SHREEVAAS INFRASTRUCTURE PRIVATE LTD.,NEW DELHI vs. DCIT, CC, , DEHRADUN

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 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.

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 surrendered business income. Consequently, ground raised by the assessee in this appeal is allowed.

In the result, appeal is allowed.