S. 153A Return is deemed to be Return u/s 139(1), Restrictive provisions of S. 80 do not apply: ITAT [Read Order]

The Delhi Bench of Income Tax Appellate Tribunal (ITAT) in ‘Asst.Commissioner of Income Tax v. M/s Splendour’ Land Base Ltd held that return under section 153A shall be deemed to be return under section 139(1) and the return under section 153A once accepted and assessed replaces original return under section 139 and the restrictive provisions of S.80 do not apply.

The Assessee Splendour Landbase Ltd is a company and is engaged in the business of real estate development. Assessee filed its return of income u/s 139 of the Income Tax Act, 1961 for AY 2010-11 on 29.03.2011 claiming carry forward of business loss of Rs.3,31,15,331/- (including unabsorbed depreciation of Rs 40,35,877/-) and showing income from other sources of Rs 12,70,527/-. The said business loss and unabsorbed depreciation was not allowed to be carried forward in AY 2010-11 in the original assessment u/s 143(3) dated 11.3.2013. Income was assessed at Rs 12,70 ,527/- being income from other sources. Subsequently pursuant to search and seizure proceedings and in compliance of notice u/s 153A, return filed originally u/s 139 were filed u/s 153A for AY 2010-11 declaring the same income/loss. In AY 2010-11, assessment was made u/s 153 read with section 143(3),wherein carry forward of business loss of Rs 3,31,15,331/- (including unabsorbed depreciation of Rs 40,35,877/-) was not allowed on the ground that assessment u/s 143(3) already done wherein carry forward of the loss was disallowed as the return for AY 2010-11 was filed belatedly. Accordingly, assessment u/s 153A was done at income of Rs 12,70,527/- same as income in order u/s 143(3).

The CIT (A) in the appeal filed by the assessee observed that non-allowance of carry forward of business loss was restricted to Rs 2,78,08,927/- being business loss (excluding depreciation). Carry forward of depreciation of Rs. 40,35,877 was allowed and partly allowed the appeal of the assessee.

The Department of Revenue filed an appeal before ITAT. The assessee also filed a cross objection against the order of the CIT(A) disallowing the carry forward business loss  of Rs 2,78,08,927.The ITAT considered both of the appeal an cross objection together as the issues were inter related.

Considering the cross objection of the assessee, the ITAT agreed with the contention of the assessee that the business loss suffered by the assessee in AY 2010-11 as claimed in 153A return is duly allowable to be carried forward even if the same was not allowed to be carried forward in original assessment u/s 143(3) for AY 2010-11 on account of delayed filing of original return. The ITAT cited the decisions of Delhi High Court in Principal Commissioner of Income-tax-19 Vs Neeraj Jindal and the decision of Pune bench of ITAT in Sanjay Nandlal Vyas Vs ITO,held that  return u/s 153A is deemed to be return u/s 139(1) and that restrictive provisions of section 80 do not apply to this case. The return u/s 153A which once accepted and assessed, replaces the original return u/s 139. Therefore, the assessee is eligible for carry forward of business loss.