Instakart Services Private Limited Vs ACIT (ITAT Bangalore)
ITAT Bangalore held that disallowance of entire business losses by Assessing Officer without pointing out specific defects is not permissible. Accordingly, appeal of assessee allowed and order set aside.
Facts- The assessee, a private company, is engaged in the business of logistics, courier and allied services. For the year under consideration, the assessee declared a loss of Rs. 768,38,95,521/- after setoff of income from other sources for Rs. 10,74,193/- and capital gain of Rs. 4,25,82,091/- only. The case of the assessee was selected for complete scrutiny under CASS to verify the claim of huge loss. The only effective issue raised by the assessee is that CIT(A) erred in confirming the disallowances of the claim representing business loss for Rs. 772,75,51,806/- only.
Conclusion- Co-ordinate Bench of the Tribunal in Flipkart India Pvt. Ltd. v. ACIT for A.Y. 2015-16 reported in 92 taxmann.com 387 has already dealt with a similar issue and held that disallowance of losses declared in audited accounts without pointing out specific defects is not permissible.
Hon’ble Supreme Court in Badridas Daga (34 ITR 10) and Sassoon J. David (118 ITR 261) has settled that losses arising in the ordinary course of business and expenses incurred wholly and exclusively for business purposes are allowable, even if they do not result in immediate profit. The assessee’s loss is real, revenue in nature, incidental to trade, and not barred under any provision.
