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Income Tax Appellate Tribunal, “SMC” Bench, Mumbai
Before: Shri Shamim Yahya (AM)
This appeal by the assessee is directed against the order of learned CIT(A) dated 21.5.2018 and pertains to A.Y. 2012-13.
The grounds of appeal
read as under :-
1. The learned Commissioner of Income Tax (Appeals) erred in facts and in law in confirming the disallowance of set off of brought forward business loss of Rs. 13,54,700/- for A.Y. 2011-12 against income from speculation business for A.Y. 2012-13, made by the CPC for the year under consideration.
2. The learned Commissioner of Income Tax (Appeals) erred in misinterpreting the provisions of section 72 of the Income Tax Act, 1961 that the business loss can be set-off against any business income, including profits from speculation business.
3. The Appellant craves leave to add, alter, rescind or amend any of the above grounds of appeal at any time before or at the time of hearing.
Brief facts of the case are as under :-
2 M/s. Talisman Securities Pvt. Ltd.
The assessee-company filed its return of income on 30.09.2012 for A.Y. 2012-13. The assessee filed return of income disclosing the business loss of Rs. 16,80,712/- and speculation profit of Rs. 30,35,412/-. After setting off the business loss of Rs. 16,80,7127-, the assessee showed net income of Rs. 13,54,7007- which is speculation profit. The assessee has set off brought forward business loss of Rs. 13,54,700/- against this net income. The CPC Bangalore while processing the return of income did not allow the set off of business loss. On an application u/s. 154, the CPC has set off the current years business loss of Rs. 16,80,712/- against the speculation profit of Rs. 30,35,412/-. The carry forward business loss was not set off by CPC in the order u/s.154 dated 23.7.2014.
Aggrieved with this order u/s. 154 of CPC the assessee filed the appeal before learned CIT(A).
Upon assessee’s appeal learned CIT(A) referred to the assessee’s submissions and thereafter she reproduced the provisions of section 72. Learned CIT(A) thereafter concluded as under : “It is very clear from the section that the carry forward business loss of the assessee shall be set off against the profits and gains, if any of any business or profession carried on by him and assessable for that assessment year. In this case, the assessee seems to set off the carry forward business loss against the speculation income of the current year which is not permissible. It is only the carry forward business loss which can be set off against the speculation income and not any other carry forward loss. The CPC has rightly not set off the brought forward business loss for A.Y. 2011-12 against the income from speculation for A.Y. 2012-13”.
Against the above order assessee is in appeal before the ITAT. I have heard both the counsel and perused the records. I find that learned CIT(A) has passed a contradictory concluding order. She has mentioned that it is only the carry forward business loss which can be set off against the speculation income and not any other carry forward loss. That the CPC has rightly not set off the brought forward business loss for A.Y. 2011-12 against the income from speculation for A.Y. 2012-13. That this ground of appeal is dismissed. When
3 M/s. Talisman Securities Pvt. Ltd. learned CIT(A) is herself saying that carry forward business loss can be set off against speculation income, there is no ground for her to uphold the CPC adjustment.
In my considered opinion this self-contradictory order is not sustainable. Moreover, this makes it amply clear that this was not a matter of adjustment under section 143(1). Hence, the action of the CPC is not sustainable on that account also. Accordingly, I allow issue raised by the assessee, in assessee’s favour.
In the result, the assessee’s appeal stands allowed. Order has been pronounced in the Court on 20.8.2019.