January 2015
Loss: Carry forward and set-off – Sections 80, 143(3) and 154 – A. Y. 1997-98 – Return with positive income filed in time – AO computed loss in order u/s. 143(3) – Loss can be carried forward and set off – Rectification u/s. 154 to withdraw carry forward of loss not justified-
By K. B. Bhujle Advocate
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CIT Srinivasa Builders; 369 ITR 69 (Karn):
For the A. Y. 1997-98, the assessee filed return of income on 06/01/1998 declaring income of Rs. 5,29,270/-. The Assessing Officer concluded the assessment u/s. 143(3) of the Income-tax Act, 1961 and assessed the business loss of Rs. 74,84,234/- and also allowed the same to be carried forward. Subsequently, the Assessing Officer issued notice u/s. 154, to rectify the order, withdrawing the benefit of carry forward of business loss stating that the return filed by the assessee was belated. Accordingly, he rectified the assessment order. The Tribunal set aside the order of rectification.
On appeal by the Revenue, the Karnataka High Court upheld the decision of the Tribunal and held as under:
“i) The assessee had not violated any of the conditions u/s. 80 of the Act. The assessee had shown positive income in the return but in the assessment, the business loss was determined by the Assessing Officer. This being the factual position the assessee was entitled to the benefit of carry forward of business loss.
ii) Whether the loss ultimately determined by the Assessing Officer was liable to be carried forward or not was a debatable issue. The order of rectification was not valid.”
