SHARAD NAMDEO GAWADE,PUNE vs. INCOME-TAX OFFICER, WARD - 9(2), PUNE

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ITA 1436/PUN/2018Status: HeardITAT Pune10 March 2022AY 2013-144 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal held that the assessee had indeed offered the income from TDR sale, and it was permissible to set off business losses against capital gains. Therefore, the addition made by the AO was incorrect.

What were the facts?

During a survey, the assessee offered an income of Rs. 24.00 lakh from the sale of TDR. The assessee later filed a return declaring a lower income, claiming the Rs. 24.00 lakh was part of total contract receipts which showed a loss.

What were the issues?

Whether the income offered during survey from TDR sale could be treated as part of contract receipts showing a loss, and if business loss could be set off against capital gains.

Which sections of the Income-tax Act were involved?

Section 71(2)

AI-generated summary — verify with the full judgment below

Income Tax Appellate Tribunal, PUNE BENCH “SMC”, PUNE

Before: SHRI R.S. SYAL

For Respondent: Shri M.G. Jasnani

आदेश / ORDER PER R.S.SYAL, VP : This appeal by the assessee arises out of the order passed by the CIT(A)-13, Pune on 18-07-2018 in relation to the assessment year 2013-14. 2. The only issue raised in this appeal is against the confirmation of the addition of Rs.24.00 lakh made by the Assessing Officer (AO). 3. Tersely stated, the facts of the case are that a survey was conducted at the assessee’s business premises on 03-10-2012, in which the assessee offered an income of Rs.24.00 lakh from the sale of TDR. The return of income was filed declaring income of Rs.11,67,150/-. Since the offered income of Rs.24.00 lakh was not shown distinctly, the Assessing Officer (AO) made an addition of the equal sum by rejecting the assessee’s contention of having offered Rs.24.00 lakh as part of total contract receipts. The ld. CIT(A) affirmed the same, against which the assessee has approached the Tribunal.

4.

I have heard the ld. DR and gone through the relevant material on record. There is no appearance from the side of the assessee despite notice. It can be seen from the impugned order that the assessee offered income of Rs.24.00 lakh from sale of TDR and eventually filed the return declaring income of Rs.11,67,150/-. The case of the assesee is that the said sum of Rs.24.00 lakh was included in the total business contract receipts of Rs.36,51,980/-. Since there was loss of Rs.20,32,975/- from the contract business, the net income offered by the assessee covered full amount of income offered towards sale of TDR at Rs.24.00 lakh. The assessee also supported the contention of loss from the contract business by submitting that he undertook retention wall construction on the Pavna river side, during the relevant year which was made in the summer season and the construction collapsed in June, 2012. As a result of that, he had to re- construct the collapsed retention wall at his own cost, without receiving any corresponding receipts for the second time. This contention made before the authorities as found recorded on page 3 of the impugned order, has not been controverted by any plausible reasoning except for not relying on the same. Simply because the assessee wrongly included the sum of Rs.24.00 lakh in the contract receipts, after offering it during the course of survey, it cannot be said that the assessee did not offer such an income. Going with the position as it stands, it emerges that the assessee incurred business loss and earned capital gain of Rs.24.00 lakh. It is after the set off of business loss against the capital gain from sale of TDR, that the net income was offered. Section 71(2) of the Act permits set off of losses under any head of income other than capital gain against the income under the head `Capital gains’. In that view of the matter, the assessee’s contention cannot be rejected. I, therefore, overturn the impugned order and order to delete the addition made and sustained by the authorities below.

5.

In the result, the appeal is allowed. Order pronounced in the Open Court on 10th March, 2022.

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