AI Drafter 
TaxTMI 
TaxTMI 
2018 (6) TMI 444
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....in law in allowing the unabsorbed depreciation of Rs. 40,35,877/- disallowed by AO on account of carry forward loss. 3. The appellant craves leave to add, amend any / all the grounds of appeal before or during the course of hearing of the appeal. 3. The ground raised in the Assessee's Cross Objection read as under:- "1. That the Ld. CIT(A) has erred on facts and in law in not allowing carry forward of business loss of Rs. 2,78,08,927/- claimed by appellant pursuant to its return filed u/s. 153A of the Act." 4. The brief facts of the case are that the Assessee is a company and is engaged in the business of real estate development. Assessee filed its return of income u/s 139 of the Income Tax Act, 1961 (hereinafter referred as the Act) for AY 2010-11 on 29.03.2011 claiming carry forward of business loss of Rs. 3,31,15,331/- (including unabsorbed depreciation of Rs. 40,35,877/-) and showing income from other sources of Rs. 12,70,527/-. The said business loss and unabsorbed depreciation was not allowed to be carried forward in AY 2010-11 in the original assessment u/s 143(3) dated 11.3.2013.). Income was assessed at Rs. 12,70,527/- being income from other source....
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....iation. With regard to the issue of claim of carry forward of unabsorbed depreciation u/s 32 of Rs. 40,35,877/- in 153A return for AY 2010-11, it is submitted that as unabsorbed depreciation is not a loss as it is governed by provisions of section 32(2), the restrictive provisions of section 80 does not apply to such unabsorbed depreciation as inter alia held in: (i) CIT Vs. Govind Nagar Sugar Ltd. 334 ITR 0013 (Delhi HC) (ii) CIT Vs. Haryana Hotels Ltd 276 ITR 0521 (P&H HC) (iii) Brahamavar Chemicals Pvt. Ltd. Vs. CIT 239 ITR 867 (Kar HC).... We quote from headnote in the case of CIT vs Govind Nagar Sugar Ltd. [2011] 334 ITR 13 (Delhi HC) as under: "Held, dismissing the appeal, that Section 80 and 139(3) of the Act apply to business losses and not to unabsorbed depreciation which was exclusively governed by the provisions of Section 32(2) of the Act. That being so, the period of limitation for filing loss return as provided under Section 139(1) would not be applicable for carrying forward of unabsorbed depreciation and investment allowance. Under Section 32(2) unabsorbed depreciation of a year becomes part of depreciation of su....
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....isions of s. 80 of the Act do not apply and the assessee is eligible to carry forward of the loss. I do not agree with the contentions of the appellant since sub-section (3) of s. 139 very specifically mentions that the return is to be filed "within the time allowed under subsection (1)" of s. 139, and the reference to s. 139 in clause (a) of s. 153A(1) simply lays down the procedure for assessment in cases where returns are filed in response to notice u/s 153A, and therefore I am not inclined to accept the argument of the appellant. However, the claim of the appellant that the unabsorbed depreciation of Rs. 40,35,877/- should be allowed to be carried forward since it is not covered by the limitation of s. 80 of the Act. The carry forward of unabsorbed depreciation is governed by sub-section (2) of s. 32 of the Act which is placed in Chapter - IV of the Act according to which the total income is to be computed, while s. 72 and s. 80 are part of Chapter - VI of the Act. The AO is directed to verify the claim of depreciation of Rs. 40,35,877/- and allow set off in the next / subsequent year(s). This ground is therefore partly allowed." 7.1 As regards the issue of carry forward of ....
