Appeal Successful: Carry Forward Losses Allowed for Assessment Year 2017-18

The Tribunal allowed the appeal of the assessee, setting aside the order disallowing the claim of set off of brought forward loss for the Assessment Year 2017-18. It was held that the revised return filed to rectify defects should be considered a continuation of the original return, allowing the benefit of carry forward of losses. The Tribunal concluded that the assessee should be allowed the benefit of setting off brought forward losses against the income for the current year. The judgment was pronounced in favor of the assessee on 15.09.2022.

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Issues:
1. Disallowance of the claim of set off of brought forward loss.
2. Interpretation of filing original and revised return of income.
3. Validity of carry forward of losses for set off against income.

Analysis:
1. The case involved an appeal by the assessee against the order disallowing the claim of set off of brought forward loss for the Assessment Year 2017-18. The original return of income for the previous year was filed within the due date, but a notice under section 139(9) was issued to rectify defects. The revised return was filed after the due date, leading to the disallowance by the Commissioner of Income Tax (Appeals) (CIT(A)) and the Central Processing Centre (CPC).

2. The dispute centered around the interpretation of filing original and revised returns of income. The assessee argued that the revised return filed to rectify defects should be considered as a continuation of the original return, allowing the benefit of carry forward of losses. The CIT(A) and CPC, however, held that since the revised return was filed after the due date, the benefit could not be allowed.

3. The Tribunal analyzed the provisions of Section 139(9) of the Income Tax Act, which deals with rectification of defective returns. Citing a precedent from the Hon'ble Bombay High Court, the Tribunal held that once defects in the original return are rectified within the specified time, it relates back to the original filing date. Therefore, the Tribunal concluded that the assessee should be allowed the benefit of setting off brought forward losses from the previous year against the income for the current year.

4. Consequently, the Tribunal set aside the order of the CIT(A) and directed that the benefit of carry forward of losses from the previous year be allowed for set off against the income for the current year. The appeal of the assessee was allowed, and the judgment was pronounced in favor of the assessee on 15.09.2022.

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