PALATINE HOSPITALITY PRIVATE LIMITED,MUMBAI vs. INCOME TAX OFFICER- - WARD 14(3)(4), MUMBAI, MUMBAI

आयकरअपीलीयअिधकरण�ायपीठ मुंबईम�। IN THE INCOME TAX APPELLATE TRIBUNAL “J(SMC)” BENCH, MUMBAI BEFORE SHRI NARENDER KUMAR CHOUDHRY, JM & SHRI ARUN KHODPIA, AM I.T.A. No.711/Mum/2026 (Assessment Year: 2016-17) Income Tax Officer Ward- 14(3)(4) Palatine Hospitality Private Limited Office of the Commissioner of 5, Trishul, 1st Floor, NS Road No. Income Tax, Appeal ADDL/JCIT (A) – Vs. 6, JVPD Scheme, Vile Parle 4, Hyderabad, Telangana West, Mumbai- 400056. PAN: AAHCP2525P

Assessee- अपीलाथ� / Appellant Revenue-��थ�/ Respondent :

Assessee by : Shri N. R. Agrawal & Ms. Jenisha Doshi Revenue by : Shri Aditya Rai (Sr. DR.) Date of Hearing : 16.04.2026 Date of Pronouncement : 29.06.2026

ITA No. 711/Mum/2026; Palatine Hospitality Pvt. Ltd. O R D E R Per Arun Khodpia, AM: The captioned appeal is filed by the assessee, against the order of

Commissioner of Income Tax Appeals Additional/JCIT (A)-4 Hyderabad [“the Ld.

CIT(A)] dated 28.11.2025 for the assessment year 2016-17, which in turn arises

from assessment order u/s 143(1) of the Income Tax Act, 1961 (“the Act”) dated

20.11.2017 passed by The Income Tax Officer Ward 14(3)(4), Mumbai (in short,

“the Ld. AO”). The grounds of appeal raised by the assessee are as under:

“1. 1) The learned CPC and CIT(A) has erred in law and on facts in not allowing statutory allowance of depreciation as per section 32 of the Income-tax Act, 1961 amounting to Rs. 23,46,725 merely because of a procedural omission in the ITR return, when the claim is evident from records (Tax Audit Report), amounts to substance being sacrificed for form. 2) The learned CPC and the learned CIT(A) have erred in law and on facts in not allowing set-off of the brought forward business loss of AY 2014-15 amounting to Rs. 1,07,98,965 and AY 2015- 16 amounting to Rs. 2,03,94,243 totalling to Rs. 3,11,93,209, while computing the total income of the assessee, despite the same being lawfully eligible for set-off under the provisions of the Income-tax Act, 1961. 3) The Learned CIT(A)-4, Hyderabad, erred in law and on facts in passing the impugned order u/s 250 in an appeal arising from an intimation u/s 143(1) issued by CPC, despite the jurisdictional Assessing Officer of the assessee being situated in Mumbai. In terms of Section 124 of the Act, appellate jurisdiction is linked to the Assessing Officer having jurisdiction over the assessee and not to CIT(A)-4. Hydrabad, and therefore the Learned CIT(A), Hyderabad lacked lawful jurisdiction. The impugned order is thus void ab initio, non est in law, and liable to be quashed, with a direction to restore the appeal to the jurisdictional CIT(A) at Mumbai.” 2. The genesis of present appeal was on account of processing of assessee’s

return for the assessment year 2016-17 u/s. 143(1) of the Act. While passing the

intimation u/s. 143(1) dated 20.12.2017, the Ld. AO has not allowed (i) the credit

of TDS amounting to Rs. 1,14,845/-, (ii) depreciation of Rs. 23,46,725/- which is

claimed by the assessee u/s. 32 of the Act and (iii) rejected the carry forward of

ITA No. 711/Mum/2026; Palatine Hospitality Pvt. Ltd. business loss. The assessee had raised all these issues before the Ld. CIT(A)

wherein the contentions of assessee regarding depreciation u/s. 32 of the

Income Tax Act, had rejected by stating that the assessee had failed to enter the

amount of depreciation allowable as per the Act in its Income Tax Return. Hence,

the Ld. AO has not considered the same while computing the total income. That

the mistake was on the part of assessee for not filing their return in accordance

with Tax Audit Report and the Ld. AO has correctly processed and passed the

order u/s. 143(1). The assessee claimed that the intimation was served on it on

30.01.2020, therefore, the assessee has no option to revise its return. It is

concluded that the failure of assessee cannot be attributed to the Ld. AO for not

allowing the depreciation, which was not claimed in return of income at first

instance.

mistake on the part of the assessee that the assessee had not filled the relevant

columns for depreciation as per Income Tax Act in the ITR. However, such claim

can be verified from the Tax Audit Report of the assessee, wherein the working

of allowable depreciation is duly reflected at serial no. 18 of the Tax Audit Report

showing assessee’s eligibility for depreciation. It was the submission that, not

furnishing the details correctly in ITR cannot jeopardize the right of the assessee

to claim a legitimate deduction. Further, the assessee had filed a letter before

ITA No. 711/Mum/2026; Palatine Hospitality Pvt. Ltd. the Jurisdictional Assessing Officer on 27th February, 2020 u/s. 154 for

rectification of such mistake apparent from record. However, the Ld. AO has not

given any effect to such application of the assessee. Under such circumstances,

the assessee should be allowed the eligible depreciation in accordance with law.

