MANINDRA MOHAN MAZUMDAR,ASANSOL vs. PCIT, ASANSOL

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ITA 200/KOL/2022Status: DisposedITAT Kolkata28 July 2022AY 2017-182 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal found that the Assessing Officer had considered the derivative loss adjustment after due verification and that there is no specific bar in the Income Tax Act against setting off derivative loss against business income. Therefore, the revision order was not justified.

What were the facts?

The assessee claimed a derivative loss against income computed under Section 44AD. The PCIT initiated revision proceedings, holding that such adjustment was impermissible and the Assessing Officer's order was erroneous and prejudicial to revenue.

What were the issues?

Whether a derivative loss can be adjusted against income computed under Section 44AD, and if the PCIT's revisionary power under Section 263 was correctly exercised.

Which sections of the Income-tax Act were involved?

Section 44AD,Section 263

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, “B”

Before: Shri Sanjay Garg & Shri Girish Agrawal

order

: July 28, 2022 ORDER

Per Sanjay Garg, Judicial Member:

1.

The present appeal has been preferred by the assessee against the order dated 26.03.2022 of the Principal Commissioner of Income Tax, Asansol [hereinafter referred to as ‘PCIT’] exercising his revision jurisdiction u/s 263 of the Income Tax Act (hereinafter referred to as the ‘Act’).

2.

At the outset, the ld. Counsel for the assessee has invited our attention to the impugned order of the ld. PCIT passed u/s 263 of the Act to submit that the ld. PCIT has noted that the business income of the assessee was computed u/s 44AD of the Act as per which the gross profits of the assessee were computed @8% of the gross turnover. He further observed that the assessee had adjusted derivative loss of current year amounting to Rs.38,01,257/- from the income computed u/s 44AD of the Act. In the opinion of the ld. PCIT, the derivative loss could not be adjusted against the income computed u/s 44AD of the Act. He, therefore, held that the order of the Assessing Officer was erroneous and prejudicial to the interest of the Revenue.

3.

The ld. Counsel for the assessee invited our attention to the paper-book page 12,13,14,15 & 16 to submit that show-cause notices were served by the Assessing

Assessment Year: 2017-18 Manindra Mohan Mazumdar Officer during the assessment proceedings wherein the queries were raised regarding the adjustment of derivative loss against the income declared u/s 44AD of the Act which were duly replied and the relevant evidences in support of the claim were also furnished. The Assessing Officer having satisfied with the reply and explanation submitted by the assessee passed the assessment order accepting the adjustment/set off of derivative loss against business income of the assessee. The ld. Counsel has submitted that even otherwise there is no bar under the Income Tax Act for setting off of derivative loss against business income.

The ld. DR could not rebut the above contention of the ld. Counsel for the assessee.

3. In view of the above, we do not find any justification on the part of the ld. PCIT to exercise his revision jurisdiction u/s 263 of the Act in this case. The impugned revision order u/s 263 is, therefore, being not sustainable in the eyes of law is hereby quashed.

4.

In the result, the appeal of the assessee stands allowed.

Kolkata, the 28th July, 2022.

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