INCOME TAX ACT, 1961

Section 154 Section 73 Section 143(3)

Assessment - Rectification of mistake - Setting-off of brought forward losses against speculative business income -

The assessee company was a NBFC engaged in the business of purchase and sale of shares during the year under consideration and had also earned income from rent and Dividend, etc. The business of the assessee-company undisputedly remains the same as that in the earlier two assessment years, i.e., purchase and sale of shares. The losses of earlier years, i.e., assessment years 2008-09 and 2009-10 were claimed by the assessee to be set off against the profit of the year under consideration, for the reason that there was no change in the nature of the business of the assessee company. The set-off of the loss claimed by the assessee was allowed by the AO vide order passed under section 143(3). The lower authorities passed order under section 154 on the ground of set off of brought forward losses. Held: Assessee was a non-banking financial company (NBFC) and may be categorized as an Investment Company. The losses of earlier years, i.e., assessment years 2008-09 and 2009-10 were claimed by the assessee to be set off against the profit of the year under consideration for the reason that there was no change in the nature of the business of the assessee company. The set off of loss claimed by the assessee was allowed by the assessing officer vide order passed under section 143(3), in accordance with the Explanation to section 73, as per which, the business of the assessee company was deemed to be a speculative business. To reiterate, in the earlier two years, the business of the assessee was a speculative business. Ergo, the business of the assessee company in the year under consideration remains the same as that in the earlier two assessment years. There was no mistake apparent from the record in the original assessment order, dt. 16-3-2016 and the brought forward losses had, therefore, correctly been set off against the speculative business income for the year under consideration.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2010-11

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