HAFFKINE BIO PHARMACEUTICAL CORPORATON LTD,MUMBAI vs. DCIT CIR 7(1)(2), MUMBAI

Aggrieved with the above order, assessee preferred appeal before Ld. CIT(A) and submitted before him that the AO erred in not allowing the business loss declared by the assessee to be carried forward to the extent of 5.19 crores and at the same time assessee also brought to notice that the business loss assessed includes unabsorbed depreciation to the extent of Rs. 3.6 crores and the balance is regular business loss. Further, assessee submitted that AO initiated penalty u/s 271B of the Act.

After considering the submission of assessee, Ld. CIT(A) allowed the assessee to carry forward unabsorbed depreciation and sustained the findings of AO with regard to carry forward of business loss to the extent of Rs. 1.58 crores. With regard to initiation of penalty, assessee has not pressed this ground since penalty is not emanating from the assessment order passed by the AO.

Apart from above, Assessee also filed additional grounds of appeal with a prayer to admit the same by relying on the decision of Hon’ble Supreme Court in the case of National Thermal Power Corporation vrs. CIT (229 ITR 383) (SC).

After considering the submission of assessee, we accept the additional grounds raised by the assessee for adjudication being a legal in nature.

Before us, Ld. AR of the assessee brought to our notice at page 6 of the paper book which is notice u/s 143(2) r.w.s. 147 of the Act asking the assessee to appear before him in connection with return of income and in the same notice, the reasons for

On merit, Ld. AR submitted that assessee is a public sector company owned by the Govt. of Maharashtra and submitted that the delay in filing the return of income is beyond the control of the assessee due to non-appointment of board of directors by the

On the other hand, Ld. DR brought to our notice the facts of the case and submitted that assessee has filed its return of income belatedly and as per the provision of law, assessee cannot carry forward business loss irrespective of the fact that assessee is a public or private limited company and further, he relied upon the orders passed by the tax authorities.

Considered the rival contentions and the material placed on record, we notice from the record that assessee is a public sector company and due to internal exigencies, assessee has filed its return of income only on serving of notice u/s 148 of the Act and there is no dispute as far as the date of filing of return of income and assessee has filed its return of income belatedly even though assessee has to declare huge loss. We further notice that it is mandatory on the part of the assessee to file its loss return in order to carry forward loss. With regard to submission of Ld. AR that AO cannot initiate the proceedings u/s 147 of the Act for the reason that assessee has not filed its return of income and that

On careful reading of the ratio of the above decision, we notice that Hon’ble Jurisdictional High Court has observed in the case of trust that income of the assessee is not determinable whether it has taxable income and as per the provision of section 139 of the Act, assessee is obligated to file only it has taxable income and AO can collect the information u/s 133(6) of the Act. However, we notice that in the present case, the facts are different and as far as trust is concerned, it is obligated to file return of income only when it has taxable income, whereas in the case of a company, it is obligated to file its return of income whether it has profit earned or not and even on carry forward loss is concerned, assessee has to file its loss return within the limitation period in order to avail the benefit of carry forward loss. Therefore, the case relied upon by Ld. AR is distinguishable and in our considered view, the proceedings initiated by AO u/s

With regard to merit of the case, we notice that there is no dispute that assessee has filed its return of income belatedly and as per the provisions of the Income Tax Act, assessee cannot avail the benefit of carry forward without filing the return of income on time. We further notice that Ld. CIT(A) has already considered that the loss return filed by the assessee includes unabsorbed depreciation and business loss and he restricted the denial of carry forward loss only to the extent of actual business loss. Therefore, assessee does not have a proper case for availing the benefit of carry forward loss by not following the respective provision of filing return within the due date. Accordingly, grounds raised by the assessee are dismissed. 14. In the net result the appeal filed by the assessee is dismissed. Order pronounced in the open court on 26th Feb 2020. Sd/- Sd/- (Vikas Awasthy) (S. Rifaur Rahman) न्याययकसदस्य / Judicial Member लेखासदस्य / Accountant Member मुंबई Mumbai;यदनांक Dated : 26.02.2020 Sr.PS. Dhananjay