If the Assessee file return within the time prescribed under sec 139(1) than setting off loss in the revised return under sec 139(5) cannot be allowed

IN THE INCOME TAX APPELLATE TRIBUNAL

MUMBAI ‘G‘ BENCH

MUMBAI BENCHES, MUMBAI

BEFORE SHRI J SUDHAKAR REDDY, AM & SHRI VIJAY PAL RAO, JM

ITA No. 3522/Mum/2011

(Asst Year 2007-08 )

Glazers Exports (I) P Ltd

103 Delux Courtm Roabahadur

V B Road(off) Turner Road)

Bandra (W)

Mumbai

(Appellant)

Vs

 The Income Tax Officer

Ward 1(1)(4), Mumbai

 (Respondent)

PAN No. AABCG1675K

Assessee by: Sh L K Vedehra

Revenue by: Sh N A Satyamoorthy

Date of hearing: 29th Feb 2012

Date of pronouncement: 12th March 2012

ORDER

PER VIJAY PAL RAO, JM

This appeal by the assessee is directed against the order dated 24th Nov 2010 of the CIT (A) for the Assessment Year 2007-08.

2 The assessee has raised the following effective grounds in this appeal:

i) In the facts and circumstances of the case and in law the CIT(A) has erred in upholding and confirming the disallowance of Rs. 1,61,390/- u/s 14A of IT Act r/w rule 8D of the I T Rules.

ii) In the facts and circumstances of the case and in law the ld CIT(A) has erred in upholding the invocation of sec 80 of I T act and disallowing the adjustment of the income of Rs. 3,95,552/- against the assessed losses brought forward u/s 72 from Assessment Year 2000-01.”

3 Ground no.1 is regarding disallowance u/s 14A.

3.1 We have heard the ld AR of the assessee as well as the ld DR and considered the relevant material on record. The Assessing Officer has disallowed  a sum of Rs.1,61,390/- u/s 14A by applying Rule 8D of I T Rules. The CIT(A) has confirmed the disallowance made by the Assessing Officer.

4 Before us, the ld AR has filed the working of allocable expenditure u/s 14A and submitted that the said working is on a reasonable basis; therefore, the same may be accepted.

5 We find that Rule 8D is not applicable for the AY under consideration as held by the Hon’ble jurisdictional High Court in the case of Godrej and Boyce Mfg. Co. Ltd. v. Deputy Commissioner of Income-tax reported in 328 ITR 81; therefore, we remit the issue to the record of the Assessing Officer for deciding the same in light of the decision of the Hon’ble jurisdictional High Court in the case of Godrej (supra). Needless to say that the assessee be given an appropriate opportunity of hearing before passing a fresh order on this issue.

6 Ground no.2 is regarding disallowance of brought forward loss u/s 72 of the I T Act.

6.1 The assessee claimed brought forward loss of Assessment Year 2000-01 against the returned income for the Assessment Year under consideration. The Assessing Officer disallowed the claim of the assessee on the ground that the  assessee has filed return of income belatedly on 28th Sept 2001; therefore, the loss of the said year is not allowable to be set off of against the current year’s income. On appeal, the CIT(A) has confirmed the action of the Assessing Officer on similar reasoning.

7 Before us, the ld AR of the assessee has submitted that the assessee filed the return of income within the limitation period as prescribed u/s 139(1) and thereafter, filed revised returned on 28.9.2001, which is within the period as  prescribed u/s 139(5) of the I T Act. The ld AR has submitted that this point was duly brought to the notice of the CIT(A); however, while deciding the issue, the CIT(A) has completely ignored this fact. He has referred paras 5.2 & 5.3 of the order of the CIT(A) in support of his contention.

7.1 On the other hand, the ld DR has relied upon the orders of the authorities below.

8 We have considered the rival contention and carefully perused the relevant material on record. Undisputedly the Assessing Officer disallowed the claim of brought forward loss on the ground that the assessee filed return belatedly on 28.9.2001. On appeal, the assessee has raised the contention that the assessee has filed return of income well within the time of 20.11.2000 and filed revised return on 28.9.2001. The CIT(A) has reproduced the contention of the assessee in para 5.2 as under:

“The Assessing Officer while referring to his records, has failed to appreciate that 28.9.2001 is the date of filing the revised return u/s 139(5) and not the original return which is filed u/s 139(1) on 28.11.2000. Both are within time as per law.”

8.1 After recording the facts as pleaded by the assessee, the CIT(A) has decided the issue in para 5.3 as under:

“5.3 I have considered the Assessing Officer’s order as well as the appellant’s A/R submission. Considering both, I do not find any merits in the arguments of the appellant. I am in agreement with the Assessing Officer that the appellant’s claim of set off of b/f loss of Assessment Year 2000-01 is not allowable as the return of income for the same was late. Hence in view of the late filing of return of income, I consider it proper and appropriate to hold that the Assessing Officer was justified in his action. Accordingly this ground of appeal is dismissed.”

9 It is clear from the finding of the CIT (A) that while deciding the issue of setting off of brought forward loss, the crucial and vital fact of date of filing the return and revised return has been overlooked. In view of these facts, the order of the CIT (A) is not sustainable. We, accordingly, are of the opinion that if the assessee has filed the return well within the time as prescribed u/s 139(1), then the claim of setting off of brought forward loss made in revised return filed within the time limit as prescribed u/s 139(5) cannot be disallowed. Consequently, we set aside this issue to the record of the Assessing Officer for limited purpose of verifying the date of filing of the return and revised return and then allow the claim of the assessee, if the return of income is filed within the period of limitation.

10 In the result, the appeal filed by the assessee is allowed for statistical purpose.

Order pronounced on this 12th, day of Mar 2012

                                                          Sd/                                 Sd/

                                       (J SUDHAKAR REDDY)   (VIJAY PAL RAO)

                                            Accountant Member           Judicial Member

Place: Mumbai: Dated: 12th, Mar 2012

Raj*

Copy forwarded to:

1 Appellant

2 Respondent

3 CIT

4 CIT (A)

5 DR

/TRUE COPY/

                                                                                                                  BY ORDER

Dy /AR, ITAT, Mumbai