Tuesday, November 8, 2011

Compilations of case law: IT Act related Topics : LOSS / DEPRECIATION – CARRY FORWARD & SET-OFF


Since income from a certain activity is not taxable, loss incurred in such activity cannot be set off against income from other heads
CIT Vs S.S. Thiagarajan (Mad) 129 ITR 115

Loss return filed after due date disclosing 115 J income – since RI filed late, no carry forward of loss to subsequent year.
ACIT Vs Dynavision Ltd (ITAT, Chennai) 88 ITD 213

Carry forward and set off of unabsorbed depreciation and losses – Specific and clear finding in prior assessment years, is necessary.
Sri Rajarathinam Transports P. Ltd. Vs CIT (Mad) 199 ITR 203
S.K.V. Selvaraj Vs CIT (Mad) 240 ITR 217

No appeal filed in the year in which loss occurred for which return filed late and Assessing Officer did not allow carry forward of loss – Appeal in subsequent year in which profit was earned to get this loss set off – Not maintainable.
CIT Vs Dalmia Cement (Bharat) Ltd. (SC) 216 ITR 79
Poddar Tyres Limited Vs DCIT (ITAT, Mum) 59 ITD 548

Brought forward unabsorbed depreciation of one amalgamating firm cannot be set off against profit of amalgamated firm.
Anand & Co. Vs ACIT (ITAT, Kol) 89 ITD 125

Carry forward of loss – Assessee receiving share of loss from firm – Assessee not filed return – Loss not allowed to carried forward.
K.V.K. Raju (HUF) Vs CIT (AP) 252 ITR 724

A Member of AOP cannot claim in his personal assessment, set off of his share of loss in AOP.
CIT Vs Lalitha M. Bhatt (Bom) 234 ITR 319

Loss of AOP can be set off only against its own profits and not against profits of its members.
CIT Vs Lalita M. Bhat (Bom) 234 ITR 319

Merger of Co-operative Societies and formation of a new co-operative society – carry forward losses of merged co-operative society cannot be set off against profits of new co-operative society.
Rajasthan Rajya Sahakari Spinning & Ginning Mills Fed. Ltd. Vs ITAT & Anr. (Raj) 260 ITR 167

Share of loss from Trust – No need to adjust this against individual income of beneficiaries as done in partner's cases.
M. Manoj Shenoy Vs ITO (ITAT, Bang) 35 TTJ 333

Machinery and Plant sold – No manufacturing activity carried on – Receiving interest income on outstanding dues on sale of plant & machinery – No actual sale of stocks – No continuation of business – Interest income not from business – Brought forward loss cannot be set off against interest income – claim of bad debts cannot be allowed.
Good earth Engines (P) Ltd. Vs ACIT (ITAT, Del) 62 TTJ 740

Loss in jute business – Discontinuance of business – Income from letting out godown used in jute business held assessable as House Property income – Loss in earlier year cannot be set off.
CIT Vs Bengal Jute Mills Co. Ltd (Cal) 165 ITR 631

Carry forward loss and unabsorbed depreciation – set off of – Business should be carried on.
Nakavar Agricultural Co. Ltd. Vs CIT (Ker) 229 ITR 548

Two proprietary business – Separate accounts – Separate premises – separate entities – one business stopped – Loss of that business cannot be set off against income from the other business.
C.L. Mehra Vs ITO (ITAT, Del) 59 ITD 99

Unabsorbed depreciation to be set off before unabsorbed Investment Allowance.
Seshasayee Paper & Boards Ltd. Vs DCIT (Mad) 272 ITR 165

Return of loss filed in response to notice u/s.148 – No carry forward and set off.
Koppino Pvt. Ltd. Vs CIT ( Cal) 207 ITR 228

Cost of prints cannot be included in cost of acquisition of exhibition right in film which can be carried forward – Rule 9B
ITO Vs Honey Enterprises (ITAT, Del) 89 ITD 301

Assessee never admitted the Trust as his benami – ITO rejected set off of loss in the case of Trust against income of assessee – upheld in spite of the fact that income from said Trust was included in the hands of assessee in earlier years.
ITO Vs B.N. Mathur (ITAT, Del) 30 ITD 9

Claim of loss from share transaction – some brokers not identifiable – some brokers could not file details – No details of distinctive number of share scrips purchased / sold, given – Loss not proved
ACIT Vs Rameshchandra R. Patel (ITAT, Ahd-TM) 89 ITD 203

A.Y. 1999-00 - Brought forward depreciation of earlier years cannot be set off against capital gains
Southern Travels Vs ACIT (ITAT, Chennai-SB) 103 ITD 198

Transport business - Not maintaining books - Income computed u/s 44AE - Assessee not entitled to set off unabsorbed depreciation.
DCIT Vs Sunil M. Kankariya (ITAT, Pune) 298 ITR (AT) 205

Provisions of section 71(2) and 72(1) to be read in harmony – Word 'may' used in section 71(2) is only to give flexibility to the assessee which may choose to adjust the losses against other income including capital gains.
Ashok Leyland Ltd. Vs ACIT 2008-TIOL-15-ITAT-MAD

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