Case Law Details
Ashapura Build Con Vs ITO (ITAT Ahmedabad)
In a recent case, Ashapura Build Con appealed against the orders passed by the Ld. Commissioner of Income Tax (Appeals) at the National Faceless Appeal Centre, Delhi, for the assessment years 2017-18 and 2018-19. The appeals were related to the setting off of business losses against property income and income from other sources.
The appellant, a partnership firm, filed returns with a business loss and income from house property. However, the intimation under Section 143(1) of the Income Tax Act did not consider the business loss while calculating the income. The appellant applied for rectification, but the orders passed under Section 154 did not address the issue. The CIT(A) also dismissed the appeals.
The ITAT Ahmedabad partly allowed both appeals, directing the Assessing Officer to consider the business loss and rectify the intimation orders. The setting off of business loss against property income and income from other sources was upheld by the ITAT.
FULL TEXT OF THE ORDER OF ITAT AHMEDABAD
Both the appeals filed by the same assessee are against the order passed by the Ld. Commissioner of Income Tax (Appeals), (in short “Ld. CIT(A)”), National Faceless Appeal Centre (in short “NFAC”), Delhi on 14.02.2023 for A.Ys. 2017-18 & 2018-19.
2. The grounds of appeal raised by the assessee in ITA No. 239/Ahd/2023 for A.Y. 2017-18 are as under:
“1. That on facts, and in law, the learned NFAC has grievously erred in holding that there was no mistake apparent on record u/s 154 of the Act in the intimation of CPC u/s 143(1) of the Act.
2. That on facts, and in law, the learned NFAC has grievously erred in confirming the assessed income u/s 143(1) at Rs.2,20,562/- instead of NIL income returned by the appellant.
3. That on facts, and in law, it be directed to rectify the mistake apparent on record, and assess the correct income at Rs. NIL and also allow the carry forward of unabsorbed depreciation of Rs.8,438/- as filed in the return of income.
4. The appellant craves liberty to add, alter, amend any ground of appeal.”
3. The assessee is a partnership firm and assessee’s books of accounts were audited under Section 44AD and return of income was filed on 07.11.2017. As per Profit & Loss Account salary and interest to partners were paid as salary to partners at Rs. 74,963/- and interest to partners at Rs. 3,62,984/-. In addition to business income, the assessee firm derived income from house property. During the year rent was received at Rs. 2,29,000/-. In the return of income the assessee filed property income which worked out at Rs. 1,39,401/- after taking house tax paid and deduction under Section 24A of the Act. The business loss after deducting interest paid to partners and salary to partners was computed at (-) Rs. 1,90,707/- as per the return of income. As provided in Section 71 of the Income Tax Act, set off of loss from one head against income from another was computed at NIL and accordingly return of income was filed at NIL income. The intimation under Section 143(1) of the Act as per order dated 04.02.2019 was received wherein the business loss was not set off against the income from house property and other sources which result that the demand of Rs. 90,660/-. The assessee applied under Section 154 to CPC, Bangalore who passed revised order on 12.07.2019 on the same income without setting off business loss against property income and income from other sources.
4. Being aggrieved by the order under Section 154 dated 12.07.2019 the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.
5. The Ld. A.R. submitted that there was a clear mistake in the intimation under Section 143(1) of the Act and the order passed thereunder wherein the income from business or profession has been taken as Rs. 29,855/- which is a house tax paid by the assessee in actual computation of total income filed by the assessee (audited under Section 44A). Thus, the assessee was not given the benefit of setting off business loss against property income and income from other sources hence there was a loss (-)1,90,707/- for her. Thus, the Ld. A.R. submitted that the matter may be remanded back to the Assessing Officer for rectifying the same.
6. The Ld. D.R. relied upon the intimation under Section 143(1) and order of the CIT(A).
7. Heard both the parties and perused all the relevant material available on record. It is pertinent to note that the Assessing Officer while passing order in respect of intimation order under Section 143(1) has missed out that the house tax paid was at Rs. 29,540/- and not income from business or profession as given in Sr. No. 2 in the said intimation. The assessee’s return of income has clearly set out that the total business loss was into minus at (-) Rs. 1,90,707/-. These aspects were not taken into account at the time of rectification as well as the CIT(A) has also overlook these aspects. Therefore, the Assessing Officer is directed to take into account the above said observations and accordingly after verifying the same decide as per the law. Needless to say, the assessee be given opportunity of hearing by following principle of natural justice. Thus, ITA No. 239/Ahd/2023 is partly allowed for statistical purpose.
ITA No. 240/Ahd/2023(A.Y. 2018-19):-
8. The grounds of appeal raised by the assessee are as under:
“1. That on facts, and in law, the learned NFAC has grievously erred in holding that there was no mistake apparent on record u/s 154 of the Act in the intimation of CPC u/s 143(1) of the Act.
2. That on the facts, and in law, the learned NFAC has grievously erred in confirming the assessed income u/s 143(1) at Rs. 1,99,950/- instead of loss of Rs. ()58,943/- returned by the appellant.
3. That on facts, and in law, it be directed to rectify the mistake apparent on record, and assess the correct income at loss of Rs. (-)58,943/- and also allow the business loss to be carried forward to the next year, as filed in the return of income.
4. The appellant craves liberty to add, alter, amend any ground of appeal.”
9. In respect of ITA No. 240/Ahd/2023 the facts are identical and therefore, here also the Assessing Officer is directed as per the observation made in hereinabove paragraph. Needless to say, the assessee be given opportunity of hearing by following principle of natural justice. Thus, ITA No. 240/Ahd/2023 is partly allowed for statistical purpose.
10. In result, both the appeals are partly allowed for statistical purpose.
This Order pronounced in Open Court on 07/07/2023
