If loss of earlier year not declared in Original or Revised return the same cannot be set-off

Set off of losses means adjusting the losses against the profit or income of that particular year. Losses that are not set off against income in the same year can be carried forward to the subsequent years for set off against income of those years. A set-off could be an intra-head set-off or an inter-head set-off. a. An intra-head set-off b. An inter-head set-off.

Under Inter head setoff the losses from one source of income can be set off against income from another source under the same head of income. For eg: Loss from Business A can be set off against profit from Business B, where Business A is one source and Business B is another source and the common head of income is “Business”.

Under the intra-head adjustments, the taxpayers can set off remaining losses against income from other heads. Eg. Loss from house property can be set off against salary income.

After making the suitable and allowable intra-head and inter-head adjustments, there could still be balance of unadjusted losses. These unadjusted losses can be carried forward to future years for adjustments against income of these years.

Fact and Issue of the case

The assessee filed her original return of income as on 31/08/2015 declaring an income of Rs. 5,71,960/- along with paying of double taxes of Rs. 43,230/- including self-assessment tax of Rs. 33,230/- as on 31/8/2015. In the original return of income loss against sale of property of Rs.1,12,76,573/- was not claimed by the assessee under the bonafide belief that taxes are paid against income only. The assessee is a Government School Teacher till 2017 and left the job due to her health. The assessee did not claim TDS of Rs.52,500/- deducted against the sale of property but paid additional self assessment tax of Rs. 33,230/-. The assessee has not claimed credit of Rs. 52,500/- as she was under the belief that TDS against loss is not claimable. The Assessing Officer assessed the total income of Rs.5,35,980/- and disallowed short term capital loss of Rs.1,12,76,573/- and did not allow the same to be carried forward for set off.

Being aggrieved by the assessment order, the assessee filed appeal before the CIT(A). The CIT(A) dismissed the appeal of the assessee.

Observation of the Tribunal

The Tribunal has heard both the parties and perused the material available on record. It is pertinent to note that the assessee has filed original return of income as on 31/08/2015 declaring an income of Rs. 5,71,960/- along with paying of double taxes of Rs. 43,230/- including self-assessment tax of Rs. 33,230/- on 31/8/2015. In the original return of income loss against sale of property of Rs.1,12,76,573/- was not claimed by the assessee under the bonafide belief that taxes are paid against income only. The assessee did not claim TDS of Rs.52,500/- deducted against the sale of property but paid additional self assessment tax of Rs. 33,230/-.

The assessee has not given credit of Rs. 52,500/- as the assessee was under the belief that TDS against loss is not claimable. But the fact remains that there was a sale of property which should have been declared by the assessee either in the original return or in the revised return and should have paid taxes accordingly or at the most should have offered to tax to the Revenue. Thus, the assessee has not done the same in the present case. There was property purchase and though the assessee is entitled to claim benefit under Section 54F, but the same is determined when she satisfies all the conditions laid down in the said provisions, the same was not done by the assessee at the revised income stage also. Hence, the Assessing Officer has rightly made addition as well as the CIT(A) rightly confirmed the addition. Hence, appeal of the assessee is dismissed.

Conclusion

The Tribunal ruled against the assessee and dismissed the appeal of the assessee

Read the full order from below

If-loss-of-earlier-year-not-declared-in-Original-or-Revised-return-the-same-cannot-be-set-off

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