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Income Tax Appellate Tribunal, DELHI BENCH ‘SMC’ : NEW DELHI
Before: SHRI H.S. SIDHU
This appeal has been filed by the Assessee against the Order dated 05.3.2018 of the Ld. Commissioner of Income Tax (Appeals)-12, New Delhi relevant to assessment year 2009-10. 2. The grounds raised in the appeal read as under:-
That the Ld. CIT(A) ought to have allowed set off t of the balance of unabsorbed depreciation of Rs. 3,41,971/- brought forward from assessment year 2006-07, the unabsorbed depreciation of Rs. 3,34,803/- brought forward from assessment year 2007-08 and the unabsorbed depreciation of Rs. 466/- brought forward from 0 Page No 1 of 8 assessment year 2008-09 with the income of this year, as the returns filed by the assessee for these years claiming such amounts as depreciation and supported by the Tax Audit Report of the year, had since attained finality under the Act and consequently these amounts form part of current year depreciation in terms of Section 32(2) of the Act.
2. That the Ld. CIT(A) ought to have allowed set off of the resultant business loss of Rs. 3,02,207/- (3,75,293 – 73,086) brought forward from assessment years 2007-08 consequent to appeal effect order passed u/s. 250 of the Act dated 11.12.2012 with the income of this year, as the returns filed by the assessee for this year claiming such amount as a business loss and supported by the Tax Audit Report of the year had since attained finality under the act.
3. That the lower authorities ought to have allowed set off of the unabsorbed depreciation of Rs. 466/- brought forwards from assessment year 2008-09 consequent to appeal effect order passed u/s. 250 of the Act dated 13.1.2012 and which forms part of his records, with the income of this year.
4. That the Ld. CIT(A) ought to have directed AO to dispose of the rectification application of the appellant for AY 2007-08 that has been pending with the AO since 10.6.2013, determine the business loss and Page No 2 of 8 unabsorbed depreciation of the year and thereafter give his report to him for the adjudication of the appeal.
5. That the CIT(A) had erred in observing that the appellant had not filed complete evidences like ITR copy claiming depreciation, business los, assessment order copy and appellate order copy of these were duly filed by the appellant by letters dated 28.6.2017 and 1.3.2018.
6. The above grounds are independent and without prejudice to one another.
7. Your appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal at the time of hearing.
Facts narrated by the revenue authorities are not disputed by both the parties, hence, the same are not repeated here for the sake of brevity.
At the time of hearing, Ld. A.R. for the Assessee, Smt. Lalitha Krishnamurthy, CA has filed the Synopsis / Written submissions containing pages 1 to 8 in which she has narrated the facts of the case as well as the findings of the AO and the Ld. CIT(A). She has also narrated the facts on the issue in dispute for Assessment year 2007-08, 2008-09 & 2009-10 and requested that the prayer made in the Appeal may be allowed, after verifying the facts narrated therein and matter may be set aside to the file of the AO to decide the issues in dispute afresh, in accordance with law. 5. On the contrary, Ld. DR has not raised any objection on the request of the Ld. A.R. for the Assessee.
