This Should Be Paid As Per Demand Notice Enclosed.the Following Losses Are Allowed To Be Carried Forward:s.i.no.a.ybusiness Lossdepreciatiset-Offbalanceon On Lo v. The Assessee Challenging The Legality Of The Impugnedorder Passed By The Income Tax Appellate Tribunal Has Filed Thisappeal And In The Memorandum Of Grounds Of

IN THE HIGH COURT OF JUDICATURE AT MADRAS DATED 13.03.2020 CORAM THE HONOURABLE MR. JUSTICE M. SATHYANARAYANAN AND THE HONOURABLE MR. JUSTICE ABDUL QUDDHOSE TCA.No.560 of 2018 Shree Karthik Papers LtdNo.25 Nagar,Ramanatha, 50 Feet Road,Krishnaswamypuram,Coimbatore-641 045.PAN: .. AppellantVersus The Deputy Commissioner of Income Tax,Central Circle-I,63-A, Race Course Road,Coimbatore. .. Respondent PRAYER:-Tax Case Appeal filed under Section 260-A of the IncomeTax Act, 1961, against the order of the Income Tax AppellateTribunal,''C''Bench,dated28.07.2017inI.T.A.No.325/Mds/2017. Against the order dated 25/11/2014 madein A.No.444/13-14 on the file of the Commissioner of Income Tax(Appeals)-1 Coimbatore for the assessment year 2006-2007. Againsttheorderdated29/01/2014madeinPA.No./G.I.R.No.AADCS1863K on the file of the AssistantCommissioner of Income tax Company circle -1(1) Coimbatore forthe assessment year 2006-2007. For Appellant:Mr.R.Vijayaraghavan for Mr.Subbaraya Aiyar, Padmanabhan & RamamaniFor Respondent :Mr.T.R.Senthil Kumar Standing counsel for Direct Taxes 1/6 JUDGMENT [Judgment of the Court was made by M.SATHYANARAYANAN,J.,] An Assessee is the appellant. The present appeal is filedunder Section 260-A of the Income Tax Act, 1961, challenging theimpugned order dated 28.07.2017, passed by the Income TaxAppellate Tribunal 'C' Bench (in short hereinafter referred toas 'ITAT'). 2. The appellant / assessee filed the return of income forthe assessment year 2006-2007 electronically dated 30.11.2006,declaring 'Nil' income after adjusting brought forward businessloss of earlier years amounting to Rs.63,45,202/- and it wasprocessed under Section 143 (1) of the Income Tax Act andsubsequently, the assessee filed a revised return of income on31.12.2009, admitting the 'Nil' income. A notice under Section148 dated 27.01.2010 was issued to regularise the return ofincome and accordingly the assessee has filed the revised returnof income on 28.01.2010. The Assessing Officer, vide order dated17.05.2010 has assessed the total income as 'Nil'. Subsequentlythe Assistant Commissioner of Income Tax, Company Circle-I(1),Coimbatore has passed an order under Section 154 of the IncomeTax Act dated 05-19/12/2013, revising the order of assessmentdated 17.05.2010 and assessed the total income as 'Nil'. 2/6 https://hcservices.ecourts.gov.in/hcservices/ Add:Interest u/s.234-B ...Rs.27,57,968/- Interest u/s.234-C ...Rs. 1,48,167/-...Rs.29,06,135/-Balance PayableRs.58,40,144/- This should be paid as per Demand Notice enclosed.The following losses are allowed to be carried forward:S.I.No.A.YBusiness LossDepreciatiSet-offBalanceon on Lossduring theA.Y.(2006-07) BusinessDepreciatiLosson1.1998-9914,266,045 63,45,20279,20,8432.1999-0011,075,67811,075,6783.2000-01202,777,3258,569,470202,777,328,569,470542001-0216,427,3376,683,12116,427,337 6,683,12152002-034,477,9485,233,5134,477,9485,233,51362003-0424,840,4764,202,94724,840,476 4,202,947 2/6 https://hcservices.ecourts.gov.in/hcservices/ Add:Interest u/s.234-B ...Rs.27,57,968/- Interest u/s.234-C ...Rs. 1,48,167/-...Rs.29,06,135/-Balance PayableRs.58,40,144/- This should be paid as per Demand Notice enclosed.The following losses are allowed to be carried forward:S.I.No.A.YBusiness LossDepreciatiSet-offBalanceon on Lossduring theA.Y.