INCOME TAX ACT, 1961

Section 32(2)

Loss - Carry forward and Set off - Disallowance of business loss comprising unabsorbed depreciation - Assessee filed the return belatedly

Assessee was engaged in business of installation, testing and commissioning services. It shown current year's loss which includes unabsorbed deprecation. Assessment under section 143(3) was passed by AO who noted that assessee had filed return belatedly of loss and claimed carry forward of the same under section 72. Assessee submitted that out of total loss, part sum was on account of unabsorbed depreciation and balance was a business loss for the year. AO held that assessee could not claim carry forward and set off loss under section 72 and accordingly disallowed the same. Therefore, he made an addition /disallowance of business loss and assessed the unabsorbed depreciation to be carried forward and allowed the same. CIT(A) held that for late filing of Return assessee was not allowed to carry forward the current year loss to the next year. However, section 80 does not interfere in the computation of current year loss. Thus reversed the order of AO. Held: Assessee filed return which was beyond the due date prescribed under section 139(1). In the return of income the assessee had declared loss consisting of business loss and unabsorbed depreciation. As per the provision of section 139(3) to carry forward business loss under section 72(1), assessee should have filed its return of income in time allowed under section 139(1). However, the above condition does not apply in case of unabsorbed depreciation in view of the provision of section 32(2). AO correctly held that business loss was not allowable to be carried forward and allowed unabsorbed depreciation to be carried forward. CIT(A) clearly referred to the provision of section 80 also and therefore, there was no infirmity in the order of CIT(A) on this issue and accordingly, ground raised by AO was dismissed.

REFERRED :

FAVOUR : In assessee's favour

A.Y. : 2012-13

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