Page No 3 of 8
6. I have heard both the parties and perused the records, especially the written submissions filed by the Ld. A.R. for the Assessee. For the sake of convenience, I am reproducing the Written Synopsis/Submissions as under:- 1.1 Facts as per Order passed under Section 143(3)/254 dated 21.12.2016 are that the Original assessment u/s 143(3) of the Income Tax, 1961 was completed on 29.11.2011 at a total income of Rs.60,11,568/- against returned income of Rs.13,10,582/- (order placed at pages 258 to 265 of PB). In assessment, the AO made the following additions / disallowances:
S. No. Additions / Disallowance Amount Rs.45,58,252/- Incentive / Commission Expenses disallowed 1 u/s 40a(ia) 2 Vehicle expenses disallowed Rs.1,18,400/- 3 Out of telephone expenses disallowed Rs.24,334/- 4 Brought forward losses Rs.10,52,533/- 1.2 The assessee appealed against assessment order before Id. CIT(A). The CIT(A) in appeal no. 268/11- 12 vide order dated 30.03.2013 (order placed at pages 266 to 291 of PB) decided the appeal of assessee. The decision of Id. CIT(A) was as under:
S. Additions / Issues Amount Relief / Confirmed by No. Id. CIT(A) Deleted by Id. CIT(A) Rs.45,58,252/- Rs.45,58,252/- Nil Incentive / Commission Expenses 1 disallowed u/s 40a(ia) Vehicle expenses disallowed Rs.l,18,400/- Rs.25,340/- Rs.93,060/- 2 3 Rs.24,334/- Nil Rs.24,334/- Out of telephone expenses disallowed 4 Brought forward losses Rs.10,52,533/- Nil Rs.10,52,533/- 1.3 Further, the assessee appealed before Hon’ble ITAT against the order of Id. CIT(A) confirming the addition of Rs.93,060/-, Rs.24,334/-, disallowance of brought forward losses of Rs. 10,52,533/- and taking returned income of Rs.13,10,582/-. Hon’ble ITAT decided the appeal vide order dated 24.06.2015 in (order placed at pages 292 to 297 of PB). Hon’ble ITAT deleted the additions of Rs.93,060/- and Rs.24,334/- and decided in favour of assessee. However, on the issue of brought forward losses of Rs.10,52,533/- and taking returned income at Rs.13,10,582/- Hon’ble ITAT set aside the issues to Page No 4 of 8 the file of the AO to decide the same afresh.
1.4 In set aside proceedings appellant submitted to AO that the documentation / information required was already on record for his kind consideration.
1.5 AO completed the assessment under Section 143(3)/254 of the Act by revising the returned income to Rs.119,830/- as declared but disallowed the brought forward losses of Rs.10,52,533/- and his findings is reproduced below:
“In computation, the assessee has clamed following brought forward losses and adjusted against the incomefor the year under consideration: Unabsorbed Business Loss Assessment Unabsorbed Year Depreciation — 2006-07 Rs.3,41,971 / - 2007-08 Rs.3,75,293/- Rs.3,34,803/- — 2008-09 Rs.466/- Total Rs. 3,75,293 Rs.6,77,240/- On verification of records available, it has been found that there is no such loss available for adjustment against the income for the year. The assessee has also not submitted and explanation in this regard, hence loss of Rs.10,52,533/ - (3,75,293+6,77,240) is disallowed. ” 1.6 Aggrieved the assessee appealed the matter before Id. CIT(A) and his decision is reproduced below: “7. Decision I have considered the order of the Assessing Officer and the 7.1 submission of the Appellant. Simple point in this case was determination of unabsorbed depreciation and business loss comingfrom earlier years. While giving effect to the order of the Don ’ble ITAT the Assessing Officer did not allow set off of brought forward losses amounting to Rs.10,52,533/ - on the ground that the claim was not supported by the records in the possession ofthe Assessing Officer. During the appellate proceedings, the Td. Counselfor the Appellant contends that the business loss pertaining to AY 2005-06 is supported by the ITK Acknowledgement. Unabsorbed depreciation pertaining to AY 2006-07 and in successive assessment years is proved by the presumption that the Assessing Officer had satisfied himself about the genuineness of the claim. If the Assessing Officer had asked the assessee during the above inquiry pertaining to Page No 5 of 8 AY2006-07 to AY2008-09, the purchase bills could have been easily provided to him. 7.2 The Appellant has notfiled complete evidences like copy of ITK showing business loss, claiming depreciation, copy of the Assessment Orders and copy of orders of the appellate authority giving relief to the assessee etc. In the absence of these documents, it is difficult for me to ascertain unabsorbed depreciation and business loss comingfrom earlier years. Even the Assessing Officer was not satisfied with the claim ofthe Appellant in the absence of above documents. Hence, the ground taken by the Appellant is dismissed. ” 1.7 Aggrieved the appellant is now before the Hon’ble ITAT. The grounds of appeal are as under:
“1.That the CD(A) ought to have allowed set off of the balance of unabsorbed depreciation of Rs.3,41,971 / - brought forward from Assessment Year 2006-07, the unabsorbed depreciation of Rs.3,34,803/- brought forwardfrom Assessment Year 2007- 08 and the unabsorbed depreciation ofRs.466/ - brought forward from Assessment Year 2008- 09 with the income of this year, as the returns filed by the assessee for these years claiming such amounts as depreciation and supported by the Tax Audit Report of the Year, had since attainedfinality under the Act and consequently these amountsform part ofcurrent year depreciation in terms of Section 32(2) of the Act.