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....ling within six assessment years referred to in clause (b), in the prescribed form and verified in the prescribed manner and setting forth such other particulars as may be prescribed and the provisions of this Act shall, so far as may be, apply accordingly as if such return were a return required to be furnished under section 139;" 3. The return filed u/s 153A deemed to be the return filed u/s 139(1). Accordingly, restrictive provisions of section 80 as to carry forward and set off of loss does not apply. In this regard, the appellant relies upon the ruling of Hon'ble Pune ITAT in the case of Sanjay Nandlal Vyas Vs ITO, (ITAT Pune) - ITA No 771 to 774/PN/2010 dated 23.12.2011 which directly covers the case of the appellant. In the said case, the Hon'ble ITAT has allowed the carry forward of increase in business loss claimed in 153A return by holding that provisions of section 80 does not apply to return accepted & assessed u/s 153A. The assessment under section 153A r.w.s. 143(3) of the Act has been framed on the basis of return filed in response to notice issued under section 153A and is accordingly within prescribed time. Return under 153A on the basis of which assessmen....
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.... the head notes as under:- "Whether a return filed in pursuance of a notice issued under Section 153A is as good as a return filed under section 139 and more particularly under section 139(1) - Held, yes - Whether deduction claimed under section 80- IB(10) in a return filed under section 153A can be denied on ground that claim was not made earlier in a return filed under section 139(1) - Held, no [Paras 26 to 42] [In favour of assessee]" The rider provided under law by section 80AC does not apply to the instant case and the returns filed by the assessee under section 153A have been considered as returns filed under section 139(1) within time. As per section 80AC, no deduction under section 80IB shall be allowed unless return of income is furnished before due date under section 139(1). Accordingly, it was held in this case clearly that return under section 153A is as good as a return filed under section 139(1). 6. Hon'ble Bombay High Court in the case of CIT vs B.G Shirke Construction Technology Pvt Ltd [2017] 79 taxmann.com 306 (BOM) held that: "A return filed u/s 153A is a return furnished u/s 139 and therefore, provisions of the Act which apply....
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.... business loss claimed in 153A return was allowed by the Bench by holding that restrictive provisions of Section 80 do not apply to return accepted and assessed u/s. 153A of the Act. He further stated that issue in dispute is also covered by the decision of the Hon'ble Delhi High Court in the case of Principal Commissioner of Income Tax vs. Neeraj Jindal (2017) 393 ITR 1 (Delhi) wherein the Hon'ble High Court held that once the assessee files a revised return under section 153A, for all other provisions of the Act, the revised return will be treated as the original return filed under section 139 of the Act. Therefore, he requested to follow the aforesaid decisions and directed the AO to allow the claim in dispute in favour of the assessee. 8.2 On the other hand, Ld. DR relied upon the order of the authorities below. He relied upon the decision of ITAT Kolkata in the case of Tantia Constructions Ltd Vs DCIT 2016-TIOL-2027-ITAT-KOL to contend that the assessment once framed u/s 143(3), the same cannot be disturbed in proceedings u/s 153A in the absence of any incriminating material found in search. He thus argued that the action of the AO disallowing carry forward of loss in 153A ....
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....d u/s 139(1). In the case of V.N Devadoss (supra), deduction claimed u/s 80-IB in return filed u/s 153A was allowed even though such deduction was not claimed in a return filed u/s 139(1). 9.2 We further find merit in the submissions of Ld. Counsel of the assessee who pointed out that the proposition that in the absence of incriminating material found in search, the assessment u/s 143(3) cannot be disturbed as relied upon by Ld. DR citing the decisions of Kolkata ITAT in the case of Tantia Constructions and Hon'ble Delhi High Court in the case of Kabul Chawla is not applicable in this case. Ld. DR totally misdirected himself in relying upon said judgment in case of Tantia Constructions and Kabul Chawla as the same is in context of addition in search assessment in the absence of incriminating material. Decision in Tantia Constructions and Kabul Chawla does not discuss as to whether return under section 153A is deemed to be a return under section 139(1) and that accordingly, it is not hit by section 80. It was also pointed out by the Ld. AR that the said decision in Kabul Chawla is being contested in appeal before Hon'ble Supreme Court by tax department itself. We have also peruse....
