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

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.

In reply, ld. Sr. DR submitted that he supported the orders of the ld. Assessing Officer and ld. CIT(A). It was the submission that the interest on the income tax refund which is assessed under the head income from other sources cannot be set off against the carried forward business loss.

I have considered the rival submissions. A perusal of the facts of the present case clearly shows that the assessee has categorically mentioned in the reply to the rectification notice that the interest income is liable to be set off against the carried forward depreciation loss as also the depreciation of the impugned assessment year. The Assessing Officer has not considered the submission of the assessee and has treated the interest income which has been assessed under the head income from other sources as income liable to be taxed and has not provided the set off