Whether loss of current year can be set off from the income declared u/s 115BBD is a highly debatable issue which cannot be rectified u/s 154 Interpretation of ‘expenditure’ or ‘allowance’ in section 115BBD to cover current year loss is a highly debatable issue

FACTS
The assessee company filed its return of income for A.Y. 2012-13 declaring a total income of Rs. 26,26,860. The return was processed u/s 143(1) and the total income was determined to be Rs. 31,51,660. In the intimation though the loss of current year adjusted was mentioned at Rs. 22,53,768, the same was not adjusted while computing the total income assessed. The assessee filed an application for rectification u/s 154.

The A.O. was of the opinion that since the assessee has declared income u/s 115BBD and calculated the tax at the special rate of 15%, the same cannot be set off against losses. He accordingly rejected the application made by the assessee u/s 154.

Aggrieved, the assessee preferred an appeal to the CIT(A) who held that the question whether current year loss can be set off from the income declared u/s 115BBD is a highly debatable issue and a debatable issue cannot be rectified u/s 154.

Aggrieved, the assessee preferred an appeal to the Tribunal.

HELD
The Tribunal observed that in the intimation the loss of the current year has been mentioned at Rs. 22,53,768 and that the assessee has returned income in respect of dividend received from a foreign company u/s 115BBD. It noted that as per sub-section (2), no deduction in respect of expenditure or allowance should be allowed to the assessee under any provision of the Act in computing its income by way of dividends referred to in sub-section (1). The interpretation of ‘expenditure’ or ‘allowance’ to cover current year loss is a highly debatable issue. The Tribunal dismissed the appeal filed by the assessee.