IN THE INCOME TAX APPELLATE TRIBUNAL “H(SMC)” BENCH, MUMBAI SHRI OM PRAKASH KANT, ACCOUNTANT MEMBER SHRI RAHUL CHAUDHARY, JUDICIAL MEMBER ITA No. 4386/MUM/2024 (Assessment Year: 2018-2019)

Garware Synthetics Limited Manish Textile Ind., Opp. Golden Chemicals, Penkar Pada, Post Mira, Thane – 401104, Maharashtra.

[PAN:AAACG4208M] …………. Appellant The Deputy Commissioner of Income Tax Vs Circle 15(1)(2), Mumbai Aaykar Bhavan, Mumbai – 400020, Maharashtra. …………. Respondent Appearance For the Appellant/Assessee : Shri Jay Bhansali For the Respondent/Department : Shri Pravin Salukhe Date Conclusion of hearing : 14.01.2025 Pronouncement of order : 07.04.2025

O R D E R

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Per Rahul Chaudhary, Judicial Member:

1. The present appeal preferred by the Assessee is directed against the order, dated 08/08/2024, passed by the National Faceless Appeal Centre (NFAC), New Delhi [hereinafter referred to as ‘the CIT(A)’] under Section 250 of the Income Tax Act, 1961 [hereinafter referred to as ‘the Act’] whereby the Ld. CIT(A) had dismissed the appeal against the Assessment Order, dated 12/02/2021, passed under Section 143(3) read with Sections 143(3A) and 143(3B) of the Act for the Assessment Year 2018-2019.

2. The Assessee has raised following grounds of appeal :

“1. Disallowance under section 40(a)(ia) of the Act of Rs.

43,68,932/-

1.1. The Commissioner of Income-tax (Appeals) (hereinafter referred to as "the CIT(A)] erred in upholding the action of the Assessing Officer (hereinafter referred to as "the AO"] in disallowing a sum of Rs. 43,68,932/- under section-40(a)(ia) of the of the Income-tax Act, 1961 [hereinafter referred to as "the Act"]for reasons which are wrong, contrary to facts of the case and against the provision of law;

1.2. The CIT(A)/ AO failed to appreciate that the assessee ought to be allowed the said deduction of Rs. 43,68,932/-, earlier disallowed in Assessment Year 2009-10, by virtue of the first proviso to section 40(a)(ia) of the Act as the assessee has made payment of TDS in the previous year relevant to Assessment Year 2018-19;

1.3. The CIT(A)/ AO failed to appreciate that payment to contract workers was allowable expense in the relevant previous year on payment of applicable TDS irrespective, whether such corresponding credit has been claimed by the contractor or not;

2. Set off of brought forward losses and unabsorbed depreciation

2.1. The CIT(A)/ AO erred in not allowing the set off of brought forward losses of previous years without assigning any reason for the same.

3. The above grounds/sub grounds of appeal are without prejudice to each other.”

3. The relevant facts in brief are that the Assessee has filed return of income for the Assessment Year 2018-2019 declaring loss of INR.4,39,074/ which was selected for regular scrutiny. During the assessment proceedings, the Assessing Officer observed that the Assessee had claimed deduction of INR.43,68,932/- under Section 40(a)(ia) of the Act in respect of the expenses incurred in the Assessment Year 2009-2010.

4. The Assessing Officer rejected the above claim of deduction under Section 40(a)(ia) of the Act doubting the genuineness of the expenses. Further, while computing the tax liability, the Assessing Officer failed to adjust the brought forward losses of INR.15,36,210/- and unabsorbed depreciation of INR.1,96,309/-.

5. Being aggrieved, the Assessee carried both the issues in appeal before the CIT(A). Vide order, dated 08/08/2024, the CIT(A)

dismissed the appeal preferred by the Assessee.

6. Now, being aggrieved, the Assessee has preferred the present appeal before the Tribunal on the grounds reproduced in paragraph

2 above.

7. We have considered the rival submissions and perused the material on record.

8. On perusal of the Assessment Order, the reason given by the Assessing Officer for disallowing deduction of INR.43,68,932/- claimed by the Assessee under Section 40(a)(i) of the Act was that the Assessee was getting the benefit of claiming deduction of INR.43,68,932/- on making payment of