(2006-07) BusinessDepreciatiLosson1.1998-9914,266,045 63,45,20279,20,8432.1999-0011,075,67811,075,6783.2000-01202,777,3258,569,470202,777,328,569,470542001-0216,427,3376,683,12116,427,337 6,683,12152002-034,477,9485,233,5134,477,9485,233,51362003-0424,840,4764,202,94724,840,476 4,202,947 4. The assessee, aggrieved by the said order, filed anappeal before the Commissioner of Income Tax (Appeals)-I[hereinafter referred as 'CIT (appeals']. The CIT Appeals, videorder dated 25.11.2014, in Appeal No.444/13-14, after takingnote of the various decisions including the decisions renderedby a Division Bench of this Court in Commissioner of Income TaxVs. Chensing Ventures (291 ITR 258) as well as a decision of theGujarat High Court in the Commissioner of Income Tax Vs. ShilpaDieing and Printing Mills (P.) Ltd (219 Taxman 279), haddirected the Assessing Officer to allow set-off of carry forwarddepreciation loss in accordance with Sections 72 and 32 of theIncome Tax Act, 1961. The Revenue aggrieved by the said orderfiled an appeal before the Income Tax Appellate Tribunal, 'C'Bench at Chennai, who vide impugned order dated 28.07.2017 heldthat there is no warrants in law for set off of unabsorbeddepreciation or business loss against sums chargeable to tax asincome under Section 68 in as much as the same do not fall to becategorized under any head of the Income Tax under Section 14and having taken note of the course open to the Revenue where itconsiders the sum have been wrongly assessed by the AssessingOfficer, only recourse is revision or rectification, had foundthat the assessment is liable for revision or rectification andaccordingly allowed the appeal. 5. The assessee challenging the legality of the impugnedorder passed by the Income Tax Appellate Tribunal has filed thisappeal and in the memorandum of grounds of appeal had raised the 3/6 following Substantial Questions of Law:1.Whether the Tribunal was right in law inholding that the unabsorbed depreciation cannot beset off against sum chargeable to tax as incomeu/s.68 of the Act?2. Whether the Tribunal was right in law inapplying the new provision of section 115 BBE of theAct which barred set off of losses against incomedetermined u/s.68 which was effective from 01.04.2017and not in existence in the statute for the currentassessment year 2006-07? 6. Mr.R.Vijayaraghavan, learned counsel appearing for theappellant / assessee has invited the attention of this Court tothe Circular No.11/2018 dated 19.06.2019 issued by the CentralBoard of Direct Taxes, New Delhi as well as the decisionrendered by a Division Bench of this Court, vide judgment dated24.06.2019 in T.C.A.No.722 of 2018 (the Commissioner of IncomeTax, Chennai. Vs. Shri.Hussain Mohideen Ibrahim Sha,Kodambakkam, Chennai 600 024) and would submit that in the lightof the said circular, the Division Bench in the above citeddecision had remanded the matter to the Income Tax AppellateTribunal, as it requires reconsideration and in the light of thejudgment reported in 2007 (291) ITR 0258 (Madras) cited supra,as well as the above cited circular, prays for similar relief. 7. Per contra, the learned Standing Counsel appearing forthe respondent/Revenue has invited the attention of this Courtto the contents of the impugned order and would submit thatsince the Tribunal being the final Court, had thoroughly goneinto the factual aspects and legal issues and rightly reachedthe conclusion by remanding the matter for rectification andrevision and there is no Substantial Question of Law arises forconsideration in this appeal and prays for dismissal of thisAppeal. 