The Income Tax Appellate Tribunal (ITAT) Ahmedabad Bench Dismissed the rectification order passed under Section 154 of Income Tax Act, 1961 without setting off business loss against property Income and Income from other sources.
The assessee Ashapura BuildCon is a partnership firm and assessee’s books of accounts were audited under Section 44AD of Income Tax Act and the return of income was filed.
In the return of income the assessee filed property income which worked out at Rs. 1,39,401/- after taking house tax paid and deduction under Section 24A of the Income Tax Act.
The business loss after deducting interest paid to partners and salary to partners was computed at (-) Rs. 1,90,707/- as per the return of income and then As provided in Section 71 of the Income Tax Act, set off of loss from one head against income from another was computed at NIL and accordingly return of income was filed at NIL income.
Thereafter, the assessee received an intimation under Section 143(1) of the Income Tax Act that business loss was not set off against the income from house property and other sources which result in the demand of Rs. 90,660/.
Therefore, the assessee filed a rectification application under Section 154 of Income Tax Act before the CPC. However, passed the revised order on the same income without setting off business loss against property income and income from other sources.
Aggrieved by the order, the assessee filed an appeal before the Commissioner of Income Tax (Appeal) {CIT(A)}, who dismissed the appeal of assessee .Thus the assessee filed a second appeal before the tribunal.
M. K. Patel, counsel for the assessee submitted that there was a clear mistake in the intimation under Section 143(1) of the Income Tax Act and the order passed thereunder wherein the income from business or profession has been taken as Rs. 29,855/- which is a house tax paid by the assessee in actual computation of total income filed by the assessee.
Further, the assessee was not given the benefit of setting off business loss against property income and income from other sources hence there was a loss (-)1,90,707/- for her.
Ramesh Kumar Departmental representatives supported the decision of lower authorities.
The tribunal after reviewing the facts and submissions of the both parties, a Single member bench of Suchitra Kamble (Judicial Member) observed that the assessee’s return of income has clearly set out that the total business loss was into minus at (-) Rs. 1,90,707/-.
These aspects were not taken into account at the time of rectification as the CIT(A) has also overlooked these aspects.
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