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Facts
The assessee filed an appeal against an order for AY 2013-14. The core issue was whether an addition made under section 68, amounting to Rs. 5,12,73,350, could be set off against brought forward losses, given the provisions of Section 115BBE.
Held
The Tribunal referred to CBDT Circular No. 11 of 2019, which clarified that the amendment inserting 'or set off of any loss' in Section 115BBE(2) was effective from 01.04.2017. Therefore, for assessment years prior to 2017-18, set off of losses against income under Section 115BBE was permissible.
Key Issues
Whether set off of losses against additions made under Section 115BBE for AY 2013-14 is permissible prior to the amendment effective from AY 2017-18.
Sections Cited
115BBE, 115JB, 68
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Income Tax Appellate Tribunal, ‘E‘ BENCH
आदेश / O R D E R PER AMIT SHUKLA (J.M): The aforesaid appeal has been filed by the assessee against order dated 30/03/2024 passed by NFAC, Delhi for the A.Y.2013-14.
In the grounds of appeal assessee has raised following grounds:-
“i) The Id CIT (A) erred in confirming the action of Assessing Officer to ignore the mandate of Sec. 115BBE(2) which is neither a debatable point nor an accidental slip but a rectifiable mistake apparent on the record, therefore not allowing the set-off of unabsorbed depreciation of earlier years as accepted by the Revenue amounts to denying the legitimate adjustment in the computation of Book profit u/s 115JB, hence, the Order u/s. 154 is bad in law and the benefit of adjustment may be granted. ii) Without prejudice to above, the amended provision of Sec. 115BBE(2) applicable w.e.f AY 2017-18 is prospective by implication and any form of clarificatory note or proposal cannot override the bare provision of Sec 115BBE(2) rw s.115JB: therefore, computing incorrect Book Profit and ignoring the mandate of bare provision is not a debatable point but a rectifiable mistake in need of judicial attention, hence, the dismissal of 1st appeal is uncalled for iii) Without further prejudice to above, the insertion of word 'shall presupposes the mandatory implication of the provision of 115BBE(2) and thus, binding on both Revenue and the Assessee as well.”
The limited issue here is, whether the addition which was made u/s.68 in the quantum proceedings is to be set off against the losses in the A.Y.2013-14. Here in this case, the addition was made u/s.68 for sums aggregating to Rs.5,12,73,350/-. The issue which has been raised before the ld. AO as well as before the ld. CIT(A) in the application u/s.154 that ld. AO was not justified in denying the assessee benefit of set off of brought forward losses by applying the proviso to Section 115BBE and thereby, application for rectification u/s.154. The assessee had filed return of income for A.Y.2013-14 within the due date i.e. 29/09/2013 declaring total loss of Rs. 1,75,16,739/- and carried Klaus Waren Fixtures Pvt. Ltd. forward loss of Rs.12,55,08,000/-. The ld. AO in his order u/s.154 has held that Section 115BBE (2) specifically speaks of no deduction in respect of any expenditure of allowances. The ld. CIT(A) too has confirmed the said order of the ld. AO.
Provisions of Section 115BBE reads as under:- 115BBE. (1) Where the total income of an assessee,— (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of— (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of sixty per cent; and (ii) the amount of income-tax with which the assessee would have been chargeable had his total income been reduced by the amount of income referred to in clause (i). (2) Notwithstanding anything contained in this Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the assessee under any provision of this Act in computing his income referred to in clause (a) and clause (b) of sub-section (1).
In sub-section (2), it has been provided that no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed has been brought by way of amendment w.e.f. 01/04/2017 i.e. from A.Y.2017-18. Earlier, there was no such condition that addition made u/s.68 to 69D will not be allowed
Thus, CBDT has clearly clarified that since the set off of loss have been specifically inserted only by the Finance Act, 2016 w.e.f. 01/04/2017 and therefore, assessee is entitled to set off of losses against income determined u/s.115BBE till the A.Y.2016- Klaus Waren Fixtures Pvt. Ltd. 17. Accordingly, we direct the ld. AO to allow the set off of losses against the addition made u/s.68 in view of the aforesaid Circular which is binding on the ld. AO. Accordingly, appeal of the assessee is allowed.
In the result, appeal of the assessee is allowed.
Order pronounced on 3rd October, 2024.
Sd/- Sd/- (GAGAN GOYAL) (AMIT SHUKLA) ACCOUNTANT MEMBER JUDICIAL MEMBER Mumbai; Dated 03/10/2024 KARUNA, sr.ps Copy of the Order forwarded to : 1. The Appellant 2. The Respondent. 3. CIT 4. DR, ITAT, Mumbai 5. Guard file. //True Copy//
BY ORDER,
(Asstt. Registrar) ITAT, Mumbai