That the CD (A) ought to have allowed set off of the resultant business loss of Rs.3,02,207/ - (3,75,293 — 73,086) brought forward from Assessment Year 2007-08 consequent to appeal effect order passed under Section 250 of the Act dated 11.12.2012 with the income of this year, as the returns filed by the assessee for this year claiming such amount as a business loss and supported by the Tax Audit Report of the Year had since attained finality under the Act.
3. That the lower authorities ought to have alhwed set off of the unabsorbed depredation of Rs.466/ - brought forward from Assessment Year 2008-09 consequent to appeal effect order passed under Section 250 of the Act dated 13.01.2012 and which forms part of his records, with the income of this year.
4. That the CTT(A) ought to have directed AO to dispose off the rectification application of the appellant for AY 2007-08 that has been pending with the AO since 10.06.2013, determine the business loss and unabsorbed depredation of the year and thereafter give his
Page No 6 of 8 report to him for the adjudication of the appeal.
That the CTT(A) had erred in observing that the appellant had not filed complete evidences like ITR copy claiming depredation, business loss, assessment order copy and appellate order copy as these were duly filed by the appellant by letters dated 28.06.2017 and 01.03.2018.
6. The above grounds are independent and withoutprejudice to one another.
7. Your appellant craves leave to add, alter, amend or withdraw any of the grounds of appeal at the time of hearing. ”
2.0 Submissions of Appellant The ITR / Computation of income reflecting the UAD and Business Loss for each of the relevant years as per Paper Book filed before the Hon’ble Tribunal are given below (the page reference is to paper book filed in ITAT):
Unabsorbed Depreciation Assessment Year ITR Amount Amount Computation (Pgs) (in Rs.) (in Rs.) of Income (Pgs) 2005-06 3,77,364 1 2 35,393 3,41,971 Less: UAD set off against income of AY 2006- 07 2006-07 37 38 — 2007-08 3,34,803 78 79L and 79M 2008-09 466 134 135K and 135L Total 6,77,240 Unabsorbed Business Loss Assessment Year ITR Amount Computation of (pgs) (in Rs.) Income (Pgs) 2007-08 3,75,293 78 79L to 79M 10,52,533 201 211 212 Brought forward UAD and Business Loss set off by assessee against taxable income of AY 2009-10 2
Page No 7 of 8 2.1 AY2007-08 In AY 2007-08 AO had erroneously taken total income as per return at nil in the assessment order and placed at page 123 of PB whereas income as per ITR was a loss of Rs.7,10,096/- and placed at pages 79L and 79K of PB.
An application under Section 154 dated 07.06.2013 for this purpose was filed with AO and placed at page 299 of PB.
The additions made by AO were subsequently deleted by Id. CIT(A) (order placed at pages 124 to 133 of PB). The necessary appeal effect order is placed at pages 305 to 306 of PB.
Appeal of the Department was dismissed by Hon’ble ITAT as per order dated 20.04.2012 placed at pages 194 to 200 of PB.