8. This Court has carefully considered the rival submissionsand also perused the materials placed before it. 9. It is relevant to extract Paragraph no.4 of the decisionreported in 2007 (291) ITR 258 (cited supra):4.Heard the counsel. The AO has not given anyreason whatsoever to deny the set off of the businessloss against the income declared under the head ''other sources ''. Sec.71 deals with set off of lossagainst income under any other head. After setting offlosses against the income under the same head, if thenet result is still a loss, the assessee can set off 4/6 the said loss under Section 71 of the Act againstincome of the same year under any other head, exceptfor losses which arise under the head ''capitalgains''. The income tax is only one tax and levied onthe sum total on the income classified and chargeableunder the various heads. Sec.14 has classifieddifferent heads of income and income under each headis separately computed. Income which is computed inaccordance with law is one income and it is not acollection of distinct tax levied separately on eachhead of income and it is not an aggregate of varioustaxes computed with reference to each of the differentsources separately. There is only one assessment andthe same is made after the total income has beenascertained. The assessee is subject to income-tax onhis total income though his income under each head maybe well below the taxable limit. Hence the losssustained in any year under any head of income willhave to be set off against income under any otherhead. In this case, the AO made addition ofRs.28,50,000/- as undisclosed income under Section 69of the Act. Once the loss is determined, the sameshould be set off against the income determined underany other head of income. In the assessment, noreasons were given by the AO to deny the benefit ofS.71 of the Act. The benefit provided under Section 71of the Act cannot be denied and the learned standingcounsel appearing for the Revenue is also unable toexplain or give reasons why the assessee is notentitled to the benefit of Section 71 of the Act. Thereasons given by the Tribunal are based on validmaterials and evidence and the same are in accordancewith the provisions of Section 71 of the Act. We findno error or legal infirmity in the impugned order. 10. The Central Board of Direct Taxes, New Delhi in theabove cited circular bearing no.11/2019 dated 19.06.2019 hadtaken note of the legislative intent behind amendment in Section115BBE(2), for the purpose of removing any ambiguity ofinterpretation, observed that vide Finance Act 2016 with effectfrom 01.04.2017, an assessee is entitled to claim set-off ofloss against income determined under Section 115BBE of the Acttill the assessment year 2016-2017. In the case on hand, theassessment year pertains to 2006-2007 and therefore, this Courtis of the considered view that in the light of the above citedjudgment in 2007 (291) ITR 258 as well as the circular, thematter in issue requires further adjudication at the hands ofthe Income Tax Appellate Tribunal. 5/6 11. In the result, the Substantial Question of Law No.2raised by the appellant is held in affirmative, as it requiresfurther adjudication. As a consequence, there is no necessity toanswer Substantial Question of Law No.1. 5/6 11. In the result, the Substantial Question of Law No.2raised by the appellant is held in affirmative, as it requiresfurther adjudication. As a consequence, there is no necessity toanswer Substantial Question of Law No.1. 12. In the result, the Tax Case Appeal is partly allowed andthe impugned order passed by the Income Tax Appellate Tribunal,''C'' Bench, dated 28.07.2017 in I.T.A.No.325/Mds/2017 is setaside and the appeal is remanded to the Income Tax AppellateTribunal, ''C'' Bench, for further adjudication andconsideration as to the issues pointed out in the light of thejudgment in 2007 (291) ITR 258 [Madras Division Bench] as wellas Circular No.11/2018 dated 19.06.2019 issued by the CentralBoard of Direct Taxes, New Delhi. No costs. -s/d- Assistant Registrar True CopySub-Assistant Registrar skTo 1.The Income Tax Appellate TribunalC Bench Chennai 2.The Deputy Commissioner of Income Tax,Central Circle-I,63-A, Race Course Road,Coimbatore. 3.The Assistant Commissioner of Income TaxCompany Circle-1(1) Coimbatore +1 cc to M/s.Subbaraya Padmanabhan sr23083+1 cc to M/s.T.R.Senthil kumar advocate sr23077 rsv(co)aa17/07/2020 6/6 https://hcservices.ecourts.gov.in/hcservices/