M/S VERSTAR TECHNOLOGIES LLP,PUNE vs. ASSISTANT COMISSIONER OF INCOME TAX, CIRCLE 7, PUNE

This is an appeal filed by the assessee directed against the order of the National Faceless Appeal Centre, Delhi [‘NFAC’] dated 06.11.2023 for the assessment year 2020-21.

Briefly, the facts of the case are that the assessee is a partnership firm engaged in the business of Real Estate and Renting Services. The Return of Income for the A.Y. 2020-21 was filed on 31.12.2020 declaring Nil income. Against the said return of income, the assessment was completed by the Assessment Unit (NFAC) vide order dated 28.09.2022 at a total income of Rs.3,63,78,090/-. While doing so, the Assessment Unit (NFAC) denied the grant of depreciation on the cost of Goodwill of Rs.16,62,99,840/- by holding that the assessee had not incurred any cost for acquisition of the Goodwill, with which we are not concerned. However, the Assessment Unit/NFAC had not set off the brought forward business depreciation loss as well as the current year losses against the assessed income as claimed by the appellant company.

Being aggrieved, an appeal was filed before the CIT(A)/NFAC who vide impugned order, without dwelling into the issues, summarily rejected the claim of the assessee firm.

Being aggrieved, the assessee is in appeal before the Tribunal in the present appeal.

At the outset, the ld. Authorised Representative for the assessee did not press the Grounds of appeal Nos. 2 to 4. Accordingly, these grounds are dismissed as ‘not pressed’.

The only ground of appeal which survives for our adjudication is the ground challenging the action of the lower authorities in not setting off the brought forward losses and the current year losses against the assessed income.

The ld. Authorised Representative for the assessee points out that the assessee filed the return of income declaring Nil income. The ld. AR took us through the intimation passed u/s.143(1) of the Act for the A.Y. 2019-20 placed at pages 95 to 102 of the paper book and submits that there was brought forward loss of Rs.96,22,842/- for the A.Y. 2019-20, liable for set off against the current assessed income. Similarly, he submits that for the A.Y. 2020-21 the assessee has returned loss of Rs.2,88,61,964/- as per the acknowledgement of return of income placed at page 8 of the paper book. The Assessment Unit/NFAC, instead of proceedings with the returned loss of Rs.2,88,61,964/- assumed the returned income as Nil. Thus, he submits that the Assessment Unit/NFAC had wrongly assessed the total income at Rs.3,63,78,090/-.

On the other hand, the ld. DR also submitted the computation statement showing total income based on the information available on record and he expressed agreement with the submissions advanced by the ld. AR for the assessee.

We heard the rival submissions and perused the material on record. The only issue that survives in the present appeal relates to set off of brought forward business loss of Rs.96,22,842/- and adopting of the returned loss as a base figure for computing the assessed income for the year under consideration. This is purely a factual issue and therefore, matter requires remission to the file of Assessment Unit/NFAC. Therefore, we remand the matter back to the file of Assessment Unit/NFAC to re-compute the assessed income by taking the returned loss as a base figure and then set off of the brought forward business loss, if any, after due verification.

In the result, the appeal filed by the assessee is partly allowed for statistical purposes.