The Pune Bench of the Income Tax Appellate Tribunal (ITAT) has held that statutory tax benefits cannot be denied on vague grounds. Such rejections such as in the present case, reflect a “sheer lack of application of mind,” the tribunal said.
Applying this principle, the tribunal allowed a Maharashtra based tech company to carry forward business losses of Rs 1.09 crore and unabsorbed depreciation totalling Rs 1.03 crore.
The tribunal, comprising Judicial Member Astha Chandra and Accountant Member Dr. Dipak P. Ripote, was hearing an appeal in which the assessee had issued non-convertible debentures of Rs. 75 lakh to SIDBI Venture Capital Limited during FY 2004–05, which were subsequently waived. The assessee had treated the waiver as a capital receipt.
In the same appeal, the company also challenged the denial of carry forward of business losses and unabsorbed depreciation. Despite the assessee declaring these losses in the return of income and relevant statutory schedules, the Assessing Officer did not allow the set-off while computing total income. The CIT(A) rejected the ground by merely stating that the assessee had not furnished “credible proof.” The Revenue supported the order of the CIT(A).
Before the tribunal, the company submitted that the losses and unabsorbed depreciation were duly reflected in Schedule CFL and Schedule UD of the return of income. It argued that once these details formed part of the return and had been accepted in earlier years, denial without pointing out any specific deficiency was arbitrary and contrary to law.
The ITAT observed that the Assessing Officer himself had acknowledged the returned loss in the assessment order. It noted that the CIT(A) failed to explain what “credible proof” was lacking, particularly when the statutory schedules of the return clearly disclosed the losses.
Accordingly, the ITAT directed the Assessing Officer to allow the carry forward of business losses and unabsorbed depreciation as claimed by the assessee.
Case Title: Mithi Software Technologies Private Limited v. The Income Tax Officer
Citation: 2026 LLBiz ITAT (PUN) 8
Case Number: ITA No. 2371/PUN/2025
Counsel for Respondent: Advocate Ambarnath Khule