2021 (9) TMI 509

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....e Commissioner of Income Tax (Appeals) - 19, Chennai dated31.07.2019 in l.T.A.No.371/2018-19 for the abovementioned Assessment Year is contrary to law, facts, and in the circumstances of the case. 2. The CIT (Appeals) erred in not appreciating the narrow scope of the provisions in154 of the Act while sustaining the order of rectification making adjustments which do not constitute mistake apparent record without assigning proper reasons and justification. 3. The CIT (Appeals) ought to have appreciated that the adjustments to the total income emanated out of the debatable issues and the same cannot be construed as mistake apparent from the record for the purpose of invoking the provisions in section 154 of the Act thus vitia....

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....was no proper opportunity given before passing the impugned order and ought to have appreciated that any order passed in violation of the principles of natural justice should be reckoned as nullity in law." 3. Brief facts of the case are that assessment for impugned assessment year has been completed u/s.143(3) r.w.s. 153A of the Income Tax Act, 1961, on 31.03.2016 and determined total income at Rs. 54,38,08,980/-. The assessment has been subsequently rectified u/s.154 of the Income Tax Act, 1961 vide order dated 06.02.2019 on the ground that while passing order u/s.143(3) r.w.s 153A of the Act, business loss of Rs. 30,67,346/- was wrongly set off against income under the head salary of Rs. 40,35,000/-, which is not allowable as per sect....

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....l against the order. Aggrieved by the learned CIT(A) order, the assessee is in appeal before us. 5. The learned A.R for the assessee submitted that the learned CIT(A) has erred in sustaining order of the Assessing Officer passed u/s.154 of the Income Tax Act, 1961, without appreciating fact that proposal for rectification was taken up to rectify mistake of set off of business loss against salary income, whereas while computing taxable income, the Assessing Officer has adjusted entire business loss with capital gains as against income from house property and income from other sources . The learned A.R further referring to provisions of section 71(2) and circular No.26 dated 7.7.1955 issued by CBDT submitted that in absence of a particular....

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....o precedence of set off of loss against each head of income is prescribed, but general rule provides for set off loss under one head of income against any other head of income except income under the head capital gains and business or profession in the order of preference, as provided under the Income Tax Act, 1961. Admittedly, income tax provides for computation of income in order of preference starting from income under the head salary, income from house property, income from business or profession, capital gain and income from other sources. If you go by same logic, then loss from one head should be set off against other head of income excluding impermissible set off of loss in the order of preference like computation of income as per la....