Hindustan Aqua Ltd., New Delhi vs DCIT - (Income Tax Appellate Tribunal) (28 Feb 2024)

Unadjusted business loss of a particular year would be eligible to be carried forward to subsequent assessment years and for set off also

MANU/ID/0273/2024

Direct Taxation

The appeal arises out of the order of the Commissioner of Income Tax (Appeals). The only issue to be decided in this appeal is as to whether the learned CIT(A) was justified in confirming the action of the Assessing Officer in not allowing the set off of brought forward loss of Asst Year 2005-16 in the sum of Rs 12,53,378 in the facts and circumstances of the instant case.

It is evident that the assessee had indeed had assessed business loss of Rs 12,53,378 in Assessment Year 2005-2006. This loss was admittedly not set off with the business income by the assessee in Assessment Years 2008-2009 and 2009-2010. But that does not mean that the assessee would not be eligible for set off of the said business loss with future business income.

As per the provisions of Section 72 of the Income Tax Act, 1961 (IT Act), the unadjusted business loss of a particular year would be eligible to be carried forward to subsequent assessment years and the same would be eligible for set off against the business income of subsequent assessment years. Hence as per Section 72 of the Act, the assessee had indeed set off the brought forward business loss of Rs 12,53,378 pertaining to Asst Year 2005-06 with the business income of Asst Year 2010-11 which is within the 8 years time limit provided in the statute. Hence, the lower authorities grossly erred in not following the provisions of the Act in the correct perspective and had denied the legitimate deduction to the assessee.

The Assessing Officer is directed to allow the set off of brought forward business loss of Rs 12,53,378 pertaining to Asst Year 2005-06 with the business income of the year under consideration. Appeal of the assessee is allowed.

Tags : SET OFF BUSINESS INCOME ELIGIBILITY