TaxTMI 
TaxTMI 
2018 (6) TMI 444
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....,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 sources. Subsequently pursuant to search and seizure proceedings and in compl....
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.... 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 subsequent year by legal fiction and when it becomes part of the current year depreciation it was liable to be set off against....
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....t 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 depreciation raised in Revenue's Appeal is concerned, we find that Ld. CIT(A) has observed that the claim of the assessee is that the unabsorbed deprec....
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....escribed 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 assessment was framed has replaced original return superseding earlier return and superseding the assessment based upon that original return. As return under section 153A was accepted there....
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....es - 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 to return filed in regular course u/s 139(1), would also continue to apply in case of return filed u/s 153A." In view of the above as the appellant's return was filed and assessed under section 153A and this return is treate....
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....n 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 assessment is proper, because the return was belated in accordance with provisions of section 139(3). 9. We have heard the rival submissions and perused the relevant records especially the case laws cited by both the parties. We have also gone through th....
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....sessee 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 perused the said decision of Kolkata ITAT and found that there is no discussion in this case as to the aspects that section 153A has non obstante clause overriding provisions of section 139. 153A return once accepted and assessed replaces the original return and that....
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....ot 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 notices u/s. 153A as revised returns. He submitted further that finally determined loss in the assessment is to be carried forward as per the law. He placed reliance on the following decisions : 1. Sujani Textiles (P) Ltd. Vs. ACIT (2004), 88 ITD 31 (Mad. ) 2. Escorts Mahle L....
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....e" 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 is disclosed at the increased level, that is, after considering the additions so made in the original assessment and then agitates during the assessment proceedings about the deductibility of the amount(s) which was/were not allowed earlier. Probably the second course is adopted so as to prempt any move on the part of the Revenue to impose conceal....
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.... 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 claim for the same to be carried forward but does not mean that the A.O is not empowered to consider the question of deductibility as per the provisions of the Act; if after going through such claim he feels that it is necessary to consider for determining the total income in the assessment u/s. 153A r.w.s. 143(3) of the Act. The Madras Bench of the Tribunal....
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....n 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 Calcutta High Court in the case of Koppind P. Ltd Vs. CIT(Supra) is also not helpful to the revenue as the same was in the context of S. 147, wherein in the reassessment proceedings only escaped income can be taxed. We do not agree with the submission of the Ld. D.R that wordings of S. 147 and S. 153A are similar. We are of the view that u/s. 147 only income which has ....