HORIZON DREAM HOMES PRIVATE LIMITED,MUMBAI vs. ASSISSTANT COMMISSIONER 12(2)(2), MUMBAI

ITA 5934/MUM/2024Status: DisposedITAT Mumbai08 May 2025AY 2011-1211 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the appeal is partly allowed. Regarding the set-off of the current year's business loss of Rs. 55,45,600/- against income assessed under the head 'Income from other sources', the Tribunal found that Section 115BBE was not applicable for AY 2011-12. Citing Section 71(1), which allows set-off of losses under one head against income under another head, the Tribunal concluded that the business loss was eligible for set-off against income from other sources. The AO was directed to allow this set-off. However, concerning the set-off of brought forward business loss of Rs. 22,73,038/- from AY 2010-11, the Tribunal noted that the AO had not recorded any finding in this regard. Therefore, the matter was set aside to the file of the AO to examine this claim and decide it as per law. The contentions raised were left open for adjudication by the AO. The Tribunal explicitly stated that the appeal was partly allowed for statistical purposes.

What were the facts?

The assessee, Horizon Dream Homes Private Limited, is in appeal before the Income Tax Appellate Tribunal (ITAT) against an order dated 18.11.2024 passed by the Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi. This order confirmed the Assessing Officer's (AO) rejection of the assessee's application under Section 154 for rectification of an assessment order passed under Section 143(3) read with Section 147 for Assessment Year 2011-12. The AO had made additions of Rs. 2,41,72,800/- as unsecured loans under Section 68, Rs. 11,36,500/- as interest on sham transactions, and Rs. 362,592/- as commission on sham transactions, all taxed under 'Income from other sources'. The assessee's original appeal against the quantum additions is pending before the CIT(A). The rectification application sought to treat the additions as business income and allow set-off of current year and brought forward business losses.

What were the issues?

1. Whether the Tribunal has jurisdiction to decide the issue of set-off of business losses when the quantum appeal against the additions is pending before the CIT(A)? (Mixed law and fact, relying on Section 154 and Section 71). Assessee's contention: The assessee argued that the additions made under Section 68 should be taxed under the head 'Income from Business or Professions' as the loans were for business purposes and utilized for business. They relied on Section 14, the principle from United Commercial Bank Ltd. V. CIT, and a Cochin ITAT decision in Bhima Jewellers. They also contended that current year business loss of Rs. 55,45,600/- should be set off against 'Income from other sources' as per Section 71(1), and brought forward business loss of Rs. 22,73,038/- from AY 2010-11 should also be set off. They cited CBDT Circular No. 11/2019 and decisions in Digital Electronics Limited, CIT V. Hickson and Dadajee Pvt. Ltd., and PCIT V. Alcon Developers. Revenue's contention: The Revenue relied on the orders of the lower authorities. The Ld. DR submitted that the matter is already agitated before the Ld. CIT(A) and the present appeal is not maintainable. The AO rejected the rectification application stating that Section 115BBE was not applicable for AY 2011-12 and cited Gujarat High Court in Fakir Mohmed Haji Hasan Vs. CIT and Kerala High Court in CIT Vs. Kerala Sponge Irons Ltd. to hold that income determined under Section 68 does not fall under the ambit of Section 14 and Section 71 is not applicable.

Which sections of the Income-tax Act were involved?

Section 154,Section 143(3),Section 147,Section 68,Section 14,Section 56,Section 71(1),Section 115BBE,Section 72

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Income Tax Appellate Tribunal, “E” BENCH, MUMBAI

Before: SHRI VIKRAM SINGH YADAV, ACCOUNTANT & SHRI RAJ KUMAR CHAUHAN

For Appellant: Shri. Mandar Vaidya
For Respondent: Shri. Hemanshu Joshi, SR. D.R
Pronounced: 08.05.2025

Per: Vikram Singh Yadav, A.M.: The present appeal by the assessee is directed against order dated 18.11.2024 passed by the Ld. Commissioner of Income-tax (Appeals) - National Faceless Appeal Centre, Delhi [in short ‘the Ld. CIT(A)'] for assessment year 2012-13 wherein he has confirmed the findings of the Assessing officer in rejecting the assessee's application u/s 154 seeking rectification of assessment order passed u/s 143(3) r/w 147 dated 29/12/2016. 2. Briefly the facts of the case are that the assessee filed its return of income on 30.11.2011, declaring total income (loss) of Rs. 55,45,600/-. The return of income was processed u/s.143(

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