The Ld. AR placed his reliance on the decision of PCIT Vs. M. M. Plastoware India

Pvt. Ltd. in ITA No. 133/Mum/2025 vide order dated 10th March, 2024, wherein

the Tribunal has decided the identical issue observing that if the assessee is able

to demonstrate it eligibility for the claim, which the assessee inadvertently

remains to claim in the original return filed by it, the assessee would be entitled

for such claim, even if it is claimed first time during the appellate proceedings.

The reference was made to the decision of the Hon’ble Apex Court in the case of

Goetze (India) Ltd. Vs. CIT 2006 284 ITR 323 (SC). The Ld. AR also relied on a

similar judgment in the case of IndAuto Filters Vs. Assistant Director of Income

Tax in ITA No. 719/Bang/2022 vide order dated 21st October, 2022, wherein the

Tribunal has observed that if the assessee has filed a rectification for correction

of omission in the returns of the income, which has not been given effect by the

Ld. AO, the assessee should be allowed the deductions, even if the same are not

claimed in the original return of the income on account of inadvertent/clerical

mistakes.

ITA No. 711/Mum/2026; Palatine Hospitality Pvt. Ltd. 4. Per contra, the Ld. DR vehemently supported the orders of the revenue

authorities and requested to set aside the issue to the file of Ld. AO to revisit the

issue for verification of the facts.

available on record and the decisions relied upon by the assessee. Admittedly,

the assessee has filed its return belatedly in the relevant year and also had not

fed the details of the depreciation in the schedule for depreciation in its return

of income which is evident from the copy of return filed before us wherein the

assessee left to mention the details of depreciation under the Income Tax Act.

However, such details are available in the Tax Audit Report of the assessee,

which fact has not been disputed by the revenue. Under such circumstances,

following the settled principle of law in terms of the decision of Hon’ble Supreme

Court in case of Goetze (India) Ltd. (supra). Principally, we agree with the

contention of the assessee that the legitimate claims of the assessee, which due

to inadvertent error could not be claimed / fed into the ITR would be allowable

to the assessee. We, thus, allow this ground of the assessee but the quantum of

entitlement needs verification by the Ld. AO. Therefore, the Ld. AO is directed to

allow the claim of depreciation which is subject to factual verifications.

ITA No. 711/Mum/2026; Palatine Hospitality Pvt. Ltd. 6. Adverting to Ground No. 2 of assessee regarding set of brought forward in

losses for assessment year 2014-15 and 2015-16, which were not allowed to the

assessee, as its return was filed belatedly for the relevant year i.e., assessment

year 2016-17. On this aspect, it is the law that, if the assessee has lawfully filed

its return within prescribed due dates for the years, for which the losses were

brought forward, the assessee would be entitled for carrying forward and set off

of such losses, even if the subsequent return for years in which such claim is

brought forwarded are filed with a delay. We, therefore, allowing the claim of

the assessee for carrying forward and set of losses for assessment year 2014-15

and 2015-16, which as per assessee, ITRs were filed within the prescribed

limitation of time. However, for factual verification, the Ld. AO is directed to

verify the claim of assessee and allow in accordance with law, as the return for

assessment year 2014-15 was filed on 30.09.2014 and for assessment year 2015-

16 on 31.10.2015, which are claimed to be within the prescribed limitation of

time.

contentions raised by the assessee, regarding jurisdiction of the Ld. CIT(A) which

in our considered opinion is under the prerogative of the revenue/department

in terms of the faceless scheme and, therefore, it cannot be said that the Ld.

ITA No. 711/Mum/2026; Palatine Hospitality Pvt. Ltd. CIT(A), Hyderabad lacked the lawful jurisdiction over the case of the assessee.

Ground No. 3 of the assessee is, therefore, dismissed.

Order pronounced in the open court on 29-06-2026.

Sd/- Sd/- (NARENDER KUMAR CHOUDHRY) (ARUN KHODPIA) JUDICIAL MEMBER ACCOUNTANT MEMBER

Mumbai, Dated : 29-06-2026. Soumili Das, PS

Copy of the Order forwarded to : 1. The Appellant 2. The Respondent 3. DR, ITAT, Mumbai 4. Guard File 5. CIT BY ORDER,

(Dy./Asstt. Registrar) ITAT, Mumbai