The Ahmedabad Bench of the Income Tax Appellate Tribunal ( ITAT ) ruled that the Central Processing Centre ( CPC ) erroneously disallowed the carry-forward loss without properly interpreting that companies engaged in international transactions are entitled to an extended due date under the Income Tax Act.
Kiri Industries Ltd., the assessee, filed its income tax return for the Assessment Year (AY) 2016-17 on November 30, 2016, reporting a total loss of Rs. 95,90,04,541. The CPC processed the return under Section 143(1) on August 13, 2017, and disallowed the carry-forward of Rs. 65,39,53,132, citing that the return was filed beyond the due date, which the CPC mistakenly considered as October 17, 2016.
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The assessee appealed before the CIT(A), arguing that it was engaged in international transactions and it was required to furnish Form 3CEB under Section 92E of the Act, which extended the due date for filing the return to November 30, 2016. The assessee argued that the CPC’s adjustment was beyond its jurisdiction, as Section 143(1) only permits adjustments for apparent arithmetical errors or incorrect claims.
The CIT(A) observed that Form 3CEB was duly filed, proving that the assessee was engaged in international transactions and, therefore, entitled to the extended filing deadline of November 30, 2016. The CIT(A) ruled in favor of the assessee.
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Aggrieved, the revenue approached ITAT arguing that CIT(A) did not call for a Remand Report under Rule 46A to verify the anomaly in the date mentioned in Form 3CEB and admitted that there was no material defect in CIT(A)’s order.
The two-member bench, comprising Smt. Annapurna Gupta (Accountant Member) and Shri Siddhartha Nautiyal (Judicial Member) observed that the CPC’s denial of carry-forward losses was unlawful as the return was filed within the due date. The tribunal dismissed the Revenue’s appeal, confirming that the carry-forward loss of Rs. 65,39,53,132 should be allowed. The revenue’s appeal was dismissed.
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