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Income Tax Appellate Tribunal, DEHRADUN CIRCUIT BENCH, DEHRADUN
Before: SHRI SAKTIJIT DEY, VICE- & SHRI M. BALAGANESH
This is an appeal by the assessee against order dated
21.02.2019 of learned Commissioner of Income-tax (Appeals)-IV,
Kanpur pertaining to the assessment year 2014-15.
The effective ground raised by the assessee reads as under :
“On the facts and in the circumstances of the case and in law the Ld. (CIT(A) has erred in denying the set off of current year business loss of Rs.69,98,584/- against the surrendered business income of Rs.98,00,000/-. The action of authorities is
ITA No. 3076/Del/2019
wrong, illegal, misconceived, unjustified and bad at law therefore, it should be quashed.”
As can be seen from the ground raised, the short controversy in
the appeal is, whether the current year’s business loss can be set off
against the business income surrendered at the time of search and
seizure operation.
Briefly, the facts relating to this issue are, a search and seizure
operation in case of the assessee and other group entities was
carried out on 21.11.2013. In course of search and seizure operation,
certain incriminating document was found indicating advance made in
cash against land amounting to Rs.98,00,000/-. The assessee offered
the amount as additional income by crediting it to the profit & loss
account as advance written off. However, against the said income,
the assessee set off the current year’s business loss. Firstly, the
Assessing Officer held that while crediting the additional income to
the profit and loss account, the assessee has claimed expenses,
which is not allowable. Accordingly, he again made addition of
Rs.98,00,000/-. Having held so, he also disallowed assessee’s claim
of set off of current year’s loss against the business income
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ITA No. 3076/Del/2019
surrendered. The assessee contested the addition before learned
Commissioner (Appeals). After considering the submissions of the
assessee, though, learned Commissioner (Appeals) held that since,
the Assessing Officer has not found anything adverse in respect of
the expenses claimed, he cannot again make addition of the
surrendered income, however, in so far as assessee’s claim of set off
of current year’s business loss against surrendered income, learned
Commissioner (Appeals) held that since, the addition of surrendered
business income has been made under section 69 of the Act, the
provisions of section 115BBE of the Act will automatically come into
play, which debars the assessee from claiming set off of expenses or
loss against surrendered income. Accordingly, he disallowed the
claim of the assessee.
We have considered rival submissions and perused materials
on record. On a careful reading of section 115BBE, it is observed that
prior to 01.04.2017, there was no restriction in section 115BBE in
respect of set off of losses. Only through an amendment made to
sub-section (2) of section 115BBE by the Finance Act, 2016 w.e.f.
01.04.2017, restriction in respect set off of losses was introduced.
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ITA No. 3076/Del/2019
Thus, the restriction imposed applies only on and after the
assessment year 2017-18 and not prior to that. This has further been
clarified by the Central Board of Direct Taxes in circular No. 11/2019
dated 19.06.2019, wherein, it has been clearly and categorically
stated that the amendment to section 115BBE(2) would be applicable
from 01.04.2017 and an assessee is entitled to claim set off of losses
against income determined u/s. 115BBE of the Act till the assessment
year 2016-17. The aforesaid proposition has been accepted in the
following judicial precedents :
(i) Prashanti Surya Construction Co. P. Ltd. vs. DCIT (2017) 88 taxmann.com 804 (Chandigarh Tribunal) (ii) ACIT vs. Sri Balaji Forgings (P) Ltd. (2022) 144 tamann.com 126 (Delhi Tribunal) (iii) Rajendra Kumar Anand vs. ITO (2022) 140 taxmann.com 340 (Delhi Tribunal) (iv) Ace Infracity Developers (P) Ltd. vs. DCIT (2021) 127 taxmann.com 264 (Delhi Tribunal) (v) Bajaj Sons Ltd. vs. DCIT (2021) 128 taxmann.com 406(Chandigarh Tribunal) (vi) PCIT vs. Acharan Enterprises Pvt. Ltd. (2020) 117 taxmann.com 745 (Raj.)
Thus, keeping in view the clear statutory mandate and the ratio
laid down in the decisions cited before us, we are inclined to uphold
assessee’s claim of set off of current year’s business loss against
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ITA No. 3076/Del/2019
surrendered business income. Consequently, ground raised by the
assessee in this appeal is allowed.
In the result, appeal is allowed.
Order pronounced in the open court on 23/06/2023.
Sd/- Sd/- (M. BALAGANESH) (SAKTIJIT DEY) ACCOUNTANT MEMBER VICE-PRESIDENT
Dated: 23.06.2023 *aks/-
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