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....limit prescribed u/s. 139(5) for filing the revised return. Thus, the returns filed by the assessee in response to notices issued u/s. 153A of the Act cannot be regarded as revised returns replacing the original returns filed u/s. 139(1) of the Act. He accordingly did not accept the contention of the assessee that the original returns were replaced by the returns filed in response to the notices issued u/s. 153A of the Act. 5. Before us, the Ld A.R. while reiterating the above contentions made before the authorities below, submitted that undisputedly, returns of income u/s. 139(1) of the Act in the years under consideration were filed in time, hence the assessee was very much entitled to revise the returns of income during the prescribed time limit, hence the assessee had satisfied the provisions of Section 80 permitting carry forward of loss. He clarified that as per Section 80, there is no such condition that only the loss claimed in the return filed u/s. 139(1) can be permitted to be carried forward. Merely because returns of income filed u/s. 153A by the assessee beyond the notice period, does not curtail to adopt those returns of income filed in response to the notice....
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....t the provisions of assessment in the case of search u/s. 153A etc. have been inserted by the Finance Act, 2003 with effect from 01.06.2003. These provisions are successor of the special procedure for assessment of search cases under Chapter XIV-B starting with section 158B. Whereas Chapter XIV-B required the assessment of "undisclosed income" as a result of search, which has been defined in section 158B(b), section 153A dealing with assessment in case of search with effect from 01.06.2003 requires the Assessing Officer to determine "total income" and not "undisclosed income". 10. If any deduction is claimed by the assessee in the proceedings u/s 153A that cannot be rejected simply on the ground that it was not claimed in the original assessment or was disallowed. The starting point of assessment is the amount of income declared in the return of income, which is further enhanced with the additions. We are unable to appreciate the qualitative difference between the two situations viz., the first in which the assessee files return in response to notice u/s. 153A disclosing lower income than the one originally assessed u/s. 143(3) and the second situation in which the income ....
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....l. 9. Almost similar are the facts in the present case before us as the assessee had claimed interest expenditure of loan from a Credit Co-Operative Society in the returns filed u/s. 153A which was not claimed in the returns of income filed u/s. 139(1) of the Act. The A.O had allowed the said expenditure while assessing loss. However, the increase in loss as per returns filed in response to notices u/s. 153A was not allowed to be carried forward in view of the provisions of Section 80 of the Act. The A.O. held as per Section 80 of the Act, the loss which is not determined as per the provisions of Section 139(3) of the Act cannot be carried forward. The Ld CIT(A) has upheld the action of the A.O with further observations that the assessee had filed returns of income in response to notice issued u/s. 153A of the Act which are beyond the time limit prescribed u/s. 139(5) for filing revised return. Hence, the returns filed by the assessee in response to the notices issued u/s. 153A cannot be regarded as revised returns replacing the original returns filed u/s. 139(1) of the Act. Section 80 r.w.s. 139(3) of the Act laid down the procedure for submission of return for losses and....
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....the Act is the revised return superseding earlier return of income and the assessment based upon that original return of income. We thus following the ratio laid down by the Mumbai Bench of the Tribunal in the case of DCIT Vs. Eversmile Construction Pvt. Ltd. (Supra), hold that the A.O was not justified in denying the claim of carry forward of loss in question in the A.Ys. under consideration. 9.1 The decision of Delhi Bench of the Tribunal in the case of Steri Moulds Pvt. Ltd. (Supra) relied upon by the Ld. D.R to support his contention that only the loss declared in the return filed u/s. 139(1) can be carried forward, is not helpful to the revenue as facts therein are distinguishable. In that case assessee had filed the original return declaring positive income and no revised return was filed. Therefore the assessee made a claim in the assessment proceedings which resulted in positive income converted to lose figure. Since assessee had not filed revised return, the Tribunal held that the loss cannot be permitted to be carried forward. However in the case of assessee before us, he had filed the return u/s. 153A declaring higher loss. Likewise, the decision of Hon'ble Calc....