Mittal Enterprises vs The Assessing Officer CPC, Income Tax Department, Bengaluru

PER RAMIT KOCHAR, AM:

This appeal in ITA No. 3077/Del/2026 for Assessment Year: 2024-25 has arisen form the learned CIT(A)’s appellate order u/s 250 of the Income-tax Act, 1961(hereinafter called “the Act”) , dated 21.01.2026 in DIN & Order No: ITBA/APL/S / 250/2025-26/1084996066 (1), which in turn has arisen from the intimation/order dated 15.07.2025 passed by ld. AO, CPC, Bengaluru u/s 143(1) of the 1961 Act, for assessment year 2024-25 in DIN CPC/2425/A5/552396976.

The assessee has filed its return of income u/s 139(1) on 23.10.2024. The short question which has arisen in this appeal is with respect to denial of set off of brought forward loss to the tune of Rs. 35,65,883/- for the assessment year 2023-24 by CPC against the income computed to the tune of Rs. 25,03,480/- u/s 143(1) of the 1961 Act. The CPC denied the adjustment, while ld. CIT(A) while adjudicating first appeal observed that columns in the return of income was not properly filled , and hence vide Section 80 of the 1961 Act, the assessee is precluded from claiming set off of brought forward loss of Rs. 35,65,883/- for assessment year 2023-24, against the income for the assessment year 2024-25. The assessee is firm. The assessee had filed its return of income for assessment year 2023-24 on 27.10.2023(vide acknowledgment no. 450918431271023), wherein Rs. 37,21,320/- is claimed to be losses for current year to be carried forward to subsequent years , in Schedule CFL(return of income placed on record). Proceeding further, the assessee has filed copy of return of income filed for assessment year 2024-25 which was filed on 23.10.2024 u/s 139(1)(acknowledgment number 633216681231024) . The extended due date of filing return of income for assessment year 2024-25 was 15.11.2024. Vide Intimation u/s 143(1) dated 15.07.2025 for assessment year 2024-25, CPC computed income of the assessee at Rs. 25,03,480/- as against the loss to the tune of Rs.1,06,77,974/- claimed by the assessee. The assessee has no grievance as to the aforesaid computation of income. The ld. Counsel for the assessee has submitted that the assessee is not agitating disallowance of expenses as well denial of adjustment of brought forward losses for assessment year 2022-23 against income for current year as well further carried forward to subsequent years of the remaining losses for assessment year 2022-23 and the aforesaid has been accepted by the assessee. The grievance of the assessee is now restricted only to adjustment/carried forward of business loss for assessment year 2023-24 to the tune of Rs. 35,65,883/- against the income computed by CPC for the impugned assessment year and carry forward to subsequent years of the remaining losses. I have observed that CPC while processing return of income u/s 143(1) , has in column in Schedule CFL(as computed u/s 143(1)(Page 40) has computed brought forward loss available for set off of Rs. 35,65,883/- , but the same was not set off but carried forward to subsequent years. I have observed that the assessee while filing of return of income has specified in CFL Schedule for assessment year 2024-25 that the assessee is seeking carry forward of business loss for assessment year 2023-24 to the tune of Rs. 35,65,883/- for which return of income was filed on 27.10.2023 for assessment year 2023-24. The assessee has now sought off adjustment of this loss for ay:2023-24 against income for assessment year 2024-25 , because in return of income filed the assessee has claimed losses itself, and hence there was no question of claim of set off in return of income filed for assessment year 2024-25 as the return of income was a return of losses . The CPC computed income of Rs.25,03,480/- instead of losses claimed to be incurred by the assessee for assessment year 2024-25 vide its return of income, so when returned losses are converted into income, then obviously benefit of adjustment of brought forward losses are to be sought by the assessee which should be allowed to the assessee in normal course. Even the assessee filed rectification u/s 154 , which was disposed off by CPC vide order dated 22.08.2025(DIN CPC/2425/U5/560288174)(placed on record by assessee), wherein in Schedule CFL(as computed u/s 154), CPC has computed business loss of Rs. 35,65,883/- as total of earlier years , but the adjustment against the current year is not allowed, but rather it was allowed to be carried forward to future years, which is erroneous. The ld. SR DR has no objection if the matter is restored to the AO. Thus, keeping in view entire factual matrix as is emerging from the records placed before me, I am of the view that the assessee is eligible for adjustment and set off of business loss of assessment year 2023-24 to the tune of Rs. 35,65,883/- against the income computed for the impugned assessment year, and the remaining unadjusted loss after aforesaid set off to be carried forward to subsequent year. I am directing AO to allow set off of the aforesaid loss of Rs. 35,65,883/- against income of current year and the remaining unadjusted loss to be carried forward, subject to verification by the AO. I order accordingly.

In the result, the appeal filed by the assessee is allowed in the manner indicated above.