TaxTMI 
TaxTMI 
2025 (10) TMI 849
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...." of Rs. 8.57 crores for AY 2020-21 as claimed in ITR towards brought forward losses. (iii) The learned CIT(A) erred in appreciating that the CBDT Circular No.29/2019 dt.02/10/2019 was clarificatory in nature and mentioned that MAT credit will not be allowed to assessee's opting sec.115BAA and the Circular never mentioned that brought forward "capital losses" will be allowed. (iv) Any other ground that may be urged at the time of appeal hearing. 3. The brief facts of the case are that, M/s. Lahari Holiday Homes Pvt. Ltd. ("the assessee") filed its original return of income for A.Y. 2021-22 under the normal provisions of the Income Tax Act, 1961 ("the Act") claiming MAT credit. Thereafter, the assessee filed a revised return on 15.02.2022, opting for the concessional tax regime under section 115BAA of the Act. The Learned Assessing Officer ("Ld. AO") rejected the revised claim on the ground that once the assessee filed the original return under MAT, subsequent exercise of section 115BAA option through a revised return amounts to "withdrawal" prohibited by CBDT Circular No. 29/2019. The Ld. AO further disallowed the set-off of brought-forward business losses ....
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.... 7. Per contra, as regards to the first issue regarding concessional tax regime under section 115BAA of the Act, the Learned Authorised Representative ("Ld. AR") submitted that the assessee had exercised the option under section 115BAA of the Act for the first time in its revised return filed within the statutory due date. In this regard, the assessee relied on CBDT's own clarification in FAQ on ITR-6 (uploaded on the Income-tax Department's official portal), wherein it is categorically stated that a company may file a revised return opting for section 115BAA of the Act, even if the original return was filed otherwise. He further contended that under settled law, a revised return under section 139(5) of the Act substitutes the original return and is deemed as filed under section 139(1) of the Act. Thus, the Ld. AO's interpretation of "withdrawal" is misconceived, since there was no earlier exercise of section 115BAA of the Act that could be withdrawn. 8. As regards the second issue related to set off of carried-forward losses and unabsorbed depreciation, the Ld. AR pointed out that the assessee had not claimed any deduction under section 32(1)(iia), 32AD, 35, 35CCC....
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....ts official website having pathway www.incometax.gov.in/iec/foportal/sites/default/files/2023-10/Webinar%20PPT.pdf a PDF having FAQs in respect of filing of ITR-6. In this respect, the income tax department, while addressing various aspects of filing ITR-6 (the return form for companies), has clarified in response to Question No. 3 that an appellant is eligible to claim the benefit under Section 115BAA through a revised return. The relevant extract of the question and response is reproduced below: .... "Question No. 3: Can taxpayer file the revised return with New tax regime if the original return is already filed without opting for New Tax Regime ? Response: Yes. If taxpayer has filed the form 10IB / 10IC / 10ID within due date then the revised return can be filed by opting the new tax regime in the return" ... 6.2.6 At the outset, it is important to state that under the Income-tax Act, it is a well- established principle that a return filed under Section 139(5), being a voluntary revision of the original return, assumes the character of a return filed under Section 139(1). A revised return effectively substitutes the original return and is deemed to be ....
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....d, the other provisions remain applicable. Consequently, grounds of appeal numbered 2 and 3 are hereby allowed. 10. On perusal of above, we find that the Ld. CIT(A) has extracted FAQ no.3 of CBDT's own clarification at para no.6.2.5 of its order which permits exercise of the 115BAA option in a revised return. Therefore, the interpretation of the Ld. AO that such filing constitutes a withdrawal of earlier option is legally untenable. Further, we also hold that once the concessional tax regime is allowed to the assessee for A.Y. 2021-22, the assessee would not be eligible to claim any MAT credit in the A.Y. 2021-22. Accordingly, we uphold the findings of the Ld. CIT(A) on this issue subject to verification of claim of MAT credit Accordingly, we direct the Ld. AO to verify the MAT credit, which the assessee is not eligible for A.Y. 2021-22. 11. On the second issue, we have gone through the para nos. 6.3 to 6.3.9 of the order of Ld. CIT(A), which is to the following effect : 6.3 In ground no. 4, appellant objects to the action of the AO in disallowing the brought forward losses based on misinterpretation of the contents of Cir No.29/2019. 6.3.1 Disallow....
