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Facts
The assessee's return for AY 2021-22 was processed by CPC, disallowing set-off of brought forward unabsorbed depreciation against current year's income from house property and other sources. The CIT(A)/NFAC upheld this disallowance, though they deleted a minor addition.
Held
The Tribunal noted that the assessee claimed brought forward unabsorbed depreciation was permissible to be set off against income from other heads, provided returns were filed within the due date. The Tribunal found that the initial disallowance by CPC was based on section 143(1)(a)(iii) of the Act.
Key Issues
Whether brought forward unabsorbed depreciation can be set off against income from house property and other sources, and if section 143(1)(a)(iii) of the Act is attracted for such disallowance.
Sections Cited
143(1), 143(1)(a)(iii), 139(1)
AI-generated summary — verify with the full judgment below
Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE
Before: SHRI MANISH BORAD & SHRI VINAY BHAMORE
Assessment Year : 2021-22 Laxminarayan Ramswarup Vs. ACIT, Circle-1, Jalgaon. Maniyar, Sitaram Ramswarup, 105, Polan Peth, Dana Bazar, Jalgaon- 425001. PAN : AAQPM9220L Appellant Respondent Assessee by : Shri Vinay V. Kawdia Revenue by : Shri Harshit Bari Date of hearing : 21.08.2025 Date of pronouncement : 12.11.2025 आदेश / ORDER
PER VINAY BHAMORE, JM:
This appeal filed by the assessee is directed against the order dated 13.03.2025 passed by Ld. CIT(A)/NFAC for the assessment year 2021-22.
The assessee has raised the following grounds of appeal :- “1) In the absence of conditions precedent for invoking provisions of S. 143(1)(a)(iii) of the Act, the learned CIT(A), NFAC has erred in confirming the adjustment of Rs. 8,03,196/- made by CPC u/s 143(1)(a)(iii) of the Act by denying the set off of brought forward unabsorbed depreciation of earlier years against current years income.
2) Under the facts and circumstances of the case and in law the learned CIT(A), NFAC has erred in confirming the addition of Rs.8,03,196/- made by CPC, Bengaluru u/s 143(1)(a)(iii) of the Act by disallowing the set off of brought forward unabsorbed depreciation loss of earlier years against current years income from House property (Rs.82,085/-) and income from other sources (Rs. 7,21,111/-). The assessee is fully eligible for set off and the same may please be allowed in full. 3) The appellant craves the permission to add, amend, modify, alter, revise, substitute, delete any or all grounds of appeal
, if deemed necessary at the time of hearing of the appeal.”
3. Facts of the case, in brief, are that the assessee is an individual having income from salary, business and profession, income from house property and income from other sources. The return of income was furnished on 07.01.2022 declaring taxable income of Rs.7,33,000/-. Vide an intimation dated 14.07.2022, CPC processed the return u/s 143(1) of the Act and set-off of brought forward unabsorbed depreciation of earlier years of Rs.8,03,196/- was not allowed against current years income disclosed under the head Income from House property & Income from other sources & income of Rs.16,09,770/- was determined as against income returned by the assessee at Rs.7,33,000/-. The above assessed income includes disallowance on account of not allowing set-off of unabsorbed depreciation & addition of Rs.73,577/-.
4. Being aggrieved the assessee preferred an application u/s 154 before the CPC and the CPC issued the same intimation again with no change.
Being further aggrieved the assessee preferred an appeal before Ld. CIT(A)/NFAC. After considering the reply of the assessee, Ld. CIT(A)/NFAC partly allowed the appeal filed by the assessee and directed the Jurisdictional Assessing Officer (‘JAO’) to delete the addition of Rs.72,973/- made by the CPC. However, Ld. CIT(A)/NFAC dismissed the ground regarding set-off of brought forward unabsorbed depreciation loss claimed by the assessee against current years income under the head Income from House property & income from other sources..
Again being aggrieved with the above order of Ld. CIT(A)/NAFC, the assessee is in appeal before this Tribunal.
In this regard, we find that it is the claim of the assessee that the earlier years income tax returns were furnished u/s 139(1) of the Act and the unabsorbed depreciation loss was brought forward from these years which is required to be set-off against current year’s income under other heads. On the other hand, Ld. DR relied on the order passed by Ld. CIT(A)/NFAC and requested to confirm the same. Ld. DR also pointed out that the return for assessment year 2020-21 is not produced before the bench, however copy of other returns are furnished.
We have heard Ld. counsels from both the sides and perused the material available on record including the paper book furnished by the assessee. In this regard, we find that the assessee was incurring business losses and unabsorbed depreciation loss was also there which was claimed during the period under consideration against the income disclosed under the head income from House property & also against income from other sources to the extent of Rs.8,03,196/-. However, CPC disallowed the claim of set-off of brought forward unabsorbed depreciation loss of Rs.8,03,196/- against the current year’s income by invoking the provisions of section 143(1)(a)(iii) and also made an addition of Rs.73,577/- to the income of the assessee and consequently an income of Rs.16,09,770/- was determined by CPC u/s 143(1) of the Act. Ld. CIT(A)/NFAC also dismissed the ground raised by the assessee with regard to set-off of unabsorbed depreciation loss against current years income under the other heads.
9. It was the contention of Ld. counsel of the assessee that all the relevant earlier years return of income were furnished within the due date prescribed u/s 139(1) of the Act and therefore section 143(1)(a)(iii)is not attracted. Ld. AR also contended that the addition of Rs.73,577/- made by CPC is not correct since assessee himself has disallowed the same in his computation & this fact was also accepted by Ld. CIT(A)/NFAC in his order. It was also the contention of Ld. AR that unabsorbed depreciation loss can be set- off against income from other heads. In support of this contention, Ld. AR relied on coordinate bench decisions passed in the case of Suresh Industries Pvt. Ltd., order dated 10-10-2012 & also relied on another coordinate bench decision passed in the case of Regency Property Investments Pvt. Ltd., order dated 07.08.2019.
Considering the totality of the facts of the case and in view of arguments made by both the parties, we deem it appropriate to set- aside the order passed by Ld. CIT(A)/NFAC and remand the matter to the file of the Jurisdictional Assessing Officer with a direction to verify the claim made by the assessee and pass the assessment order afresh as per fact and law after providing reasonable opportunity of