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Income Tax Appellate Tribunal, “J”, BENCH MUMBAI
Before: SHRI RAJENDRA, AM & SHRI RAM LAL NEGI, JM
PER RAM LAL NEGI (J.M): This appeal has been directed against order dated 24-3-2014, passed by the CIT(A)-41, Mumbai, pertaining to the assessment year 2010-2011. The revenue has challenged the impugned order on the following effective ground:- “1. Whether on the facts and in the circumstances of the case and in law, the Ld. CIT(A) is justified in allowing the assessee set off of the carry forward of losses despite being aware of the fact that the assessee filed the return income after the due date for filing the return of income.”
Brief facts of the case are that the assessee company being engaged in business as builder and developer, filed its return of income on 30-9-2011 declaring ‘Nil’ income. The return was processed and after hearing the assessee the AO inter alia disallowed the assessee’s claim of depreciation of Rs.28,77,666/- on the wind turbine generator vide assessment order dated 28.02.2013.
Aggrieved by the assessment order, the assessee filed an appeal before the CIT(A), inter alia on the ground that the AO has wrongly disallowed the set off of brought forward unabsorbed depreciation. The CIT(A) sought report from AO, however, when he did not receive any response from the AO, heard the assessee. The assessee pleaded that the provisions of Section 80 of the income Tax Act, 1961(in short the Act) are applicable only in case of carry forward of business loss and that the carry forward of unabsorbed depreciation is governed by the provisions of Section 32(2) of the Act. There is no requirement of filing return within the time prescribed u/s.139(l) for claiming carry forward and set off of unabsorbed depreciation. Considering the submissions of the assessee the CIT(A) allowed the aforesaid ground of appeal
holding that the loss of Rs.18,95,911/- returned by the appellant is on account of unabsorbed depreciation and the same needs to be allowed to be carried forward u/s.32(2) of the Act and accordingly directed the AO to allow set off of unabsorbed depreciation as determined upon adjudication of the appeal filed by the appellant for AY.2009-10
4. Dissatisfied with the impugned order passed by the ld. CIT(A), the revenue is in appeal before this Tribunal.
5. Before us, ld. DR heavily relying on the assessment order submitted that the alleged loss of the assessee is a business loss and the assessee has failed to file the return within the prescribed limit u/s.139 (1) of the Income Tax Act, 1961 (in short ‘The Act’) and therefore, the assessee is not entitled to carry forward the loss under section 80 of the Act.
We have heard the submissions the Ld. DR and gone through the material placed before us. We find that the AO has disallowed the claim of the assessee on the ground that the assessee company has not filed its return within the time prescribed under section 139(1) of the Act and therefore, as per section 80 of the Act such losses cannot be carried forward. On the other hand the Ld. CIT(A) has allowed the claim of the assessee holding that section 80 of the Act does not apply in case of unabsorbed depreciation.
6. In our considered opinion, the Ld. CIT(A) has rightly pointed out that AO has wrongly disallowed the depreciation carried forward to set off by treating the same as business loss. The conditions under section 80 of the Act that the return of loss must be filed in accordance with section139 (1) and loss must be determined in pursuance of the return as a condition precedent to carry forward and set off the loss apply to business losses and not to the unabsorbed depreciations. Hence, the ld. CIT(A) has rightly held that the loss in question is an unabsorbed depreciation and not a business loss, therefore, section 80 does not apply in case of unabsorbed depreciation. In the present case since the assessee has claimed depreciation on the wind turbine generator the same cannot be treated as business loss and hence entitled to carry forward the depreciation under section 32(2) of the Act. The Hon,ble Karnataka High Court in Brahmavara v. CIT (1999) 239 ITR 867 has held that the condition in section 80 regarding furnishing of return by the assessee for the concerned year within the time specified under section139(1) in order to be entitled to carry forward applies to business loss and not to unabsorbed depreciation. Therefore, unabsorbed depreciation under section 32(2) can be carried forward even if the return for the concerned year is filed beyond the time specified under section139(1) of the Act. 8. In view of the expressed provisions of the law and the ratio laid down in Brahmavara v. CIT (supra), we do not find any reason to interfere with the impugned order. Accordingly, order date 24-3-2014 passed by the Ld. CIT(A) is upheld and the ground of appeal
of the revenue is dismissed being devoid of any merit.
9. In the result, appeal filed by the revenue is dismissed. प�रणामतः राजःव क� अपील खा�रज क� जाती है । Order pronounced in the open court on 22/01/2016. आदेश क� घोषणा खुले �यायालय म� �दनांकः को क� गई । Sd/- Sd/- (RAJENDRA) (RAM LAL NEGI) लेखा सदःय / ACCOUNTANT MEMBER लेखा सदःय �याियक सदःय / JUDICIAL MEMBER �याियक सदःय लेखा सदःय लेखा सदःय �याियक सदःय �याियक सदःय मुंबई Mumbai; �दनांक Dated 22 /01/2016 ू.कु.िम/pkm, िन.स/ PS
आदेश आदेश क� आदेश आदेश क� क� ूितिल�प क� ूितिल�प ूितिल�प अमे�षत ूितिल�प अमे�षत अमे�षत/Copy of the Order forwarded to : अमे�षत 1. अपीलाथ� / The Appellant 2. ू�यथ� / The Respondent. 3. आयकर आयु�(अपील) / The CIT(A), Mumbai. 4. आयकर आयु� / CIT �वभागीय ूितिनिध, आयकर अपीलीय अिधकरण, मुंबई / DR, ITAT, Mumbai 5. 6. गाड� फाईल / Guard file. स�या�पत ूित //True Copy// आदेशानुसार/ BY ORDER, आदेशानुसार आदेशानुसार आदेशानुसार