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ITAT upheld CIT(A)’s order allowing brought forward losses
ITAT upheld CIT(A)’s order allowing brought forward losses
Deepsons Southend, a partnership firm, claimed set off of business loss against income from house property, by adjusting brought forward unabsorbed depreciation. It declared nil income. The firm was reconstituted as a going concern. AO held profit sharing ratio was different, and disallowed brought forward loss. CIT(A) allowed assessee’s appeal as only ratio of profit sharing had changed, and it was still the old firm. ITAT upheld CIT(A)’s order.-500667
1. Deepsons Southend, a partnership firm, traded in readymade garments and accessories.
2. It filed return of income declaring nil income which was processed u/s. 143(1) (of Income Tax Act, 1961).
3. The case was selected for scrutiny u/s 143(2) (of Income Tax Act, 1961) and notice was issued on.
4. Subsequently, notice u/s. 142(1) (of Income Tax Act, 1961) was also issued time to time.
5. AO made various additions and completed the assessment order.
6. CIT(A) allowed the appeal of the assessee
The ITAT held as under:
7. CIT(A) observed that the additional evidences filed are relevant and vital that would go to root of the matter while deciding the issues to which they relate. He, therefore, admitted the same on record.
8. We do not find any incongruity in this conclusion of the ld. CIT(A).
9. In the instant case, the reconstitution of the firm is not made as a result of retirement of any partner or death of any partner.
10. As a matter of fact, the reconstitution of the partnership was made only as a result of changes in the profit sharing ratio amongst the partners.
11. Therefore, in our considered opinion, the ld. CIT(A) has rightly allowed carry forward losses to be set off, as claimed by the assessee.
12. The assessee has maintained the books of account in mercantile system and he did not make any provision in this regard in his books of account in earlier years.
13. There is no agreement on record to indicate that the assessee may make such payments whenever he thinks fit.
14. We, therefore, find that the ld. CIT(A) has rightly deleting the disallowance made by the AO.
Case Reference - D.C.I.T. vs. Deepsons Southend.
IN THE INCOME TAX APPELLATE TRIBUNAL, DELHI BENCH 'B' NEW DELHI
BEFORE :SHRI H.S. SIDHU, JUDICIAL MEMBER &
SHRI L.P. SAHU, ACCOUNTANT MEMBER
ITA No. 3710/Del./2013
(Asstt. Year : 2009-10)
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