TERROIR INDIA WINERIES PVT LTD,MUMBAI vs. DY. COMMISSIONER OF INCOME TAX, CIRCLE-8(3)(1), MUMBAI

PDF · subscribers
ITA 119/MUM/2026Status: DisposedITAT Mumbai05 May 2026AY 2010-116 pages
AI SummaryPartly Allowed

What did the Tribunal hold?

The Tribunal held that the amendment to Section 115BBE(2) restricting set-off of losses was prospective. Therefore, for the assessment year 2010-11, the assessee was entitled to set off business losses against income assessed under Section 68.

What were the facts?

The assessee challenged the disallowance of set-off of current year business losses against additions made under Section 68. The CIT(A) had not addressed this specific contention, despite the amendment to Section 115BBE(2) being effective from April 1, 2017.

What were the issues?

Whether business losses can be set off against income assessed under Section 68 for AY 2010-11, prior to the amendment of Section 115BBE(2).

Which sections of the Income-tax Act were involved?

Section 68,Section 71(1),Section 115BBE(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, MUMBAI BENCHES, MUMBAI

Before: HON’BLE SANDEEP GOSAIN & HON’BLE GIRISH AGRAWAL

For Respondent: Shri Hemanshu Joshi, SR DR
Pronounced: 05.05.2026

आदेश / ORDER

PER SANDEEP GOSAIN, JUDICIAL MEMBER: This appeal is filed by the Assessee against the order of Ld. National Faceless Appeal Centre (NFAC), Delhi vide DIN: ITBA/NFAC/S/250/2025-26/1082936642(1) dated 24-Nov-2025 for the Assessment Year 2010-11.

2.

The Assessee has raised the following grounds of appeal:

1) On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the validity of notice u/s.148, issued in absence of fresh tangible material and on the basis of borrowed satisfaction and without having reason to believe of escapement of income. 2) The Ld. CIT(A), before confirming the validity of notice u/s.148, failed to consider the settled law that share premium, prior to amendment made w.e.f 01/04/2013, is a Capital receipt and alleged excessive share premium would not lead to escapement of income. 3) On facts and circumstances of the case and in law, Ld. CIT(A) erred in confirming the addition u/s.68 of Share application and share capital/premium received from M/s. Siddhivinayak Constructions Pvt Ltd of Rs.64,40,000/-. 4) The Ld. CIT(A), before confirming the addition u/s.68 of share capital/premium of Rs.64,40,000/-, erred in ignoring the fact that the disputed sum pertain to loan received from M/s. Siddhivinayak Constructions Pvt Ltd. 5) On facts and circumstances of the case and in law, Ld. CIT(A) erred in not allowing the set-off u/s.71(1) of business loss of current year of Rs. (-) 68,90,952/-, against additions made u/s.68 of Rs.64,40,000/-, though the amendment to Sec.115BBE(2) had been made effective from 01/04/2017 and on ignoring the CBDT circular no.11/2019 dated 19/06/2019.

2.

Firstly, we shall take up Ground No. 5, as the same involves a legal issue going to the root of the case. Therefore, we have decided to adjudicate this ground on merits.

3.

This ground raised by the assessee relates to challenging the order of the Ld. CIT(A) in not allowing the set-off of current year business losses under Section 71(1) of the Act amounting to Rs. 68,90,952 against additions made under Section 68 of the Act amounting to Rs. 64,40,000. The assessee contends that the amendment to Section 115BBE(2) of the Act is effective only from 01.04.2017, and that the Ld. CIT(A) has ignored CBDT Circular No. 11/2019 dated 19.06.2019.

4.

We have heard both parties on this ground, perused the material placed on record, judgment cited before us, and also the orders passed by the Revenue Authorities. Now before us, the core contention for consideration is that, as per Ld. AR, the assessee is entitled to claim set-off of losses against income referred to under Section 68 of the Act, since the restriction on such set-off is applicable only with effect from 01.04.2017. In support, reliance has been placed on CBDT Circular No. 11/2019, which clarifies that prior to 01.04.2017, such set-off was allowable.

