BALAGERIA CENTRAL CO-OPERATIVE LTD.,PURBA MEDINIPUR vs. ACIT CIRCLE-27(1), HALDIA

ITA 2320/KOL/2024Status: DisposedITAT Kolkata08 July 2025AY 2018-19Bench: SHRI GEORGE MATHAN (Judicial Member)9 pages

AI SummaryAllowed

Facts

For the Assessment Year 2018-19, the original assessment completed under Section 143(3) was subsequently proposed for suo-moto rectification by the Assessing Officer under Section 154 to enhance the tax liability. The central issue revolved around the assessee's claim to set off an interest income of Rs. 30,59,290/- from an Income Tax Refund (taxable as 'Income from Other Sources') against carried forward depreciation losses, while the Revenue contended that such income could not be set off against business losses. The assessee argued that depreciation losses (both current and carried forward) are eligible for set-off against 'Income from Other Sources' under Section 72(3) of the Income Tax Act.

Held

The Tribunal found that the Assessing Officer failed to acknowledge and address the assessee's submission regarding the permissible set-off of interest income against depreciation losses. It clarified that, as per Section 72(3) of the Income Tax Act, income classified under 'Income from Other Sources' can indeed be set off against depreciation losses. Consequently, the Assessing Officer was directed to provide the assessee with the benefit of setting off the said interest income against the carried forward depreciation loss.

Key Issues

Whether interest income on an Income Tax Refund, taxable under the head 'Income from Other Sources', can be set off against carried forward and current depreciation losses under Section 72(3) of the Income Tax Act, 1961, during a rectification proceeding under Section 154.

Sections Cited

143(3), 154, 72(3)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “SMC” BENCH KOLKATA

Before: SHRI GEORGE MATHAN

Hearing: 08/07/2025Pronounced: 08/07/2025

(नििाारण वर्ा / Assessment Year :2018-2019) Balageria Central Cooperative Ltd Vs ACIT, Circle-27(1), Haldia Saraswatitala, Contai, HO, Contai Dist: Purba Medinipur, W.B. PAN No. :AAALB 0087 A (अपीलार्थी /Appellant) .. (प्रत्यर्थी / Respondent) नििााररती की ओर से /Assessee by : Shri Soumitra Choudhury, Advocate राजस्व की ओर से /Revenue by : Shri Mrinmay Basak, Sr.DR सुनवाई की तारीख / Date of Hearing : 08/07/2025 घोषणा की तारीख/Date of Pronouncement : 08/07/2025 आदेश / O R D E R This is an appeal filed by the assessee against the order of the ld CIT(A), National Faceless Appeal Centre (NFAC), Delhi, dated 26.09.2024, passed in DIN & Order No.ITBA/NFAC/S/250/2024-25/1069142040(1) for the assessment year 2018-2019.

Shri Soumitra Choudhury, ld.AR appeared on behalf of the assessee and Shri Mrinmay Basak, ld.Sr. DR appeared on behalf of the revenue.

It was submitted by the ld. AR that the original assessment came to be completed u/s.143(3) of the Act on 20.04.2021. It was the submission that the assessment was initiated for one of the grounds being the refund claim, most specifically, ratio of the refund claimed to the income of the assessee. It was the submission that the said assessment order passed u/s.143(3) of the Act was a subject matter of suo moto rectification by the ld. Assessing Officer. It was submitted by the ld. AR that in the rectification order the Assessing Officer mentions that the assessee has filed his

It was the submission that the issue relates to an interest on the I.T. Refund to an extent of Rs.30,59,290/-. The assessee had carried forward business loss of Rs.6,39,44,308/- and carried forward depreciation loss of Rs.1,24,37,142/-. It was the submission that admittedly the interest on the income tax refund is liable to be assessed only under the head income from other sources. There is no dispute that in regard to set off against the carried forward loss, admittedly the same cannot be set off against the carried forward business loss but the assessee is fully entitled to set off the said interest income under the head income from other sources against the carried forward depreciation loss as also the depreciation loss of current year. It was the submission that this was also brought to the attention of the AO in the reply filed to rectification u/s.154 of the Act proposed by the Assessing Officer that under the provision of Section 72(3) of the Act, the set off of the income under the head income from other sources is possible against the depreciation losses. It was the submission that the Assessing Officer did not consider the submission of the assessee and has denied the assessee the set off of income under the head income from other sources in respect of the interest on the refund against the carried forward depreciation loss and has made an addition of Rs.30,59,290/-. It was the submission that the Assessing Officer may be directed to grant the set off of the said interest income against the carried forward depreciation loss.