ASSISTANT COMMISSIONER OF INCOME-TAX, RAICHUR vs. M/S.SINGDHANUR URBAN CO-OPEWRATIVE BANK LTD.,, BELLARY

The Revenue has filed an appeal against the order of Commissioner of Income Tax (Appeals), Gulbarga passed under Section 143(3) and 250 of the Income Tax Act, 1961 (the Act).

The Revenue has raised the following grounds of appeal :

The Brief facts of the case are that the assessee is a co-operative bank Registered under Karnataka Co-operative Society and Banking Regulation Act and filed the Return of Income on 7.9.2009 with total income of Rs.91,98,170. Subsequently, the case was selected for scrutiny and Notice under Section 143(2) of the Act along with questionnaire was issued. In response to notice, the learned Authorised Representative of the assessee appeared from time to time and furnished the details and produced Books of Accounts, bills and vouchers. The Assessing Officer found that there are accumulated losses of amalgamation along with the other Banks in the said assessment year. Whereas the assessee has claimed only 1/5 th of loss of Rs.1,20,10,773 and the balance to be intended to be 4 Assessment Years against the profit earned. The learned Authorised Representative of the assessee has filed written submissions on 28.11.2011 and 18.11.2011 emphasising that as per the provisions of Section 72AB (1) of the Income Tax Act, the Assessee Bank is entitled to claim the full amount of loss of Rs.6,00,53,872 as against 1/5 th claimed. The Assessing Officer was satisfied with respect to determination of loss but is of the opinion that since the assessee has not claimed such loss in the Return of Income filed on 7.9.2009 or by filing Revised Return. Hence Assessing Officer rejected the assessee's claim of complete loss in the assessment proceedings and passed order under Section 143(3) of the Act dt.30.11.2011. Aggrieved by the A.O’s order, the assessee has filed an appeal with the CIT(Appeals). On the disputed issue with respect to set off of accumulated loss on amalgamation, learned CIT (Appeals) dealt at page 2 para 4.1 to 4.12 of the order and relying on the CBDT Circular, judicial decisions and finally observed at pages 6 & 7 of the order which read as under :

At the time of hearing, the learned Departmental Representative submitted that the learned CIT(Appeals) has erred in granting relief of set off of losses of earlier years against the current year income irrespective of the fact that the assessee had neither claimed total loss in the Return of Income or by filing Revised Return of income and relied on the provisions of Section 72AB and judicial decisions and prayed for allowing the revenue’s appeal. Contra, the learned Authorised Representative relied on the orders of learned CIT(Appeals).

We heard the rival contentions and perused the material on record. The sole disputed issue envisaged by ld. DR in respect of learned CIT(Appeals) granting relief of entire set off of losses of earlier years against the current year income. We find that the assessee has made submissions on the set off claim before the Assessing Officer but was denied in the assessment proceedings. Whereas the learned CIT(Appeals) has granted relief without verifying the claim of the assessee. As rightly observed by learned CIT (Appeals), the claim made by the assessee could be entertained by appellate authorities. We considering the submissions of ld. DR and judicial decisions relied by the revenue are of the opinion that the quantum of deduction claimed requires verification. Accordingly we restore entire disputed issue for limited purpose to the file of the Assessing Officer for verification of quantum of claim made by the assessee.