5.

After considering the submissions of both parties and the facts of the present case, we note that although the Ld. CIT(A) has dealt with various arguments of the assessee in para 6.4 of the order, this specific contention has not been addressed. Upon examining the legal position, we find that CBDT Circular No. 11/2019 clearly states that the legislative intent behind the amendment to Section 115BBE(2) by the Finance Act, 2016 was to remove ambiguity in interpretation. The phrase “no set-off of any loss” was inserted only with effect from 01.04.2017.

6.

Accordingly, it is evident that for the period prior to this amendment, including the assessment year under consideration i.e., AY 2010–11, there was no prohibition on allowing set-off of losses against income assessed under Section 68 of the Act. This view is also supported by the decision of the Hon’ble Kerala High Court in the case of Vijaya Hospitality and Resorts Ltd. v. CIT [2020] 114 taxmann.com 91 (Kerala), wherein it has been held that:

Section 115BBE, read with sections 68, 71 and 263, of the Income-tax Act, 1961 Tax on income referred to in section 68 to section 69D (Set of loss) Assessment year 2013-14- During year, assessee filed its return of income and claimed set off of carried forward loss (unabsorbed portion of depreciation) - Same was allowed - Principal Commissioner invoked revision under section 263 on ground that assessee's income included deemed income being unexplained cash credit under section 68 which is not classified under any heads of income under section 14; therefore, set off of brought forward loss against this deemed income was not correct - Whether amendment brought in section 115BBE (2) by Finance Act, 2016 whereby set off of losses against income referred to in section 68 was denied, would be effective from 1-4-2017 Held, yes Whether, therefore, during relevant assessment year, there was no bar existed with respect to allowing set off of carried forward unabsorbed depreciation on fixed assets against deemed income under section 68-Held, yes [Para 14] [In favour of assessee]

And also in various similar judgments, which are as follows:

 Shree Karthik Papers Ltd vs. DCIT 118 taxmann.com 467 (Mad-HC)  Rajender Kumar Anand vs. ITO 140 taxmann.com 340 (Del-ITAT)  Famina Knit Fabs vs. ACIT 104 taxmann.com 306 (Chandigarh)  CIT vs. Shilpa Dyeing & Printing Mills (P) Ltd 39 taxmann.com 3 (Guj-HC)  Krishnamegh Yarn Industries vs. ACIT 68 taxmann.com 103 (Guj-HC),  CIT vs. Chensing Ventures 163 Taxman 175 (Mad-HC)

7.

Therefore, we are of the considered view that the legislative intent, as clarified by the CBDT, was prospective in nature, and no such bar existed during the relevant assessment year. Hence, the assessee is entitled to claim set-off of losses against income assessed under Section 68 of the Act.

8.

Accordingly, Ground No. 5 raised by the assessee is allowed.

9.

In view of our findings on Ground No. 5, the remaining grounds become academic in nature and do not require separate adjudication. Consequently, the appeal filed by the assessee is partly allowed.

10.

In the result, appeal filed by the Assessee is partly allowed.

Order pronounced in the open court on 05.05.2026.

Sd/- Sd/-

GIRISH AGRAWAL SANDEEP GOSAIN ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai Dated: 05.05.2026 Copy to: TERROIR INDIA WINERIES PVT LTD, 13, YASHODHARA, 80, C.S. VEER SAVARKAR ROAD, DADAR WEST, 1 MUMBAI, MUMBAI-400028, MAHARASHTRA DY. COMMISSIONER OF INCOME TAX, CIRCLE-8(3)(1), 2 AAYAKAR BHAVAN, M.K. ROAD, MUMBAI, MUMBAI-400020, MAHARASHTRA 3 THE PCIT / CIT, 4 THE D.R., ITAT, MUMBAI BENCH 5 GUARD FILE

More judgments on Section 68

All 29,931 judgments and leading authorities on Section 68 →

Recent GST High Court judgments

Search GST case law →