Proposed Adjustment U/s 143(1)(a)

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A company received a notice for a proposed adjustment under Section 143(1)(a) of the Income Tax Act concerning inconsistencies in the set-off of current year losses. The issue arises from discrepancies between the business loss computation and its set-off against other income sources, often due to software updates in the CPC. While the initial response suggested revising the return or explaining the computation to the CPC, it was later confirmed that the communication was due to technical issues and would be resolved shortly by the department.

swasti

swasti (Querist)
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28 February 2020 A company got communication for proposed adjustment u/s 143(1)(a) that says errors/incorrect claims/inconsistencies in the return u/s 143(1)(a)(i), - "The claim of set off current year loss shown in part -BTI is not consistent with the loss computed in the schedules of the corresponding heads of income or the priority of set off the current year loss is not consistent with the provisions of the Act."

Actually the Business Loss is set off with income from Other Sources as per law. Checked and found correct.

How to respond to this. Kindly suggest.

Eswar Reddy S

Eswar Reddy S (Expert)
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28 February 2020 It's is due software updation in CPC-IT dept. Reason is as follows: If you have business income + House property income Other sources Capital gain in the above scenario- few other sources might have credited in P&L.. So in the tax computation ,you will deduct the incomes considered separately. Due to this adjustment net profit/loss from business will vary from the ITR data entry. Earlier they used to accept it but from past 2 years they start troubling. To avoid this revise the return without going this adjustment. So while filing revised ITR- P&L data entry in ITR -remove other incomes apart from PGBP and dont do adjustment in IT computation and directly show the other incomes in respective heads.. Alternatively write a mail to CPC explaining about the hardship for genuine computation

swasti

swasti (Querist)
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29 February 2020 Thanks a lot for the Guidance Sir. But this would result in incorrect particulars provided in the return. Although we had replied disagreeing to the demand and put our point. We have received the mail from them to ignore the communication which had been due to technical issues. Thanks once again and hope to get guidance in future also.

Eswar Reddy S

Eswar Reddy S (Expert)
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29 February 2020 They will correct it shortly.. Many people sent emsils.Mostly they will resolve the isdue