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.... depreciation deemed so under section 72A, if such loss or depreciation is attributable to any of the deductions referred to in clause (i); and (iv) by claiming the depreciation, if any, under any provision of section 32, except clause (iia) of sub-section (1) of the said section, determined in such manner as may be prescribed. (3) The loss and depreciation referred to in clause (ii) and clause (iii) of sub-section (2) shall be deemed to have been given full effect to and no further deduction for such loss or depreciation shall be allowed for any subsequent year:" 6.3.3 A plain reading of the section 115BAA and circulars no. 29/2019 dated 02.10.2019 reveals that the provisions regarding the non-allowability of set-off of carried forward losses, brought forward losses, depreciation, and deductions are limited to those attributable to the specific losses, depreciations and deductions mentioned in Section 115BAA(2) of the Income Tax Act, 1961 and additional depreciation. 6.3.4 Upon a careful perusal of the appellant's Income Tax Returns (ITR) for the year under consideration and the preceding year, namely A.Y. 2020-21, it is evident that the app....
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....main available to the appellant. 6.3.9 Therefore, it is my considered opinion that there is merit in the appellant's contention and the same has correctly computed its income under the provisions of section 115BAA of Income Tax Act, 1961. Therefore, ground no. 4 is hereby allowed. 12. On perusal of above, we find that the Ld. CIT(A) has extracted the provisions contained in section 115BAA of the Act. Further, on perusal of section 115BAA(2) of the Act, we find that section 115BAA(2) of the Act specifically prohibits set-off of losses attributable to certain deductions such as section 10AA, 32(1)(iia), 32AD, 35, 35CCC, 35CCD, and unabsorbed depreciation relatable thereto. We also find that the Ld. CIT(A) after verifying the revised return and supporting schedules has categorically given a factual finding that, the assessee's brought-forward business loss and capital loss are not of such nature, which has been prohibited under section 115BAA(2) of the Act. Hence, we hold that the assessee is entitled to set-off of these losses. Accordingly, we uphold the findings of the Ld. CIT(A) on this issue. 13. In the result, the appeal filed by the Revenue is dismissed, i....
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....n relating to immediately preceding year on asset put to use for less than 180 days 0 0 0 15 Total depreciation (10+11+12+13+14) 1,19,72,516 1,23,998 16 Depreciation disallowed under section 38(2) of the I.T. Act (out of column 15) 0 0 17 Net aggregate depreciation (15-16) 1,19,72,516 1,23,996 18 Proportionate aggregate depreciation allowable in the event of succession, amalgamation, demerger etc. (out of column 17) 0 O 19 Expenditure incurred in connection with transfer of asset/ assets 0 0 20 Capital gains/ loss under section 50(5 + 8 -3 -4-7 -19) (enter negative only if block ceases to exist) 0 21 Written down value on the last day of previous year" (5+ 9-15) (enter D, if result is negative) 6,78,61,205 D 1,85,993 0 DEPARTMEN AX Image-5 (from page no. 60 of 95 of revise ITR, details related Unabsorbed depreciations) Schedule UD Unabsorbed depreciation and allowance under section 35(4) SINo Assessment Year Depreciation Allowance under section 35(4) Amount of brought forward unabsorbed depreciation Amount as adjusted on account of opting for taxation section Amount of depreciation set- off against the current year income Balance Ca....
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....1c) 1d O 2 Tax payable on total income a Tax at normal rates on 15 of Part B-TI 2a O b Tax at special rates (total of col. (ii) of Schedule-SI) 2b C c Tax Payable on Total Income (2a + 2b) 2e 0 d Surcharge 1 25% of 10(i) of Schedule SI O - On |(2c) - (10(i) of Schedule Si)] 3,29.736 Total (i + ii) 3.20,736 . Health and Education Cess @ 4% on (2c+2dii) 2º 1,45,084 f Gross tax liability (2c+2diii+2e) 2 37.72,184 3 Gross tax payable (higher of 1d and 2f) 3 37.72.184 4 Credit under section 115JAA of tax paid in earlier years (if 2f is more than 1d) (5 of Schedule MATC) 4 0 Tax payable after credit under section 115JAA [ (3 -4)] 37.72,184 e Tax relief a Section 90/90A (2 of Schedule TR) O b Section 01(3 of Schedule TR) 8 O C Total (6a + 6b) 6c 0 7 Net tax liability (5 - 6c) (enter zero if negative) 7 37,72,184 e Interest and fee payable Interest for default in furnishing the return (section 234A) Ba 28.450 b Interest for default in payment of advance tax (section 234B) 8 1,28,025 c Interest for deferment of advance tax (section 234C) 8c 14.225 d Fee for default in furnishing retum of inc....