Related to set off & carry forward of losses

This query is : Resolved

Nagendra Kumar (Querist)
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01 August 2019 Our company is engaged in Infra business and it was a startup few years back.In the Assessment year 2016-17, we paid Rs.10L for bid registration and claimed as business expenditure in IT , as we didn't have any income during the year it turned out be loss and we carry forwarded to coming years. In AY 2017-18, this registration fee(Rs.10L) was refunded due to unsuccessful bidding, our accountant erroneously considered it as income from other sources. During AY 2017-18 we have some business expenditure of Rs. 15L and no corresponding income so it turned out to be Business loss and we have set off this business loss against income from other sources and carry forwarded remaining loss of Rs.5L to coming years.
So total Business Loss Carry forwarded
AY 2016-17-Rs.10L
AY 2017-18 Rs. 5L

now Dept.. has picked AY 17-18 file for scrutiny.
They have Considered Business loss of Rs.2L after disallowing expenditure of Rs.13L
They have set off Rs.2L against Rs.10L(Income from Other sources)
and they demanding tax on remaining Rs.8 L as they cant set off carry forward business loss of Rs.10L of AY 16-17.
now we have filed rectification on ground that we have mistakenly shown it as IFOS but it was business income as it was a refund of previous year business expenditure.
This AO reluctant to rectify.

Any views on this
Thanks in Advance

CA. Brijesh Baranwal

CA. Brijesh Baranwal (Expert)
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05 August 2019 You may go for Appeal to CIT.

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