BELLE HOSPITALITY,MUMBAI vs. ITO WARD 41(2)(1) , MUMBAI

This appeal has been preferred by the Assessee against the order dated 28.04.2025, impugned herein, passed by the Ld. Commissioner of Income Tax DDL/JCIT (A) (in short Ld. Commissioner) u/s 250 of the Income Tax Act, 1961 (in short ‘the Act’) for the A.Y. 2012-13.

In this case, the AO vide order dated 15.12.2016 u/s 143(3) of the Act has made the additions of Rs.15,00,000/- and Rs.60,658/- for unexplained cash credit/non-genuine loans u/s 68 of the Act and the interest paid respectively, however, allowed the set off of Rs.10,16,395/- as claimed by the Assessee. Subsequently, the case of the Assessee was reopened u/s 147 of the Act by issuing notice dated 23.01.2015 u/s 148 of the Act, which resulted into passing the reassessment order dated M/s. Belle Hospitality 04.12.2019 u/s 147 of the Act, whereby the setoff of loss from business and profession to the tune of Rs.10,16,395/- as adjusted by the previous AO against the addition of Rs.15,00,000/- u/s 68 of the Act, vide assessment order dated 15.02.2016 u/s 143(3) r.w.s. 147 of the Act, has been revoked and added to the income, without allowing any set of loss/adjustment of the loans, against the additions of Rs.15,00,000/- and Rs.60,658/- referred to above.

Though the assessee challenged the said decision of the AO by filing appeal before the Ld. Commissioner, however, could not get any relief, as the Ld. Commissioner without deciding the grounds/issues inadvertently or overlooking the facts, adjudicated the additions of Rs.15,00,000/- and Rs.60,658/-, whereas it is a fact that the Assessee has not challenged the said additions. In fact, the Assessee challenged the decision of the AO for not adjusting/setting of the losses suffered by the assessee, which were claimed by filing return of income to the tune of Rs.10,16,395/-.

The Ld. Counsel of the Assessee at the outset has demonstrated from the CBDT circular No.11/2019 dated 19.06.2019 that the Assessee is entitled to claim setoff of losses against income determined u/s 115BBE of the Act till the A.Y. 2016-17, as the intent behind the amendment vide Finance Act, 2016 was to remove any ambiguity in the interpretation and therefore the term “or set of loss” was specifically inserted vide Finance Act, 2016 from 01.04.2017. According to Circular, the deduction in respect of expenditure or losses shall also liable be allowed to the assessee under the provisions of the Act u/s 115BBE.

As the instant case pertains to A.Y. 2012-13, therefore the Assessee is entitled to get the benefit, even on determining its income under the provisions of section 115BBE of the Act, as M/s. Belle Hospitality clarified vide Finance Act, 2016. Thus, the Assessee shall be entitled to get the setting off of losses from the additions made u/s 68 of the Act, as has rightly been allowed by the AO in the first round of assessment proceedings, vide order dated 15.02.2016 u/s 143(3) of the Act and therefore the reassessment order dated 04.12.2019 which was subjected to first appeal proceeding before the Ld. Commissioner and resulted in passing the impugned order, whereby the set of loss from the addition made u/s 68 has been revoked, is liable to be quashed. Thus, the re-assessment order itself is quashed.

As this court has quashed the assessment order and thus is inclined not to delve into other aspects of the case, as adjudication of the same would be futile exercise.

In the result, Assessee’s appeal is allowed.