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Facts
The assessee, a Limited Liability Partnership (LLP), filed its income tax return declaring a business loss. The CPC processed the return and disallowed carrying forward this loss, stating the return was filed beyond the due date. The CIT(Appeals) upheld this decision.
Held
The Tribunal held that the revenue authorities erred in not considering the correct due date for filing the return for an LLP, which is September 30th as per the LLP Act. Since the assessee filed its return before this due date, it is entitled to carry forward the business loss.
Key Issues
Whether the assessee-LLP is entitled to carry forward business loss when the return was filed before the due date as per the LLP Act, despite the revenue authorities considering a different due date.
Sections Cited
71, 72, 139(2), 132(9)
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Income Tax Appellate Tribunal, ‘A’ BENCH, KOLKATA
Before: Shri Duvvuru RL Reddy, Vice-(KZ) & Shri Rajesh Kumar
Per Duvvuru RL Reddy, Vice-President (KZ):- The present appeal is directed at the instance of assessee against the order of ld. Additional /Joint Commissioner of Income Tax (Appeals)-1, Mumbai dated 27th January, 2025 passed for assessment year 2023-24.
(A.Y. 2023-2024) Arus Properties LLP 2. Brief facts of the case are that the appellant-assessee is a Limited Liability Partnership. As per the LLP Act, 2008, the appellant maintains regular books of account and same are also audited. For the Financial Year ended 31.03.2023, the Appellant’s turnover aggregated to Rs.9,52,66,229/- which was below Rs.10 Crores, the limit prescribed for Tax Audit. However, the Appellant being LLP was governed by the LLP Act, whereunder the Appellant had to get its accounts audited within six months from the accounting year i.e. in the present case, 30.09.23. The due date of filing the Return was, therefore, in the case of the Appellant, 30.09.23. The Appellant submitted its Return declaring income under the head Other Sources Rs.7,06,395/- and loss under the head Business Rs.57,90,832/-. The net loss suffered by the Appellant worked out to Rs.50,84,437/-. The assessee claimed current year carry forward loss in terms of provisions of section 71 & 72 of the Income Tax Act, 1961. The Return was processed by CPC Bengaluru which held that the above loss, which the Appellant was not entitled to carry forward as the Return was filed beyond the due date which according to CPC, was 31.07.23. The Appellant is aggrieved by the above action of CPC in not allowing to carry forward of the aforesaid Business Loss.
On being aggrieved, the assessee preferred an appeal before the ld. CIT(Appeals). The ld. Addl./JCIT(Appeals) dismissed the appeal of the assessee saying that carry forward of current year business loss is not permissible if return of income is not filed within the due date. The assessee has not filed its return of income within the due date.
(A.Y. 2023-2024) Arus Properties LLP
On being aggrieved, the assessee preferred an appeal before the ITAT.
At the outset, it was the submission of the ld. Counsel for the assessee that the appellant was entitled to carry forward and set off against future profits in accordance with the provisions of sections 71 & 72 of the Income Tax Act, 1961. The revenue authorities held that the appellant was not entitled to carry forward as the return was filed beyond the due date which according to CPC was 31st July, 2023. Ld. Counsel further submitted that the CPC was wrong in not allowing the claim of assessee for carry forward of the business loss of Rs.57,90,832/- for set off against future profits in accordance with law and ld. Addl./JCIT(Appeals) dismissed the appeal of the assessee without going into merit of the case by simply upholding the order of ld. Assessing Officer. He, therefore, pleaded to set aside the orders of revenue authorities.
On the other hand, it was the submission of the ld. Departmental Representative that as per section 71 and 73 of the Income Tax Act, 1961, carry forward of current year business loss is not permissible if return of income is not filed within due date. Therefore, he pleaded to confirm the orders of both the revenue authorities.
We have heard both the sides and perused the material available on record. It is an admitted fact that the assessee is a (A.Y. 2023-2024) Arus Properties LLP Limited Liability Partnership. As per the LLP Act, 2008, the appellant has to maintain regular books of account and it should be audited with the aggregated turnover of more than 10 crores. It is an admitted fact that the assessee’s turnover aggregated to Rs.9,52,66,229/-. However, the appellant being LLP was governed by the LLP Act, had to get its books of account audited. The only grievance of the assessee is that the revenue authorities have not considered the due date for LLP according to Section 132(9) i.e. 30th September, but both the revenue authorities were under the impression that the due date of filing of the return of income was 31st July, 2023. Therefore, they said that the assessee-LLP is not entitled to carry forward and set off against future profits in accordance with the provisions of sections 71 & 72 of the Income Tax Act, 1961. It is also an undisputed fact that the assessee-LLP filed the return of income much prior to the due date of filing of the return, i.e. 30th September. Therefore, considering the facts and circumstances of the case, we are of the view that the assessee has filed the return of income much prior to the date of filing of the return of income under section 139(2) of the Act. Therefore, the assessee is entitled to carry forward and set off against the future profits in accordance with the provisions of section 71 & 72 of the Act. Accordingly, the grounds raised by the assessee are allowed.