The relevant details are tabulated below: Particulars TAR Amount Application u/s 154 Appeal (Pgs) (in Rs.) dated 07.06.2013 effect order (Pgs) dated 11.12.2012 _ (Pgs) _ UAD as above 3,34,803 3,75,293 Current year loss as above Total as per 7,10,096 90 299 305-306 computation (reflecting (as assessment (determining placed at page 78 brought Order dated the income forward 15.12.2009 had of the UAD of erroneously taken assessee Rs.3,41,971 /- total income as per consequent relevant to return placed at to relief given AY 2006-07 page 123 of PB at by Ld. is reflected) CIT(A)) nil whereas loss returned as per ITR placed at page 79M of PB was Rs.7,10,096/-)
2.2 AY 2008-09
Page No 8 of 8 In AY 2008-09 AO has already determined UAD Loss ofRs.466/- by appeal effect order dated 21.08.2012 placed at page 301 of PB. Appeal of the Department was dismissed by Hon’ble ITAT as per order dated 20.04.2012 placed at pages 194 to 200 of PB. The relevant details are tabulated below:
Particulars Amount Appeal effect order dated 21.08.2012 (Pgs) (in Rs.) UAD as above 466 301 (determining the income of the assessee consequent to relief given by Ld. CIT(A)). 466 Total as per computation placed at page 134 2.3 AY 2009-10 In the year under appeal (AY 2009-10) the details of brought forward UAD and Business Loss are reflected in Clause 25(a) in the Tax Audit Report placed at page 232 of PB in the following manner: Unabsorbed Depreciation Rs.3,34,803/- (2007-2008) Unabsorbed Depreciation Rs.3,41,971/- (2006-2007) Unabsorbed Depreciation Rs.466/- (2008-2009) Business Loss Rs.3,75,293/- (2007-2008) Application u/s 154 dated 26-08.2012 placed at page 304 of PB against assessment order dated 29.11.2011 placed at pages 258 to 265 of PB on this issue was also filed as per details tabulated below:-
Page No 9 of 8
Particulars TAR Amount Application u/s (Pgs) (in Rs.) Order passed 154 dated u/s 143(3) / 21.08.2012 (Pgs) 254 by AO dated 21.12.2016 (Pgs) 3,41,971 Brought forward UAD of AY 2005- 06 3,34,803 Brought Forward UAD of AY 2007- 08 466 Brought forward UAD of AY 2008- 09 3,75,293 Brought forward Business Loss of AY 2008-09 10,52,533 304 232 307-311 Total as per computation at (reflecting brought (impugned order of AO) placedjiage 201 forward UAD set off against and Business Loss totalling to current year income of Rs.10,52,533/- ) Rs.11,72,363/- resulting in net taxable income of Rs.1,19,829/- which was returned
Page No 10 of 8 Prayer: It is prayed that on the basis of the above submissions and Orders / ITR on record Hon’ble ITAT may be pleased to direct the AO to allow the claim for set off of the Brought Forward UAD / Business Loss of Rs. 10,52,533/- from the income of the assessee as tabulated below:
(i)
Assessment Year Direction Prayed for Amount (in Rs.) 2005-06 3,77,364 On the basis of ITR filed by the assessee for AY 35,393 Less: UAD set off against 2005-06 placed at page 2 of PB and AY income of AY 2006-07 2006-07 placed at page 37 read with page 38 of PB as these two years were not under scrutiny assessment Total 3,41,971 (ii) Assessment Year Directions Prayed for Amount (in Rs.) 2007-08 3,34,803 On the basis of ITR filed by the assessee placed 2007-08 3,75,293 at page 79M of PB read with appeal effect order dated 11.12.2012 placed at pages 305 to 306 of PB Total 7,10,096 (iii) Assessment Year Directions Prayed for Amount (in Rs.) 2008-09 466 On the basis of appeal effect order dated 21.08.2012 placed at page 301 of PB determining the loss of the assessee for the year at Rs.466/- consequential to relief given by Id. CIT(A). Total 466 0 Page No 11 of 8
After perusing the aforesaid Written Synopsis/Submissions, I am of the view that the aforesaid written submissions/synopsis needs to be considered and verified at the level of the AO, and decide the issues in dispute afresh. Therefore, in the interest of justice, I am setting aside the issues in dispute to the file AO with the directions to decide the issues in dispute after considering/verifying the aforesaid Written Synopsis/submissions, as per law and give adequate opportunity of being heard to the assessee.
In the result, the Assessee’s appeal is allowed for statistical purposes. Order pronounced on 05-11-2018.