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Income Tax Appellate Tribunal, ‘B’ BENCH, CHENNAI
Before: SHRI MAHAVIR SINGHAND SHRI GIRISH AGRAWAL
आदेश /O R D E R
PER GIRISH AGRAWAL, ACCOUNTANT MEMBER:
This appeal by the Department is arising out of the order of Commissioner of Income-tax (Appeals)-7, Chennai in dated 28.06.2019 against the order of ACIT (OSD), Corporate Circle-3, Chennai passed u/s. 143(3) of the Income- tax Act, 1961 (herein after referred to as “the Act”) dated 17.03.2015.
2 M/s. Yapp India Automotive Systems (P) Ltd.,
The grounds taken by the assessee in the appeal are reproduced as under:
1.“The order of the learned CIT(A) is contrary to law and facts and circumstances of the case. 2.The ld.CIT(A) ought to have held that the Return of Income filed by the assessee on 30/11/2012 was defective and invalid for having failed to abide by the condition laid down in section 139(9) r.w.Rule 12(2) and by virtue of that, the ld.CIT(A) ought to have ruled that the assessee was not eligible to carry forward the loss for having failed to comply with the provisions of Explanation to section 139(9) read with Rule 12(2). 3.The ld.CIT(A) erred in holding that carry forward of loss to be allowed to the assessee even when the original return of income was filed with unaudited accounts. 4.The ld.CIT(A) erred in not considering the fact that loss as per the original return of income was not the correct position and it was arrived at only to ensure the carry forward of loss which would be ascertainable at a later date beyond the due date for filing the return of income. 5.The ld.CIT(A) had erred in allowing the loss claimed by assessee in its original Return of Income especially when the loss was not determined by getting accounts audited as mandated u/s.44AB. 6.The ld.CIT(A) had erred in allowing the loss claimed by the assessee in its original Return of Income without furnishing of audit report u/s.44AB which is violative of section 139(3),wherein it is clearly stated that " ... any person who has sustained a loss .... may furnish within the time allowed under subsection(l), a return of loss in the prescribed Form and verified in the prescribed manner and containing such other particulars as may be prescribed. 7.The ld.CIT(A) had erred in allowing the loss claimed by the assessee in its original Return of Income without furnishing of audit report u/s.44AB which is violative of Rule 12(2) which mandates furnishing of section 44AB report compulsory for the assessee company. 8.For these and other grounds that may be adduced at the time of hearing, it is prayed that the order of the learned CIT(A) may be set aside and that of the Assessing Officer be restored.”
3 M/s. Yapp India Automotive Systems (P) Ltd.,
The brief facts of the case are that the assessee filed its return of income reporting total income as Rs. Nil with a carried forward loss of Rs. 13,06,88,158/-. The assessment was completed by determining the loss at Rs. 12,69,74,828/- by making disallowances/additions of Rs. 37,13,330/- and also by denial of carry forward of loss to the tune of Rs. 13,06,88,158/-. Aggrieved by the disallowances and the denial of carry forward of loss, assessee went into appeal before the Ld. CIT(A), wherein, the appeal was partly allowed. Aggrieved, the Department is in appeal before the Tribunal.
The moot point in appeal by the Department is in respect of allowance of carry forward of losses claimed by the assessee in respect of business loss and depreciation loss. The findings given by the ld. CIT(A) on this issue is reproduced as under: “ Decision: The original return of income was filed on 30.11.2012 declaring a business loss of Rs. 14,28,77,513- which is within the due date for filing the return of income as stipulated under section 139(1) which was based on unaudited accounts. However the appellant filed a revised return of income on 30.09.2013 under section 139)5) after the accounts were audited under the Companies Act declaring a reduced business loss of Rs. 5,80,83,151- and depreciation loss of Rs. 7,26,05,007/- respectively. The issue here is that appellant is claiming carry forward of losses in the revised return, while it had filed return u/s139(1) within time but with unaudited accounts, to which the A.O. is objecting. For carry forward of loss to be allowed the original return should be filed within the statutory time limit. In my considered view, the appellant cannot be denied the same since it is a fact the original return was filed in time. For the fact that accounts were not audited, appellant was liable for penalty u/s 2718. Appellant has also filed the revised return within time. Hence it is liable to succeed and this ground. This ground is allowed.”
