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TMI Blog2025 (5) TMI 1501X X X X Extracts X X X X X X X X Extracts X X X X ..... pearing for the Revenue contended that in terms of Rule 9 of the DTVSV Rules, the dispute in relation to reduction in loss to be carried forward under the Act, could be computed in two ways; first option would be to calculate the disputed tax payable pertaining to the unabsorbed loss, ignoring the reduction and the second option would be to carry forward the reduced amount of loss. The DTVSV Rules also indicate that the exercise of the option is up to the declarant. 3. He submits that in the present case, the petitioner cannot opt for the second option as he has already filed the returns for the subsequent years where the loss has not been carried forward. Therefore, in any event, the petitioner could not claim carry forward of losses. He submits that in this case, the petitioner would necessarily have to pay the entire tax, as computed on the amount of carry forward, which is being denied to the petitioner. Since the said tax was not paid alongwith the declaration, the petitioner's dispute could not be admissible for the benefit of the DTVSV Scheme. 4. Mr Jolly, the learned Senior Counsel appearing for the petitioner has stoutly contested the submissions made on behalf of the Re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rofession but was engaged in 'investment activities' and, therefore, was not required to maintain any books of account under Section 44AA of the Act. 9. Thereafter, the AO issued a show cause notice dated 15.03.2024 calling upon the petitioner to show cause why an amount of Rs. 17,68,47,978/-, which was paid to an entity named Smart Web Internet Services Limited should not be disallowed and added to the petitioner's income. 10. The record indicates that the petitioner readily accepted the said addition. It claimed that it had not in fact claimed any expenditure but the return had auto populated the said expense. 11. Thereafter, the AO passed an assessment order dated 21.03.2024 disallowing the said expenditure and consequently assessing the petitioner's income chargeable to tax at Rs. 16,537/-. The operative part of the assessment order setting out the computation of the petitioner's income for AY 2022-23 is set out below: "Computation of Assessed Income: Particulars Amount in rupees Return Income of the assessee : (17,68,31,441) Addition : 17,68,47,978/- Assessed Income : 16,537/- Assessed under section 143(3) r. w. s. 144B of the Income-tax Act. Pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... id not fall under Rule 9 of the DTVSV Rules. 18. Before proceeding to examine the same, it is thus necessary to refer to Rule 9 of the DTVSV Rules. The said Rule is set out below: "9. Manner of computing disputed tax in cases where loss or unabsorbed depreciation is reduced.- (1) Where the dispute in relation to an assessment year relates to reduction in loss or unabsorbed depreciation to be carried forward under the Income-tax Act, 1961 (43 of 1961), the declarant shall have an option to - (i) include the tax, including surcharge and cess, payable on the amount by which loss or unabsorbed depreciation is reduced in the disputed tax and carry forward the loss or unabsorbed depreciation by ignoring such amount of reduction in loss or unabsorbed depreciation; or (ii) carry forward the reduced amount of loss or unabsorbed depreciation. (2) Where the declarant exercises the option as provided in clause (ii) of sub-rule (I), he shall be liable to pay tax, including surcharge and cess, along with interest, if any, as a consequence of carrying forward the reduced amount of loss or unabsorbed depreciation in subsequent years: Provided that the written down value of the block of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esignated authority found that Rule 9 (1) is not applicable, it has concluded that the petitioner's dispute would fall outside the scope of DTVSV Scheme enacted by virtue of FA2 Act. 23. Before proceeding to address the question whether Rule 9 is inapplicable, it would be relevant to examine the scope of the DTVSV Scheme under the FA2 Act. 24. It is relevant to refer to the definition of the term 'appellant' and 'disputed tax' as set out in Clause (a) and (j) of sub-Section (1) of Section 89 respectively. The said clauses are set out below: "89. (1) In this Scheme, unless the context otherwise requires,- (a) "appellant" means- (i) a person in whose case an appeal or a writ petition or special leave petition has been filed either by him or by the income-tax authority or by both, before an appellate forum and such appeal or petition is pending as on the specified date; or (ii) a person who has filed his objections before the Dispute Resolution Panel under section 144C of the Income-tax Act and the Dispute Resolution Panel has not issued any direction on or before the specified date; or (iii) a person in whose case the Dispute Resolution Panel has issued direction under su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is added] 25. It is clear from the above that the petitioner falls within the definition of the term 'appellant' within the meaning of sub-Clause (i) of Clause (a) of Section 89 (1) of the FA2 Act, as the petitioner has filed the appeal against the assessment order before the CIT(A) and, that appeal is pending. 26. The controversy essentially relates to whether the dispute falls within the meaning of the term 'disputed tax.' The learned counsel for the parties are ad idem that the said question is required to be considered by referring to the proviso to Clause (j) of Section 89 (1) of the FA2 Act since in the present case the dispute relates to the reduction of a loss. The said proviso further explains that in cases falling under the proviso 'the appellant' would have an option to either include the amount of tax relating to the loss, which is in dispute or to carry forward the reduced loss in the manner as prescribed. 27. It is also relevant to refer to the term 'tax arrears' as defined in Clause (o) of Section 89 (1) of the FA2 Act, which reads as under: "(o) "tax arrear" means- (i) the aggregate amount of disputed tax, interest chargeable or charged on such disputed tax, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act; or (iv) such order of detention has not been set aside by a court of competent jurisdiction; (c) to any person in respect of whom prosecution for any offence punishable under the provisions of the Unlawful Activities (Prevention) Act, 1967, the Narcotic Drugs and Psychotropic Substances Act, 1985, the Prohibition of Benami Property Transactions Act, 1988, the Prevention of Corruption Act, 1988, the Prevention of Money-laundering Act, 2002, has been instituted on or before the filing of the declaration or such person has been convicted of any such offence punishable under any of those Acts; (d) to any person in respect of whom prosecution has been initiated by an income-tax authority for any offence punishable under the provisions of the Bharatiya Nyaya Sanhita, 2023 or for the purpose of enforcement of any civil liability under any law for the time being in force, on or before the filing of the declaration or such person has been convicted of any such offence consequent to the prosecution initiated by an income-tax authority; (e) to any person notified under section 3 of the Special Court (Trial of Offences Relating to Transactions in Securities) Act, 1992 on or befor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the carry forward of loss in the assessment of that year. In any event, benefit of carry forward of losses from previous assessment year is contingent on the Assessee complying with the requisite conditions. Thus, notwithstanding that an Assessee may be entitled to carry forward losses relatable to prior assessment years, an assessee would not be granted the benefit if it does not specifically claim the same in its return. This does not detract from the fact that the assessee could claim a loss in the prior assessment year, which it is entitled to carry forward. 34. There is a distinction between an assessee being entitled to a benefit and the assessee claiming the same. The question of whether a dispute relating to a particular assessment year can be settled, must be considered as confined to the issues relating to that assessment year. The determination of the same cannot be made contingent on the assessee's action in the subsequent assessment years. The approach of the designated authority to eliminate the applicability of options available to the assessee under Rule 9 (1) of the DTVSV Rules on the basis of an action of the assessee taken for AY 2023-24 is erroneous. Thus, und ..... X X X X Extracts X X X X X X X X Extracts X X X X
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