The Income Tax Appellate Tribunal (ITAT), Ahmedabad bench has held that brought forward losses can be adjusted against the income declared belatedly income tax return under section 139(3) of the Income Tax Act, 1961.
Assessee, M/s Oasis Textiles Ltd has filed its return belatedly and claimed to deduct the loss brought forward to the total income. The Assessing Officer disallowed the claim and held that set-off of brought forward business loss or unabsorbed depreciation/investment allowance cannot be allowed since the return was filed belatedly.
However, the CIT(A) allowed the claim of the assessee.
Ms Suchitra Kamble, Judicial Member and Shri Waseem Ahmed, Accountant Member observed that the assessee disclosed the income declared in the settlement commission but has given the set off of the brought forward losses/unabsorbed depreciation against such income which eventually make the taxable income at Rs. Nil.
“Once income has been determined under normal computation of income then it implies that all the other provision including the provision of setting off loss/unabsorbed depreciation will equally be applicable as per the law. In other words, the assessee is entitled set off the brought forward losses/ unabsorbed depreciation against the income subject to the provisions of law,” the ITAT held.
Concluding the order, the ITAT held that “It is also important to note that the assessee has filed the return of income belatedly for the year under consideration but there is no prohibition to adjust the brought forward losses against the income declared belatedly in the return of income under the provision of section 139(3) of the Act. At the time of hearing, the ld. DR has not brought anything on record contrary to the findings of the ld. CIT-A. In view of above, we do not find any infirmity in the order of the Ld.CIT(A). Hence, the ground of appeal of the Revenue is hereby dismissed.”
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