4 M/s. Yapp India Automotive Systems (P) Ltd.,
During the course of hearing before us, Ld. Counsel of the assessee Mr. S. Subramanian, FCA represented the case of the assessee and Department was represented by Mr. Chinthapalli Mehar Chand, JCIT.
Ld. Sr. DR submitted that though the assessee had filed its return of income on 30.11.2012 which was within the due date for filing the return of income as stipulated u/s. 139(1) of the Act, but it was based on unaudited accounts. The said return was revised by the assessee on 30.09.2013 u/s. 139(5) of the Act, after accounts were audited under the Company Act. The Ld. Sr. DR stated that the return originally filed on the basis of unaudited accounts was a defective return within the meaning of section 139(9) of the Act and therefore, the carry forward of loss claimed by the assessee was rightly denied by the Ld. AO. He further submitted that carry forward of loss within the meaning of section 72, section 73, section 74 and section 74A is allowed only when the return of loss is filed within the time allowed u/s. 139(1) of the Act. He stated that the whole exercise of filing the return within the due date with unaudited accounts has been done with a view to obtain the benefit of carry forward of loss without complying to the primary need of having the accounts audited before the due date for filing the return and thus, supported the findings of the Ld. AO
5 M/s. Yapp India Automotive Systems (P) Ltd., that assessee was not eligible for carry forward of the loss for the future years.
Per contra, the Ld. Counsel of the assessee at the outset invited the attention of the bench to the first para of the impugned assessment order, wherein it is noted that the return filed by the assessee on 30.11.2012 was processed u/s. 143(1) of the Act. The said para is reproduced as under: “ The assessee filed its return of income for the assessment year 2012-13 on 30.11.2012 admitting a total income of Rs. (-) 13,06,88,158/-. The same was processed u/s. 143(1). Notice u/s. 143(2) of the Act was issued on 10.09.2013. Sri. R.P. Sarathy, Manager, Ms. Ulagammai & Shri. Subramaniyam, CA appeared and the case was discussed and assessment finalized.”[emphasis supplied by us]
He further submitted that in filing the unaudited financials by the assessee has it own ramification under the Act and has nothing to impact, the claim of carry forward of loss when the return of income has been filed within the due date prescribed u/s. 139(1) of the Act. He further pointed out that no defect within the provisions of section 139(9) of the Act were intimated to the assessee in respect of the original return filed on 30.11.2012 which was subsequently revised as per the provisions of section 139(5) of the Act on 30.09.2013. He strongly submitted that the return originally filed has been processed u/s. 143(1) of the Act and the assessee has rightfully claimed carry forward of loss which the Ld.CIT(A) has allowed for its carry forward.
6 M/s. Yapp India Automotive Systems (P) Ltd., The factual position of filing of original return within the due date prescribed u/s. 139(1) of the Act is undisputed. It has been rightly noted by the Ld. CIT(A) on the fact that where accounts were not audited, the Department had all the wherewhittle to take appropriate actions for such defect by imposing penalty as prescribed under the Act.
We have heard the rival contentions and perused the material on record. We are persuaded by the findings given by the Ld. CIT(A) and also by the fact noted by the Ld. AO himself about the processing of the original return u/s. 143(1) of the Act, to uphold the decision of the Ld. CIT(A). We find no reason to interfere with the findings given by the Ld. CIT(A). Accordingly, the appeal of the Revenue is dismissed.
In the result, the appeal filed by the Revenue is dismissed.
Order pronounced on 25th May, 2022 at Chennai.