality Hospitals India Private Limited reported in (2021) 130 taxmann.com 215(Mad. HC). Reference is also drawn to dismissal of SLP by Hon'ble Supreme Court in the case of Pr. CIT v. Petrofils Co-operative Limited , reported in (2021) 130 taxmann.com 191(SC), wherein SLP was dismissed by Hon'ble Supreme Court filed by Revenue against the decision of Hon'ble Gujarat High Court holding that unabsorbed depreciation pertaining to assessment year 1997-98 could be allowed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntentions and adjudicate the same on merits in accordance with law. The AO is directed to pass detailed and reasoned order . This ground of appeal is partly allowed for statistical purposes. We order accordingly." 13. The above said order of the Tribunal is very much applicable to the present facts of the case and therefore we are also applying the principle laid down by the Hon'ble Allahabad Tribunal and on that basis, we are of the view that the assessee is entitled for set off of the carried forward losses incurred during the A.Ys. 2012-13 and 2013-14 for which period the assessee filed their return of income in time. As a result we set aside the order of the lower authorities and allowed the grounds raised by the assessee and directed the AO to allow the set off of loses incurred during the A.Ys 2012-13 and 2013-14.At the time of argument, the Ld.AR also brought to our notice that some mistakes have crept in the calculation of the losses and we have also perused the said details and satisfied ourselves that there are some mistakes in the calculation of the losses and therefore the same should be rectified and the correct amount of loss should be given set off during the A.Y. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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