Income Tax Appellate Tribunal - Chandigarh
Sangeet Resorts , Amabala Cantt. vs Dcit, Circle, Ambala on 29 January, 2020
आयकर अपील य अ धकरण,च डीगढ़ यायपीठ, "बी " च डीगढ़
I N T H E I NC OM E T A X A P PEL L A TE T RI B U N AL
D I V I SI O N B E NC H , ' B ' CH AN DI G A RH
ी एन. के. सैनी, उपा य एवं ी संजय गग , या यक सद य
BEFORE SHRI N.K. SAINI, VICE PRE SIDENT &
SHRI SANJAY GARG, JUDICIAL ME MBER
आयकरअपीलसं./ITA No. 561/ C H D / 2 0 1 9
नधा रणवष / Assessment Year : 2014-15
M/s Sangeet Resorts, बनाम The DCIT,
C/o Rajiv Goel & Associates, Circle,
179, Bank Road, Ambala
Ambala Cantt.
थायीलेखासं./PAN NO: AFSFS7209L
अपीलाथ$/Appellant &'यथ$/Respondent
नधा (रतीक*ओरसे/Assessee by : Shri Rohit Goel, CA
राज वक*ओरसे/ Revenue by : Shri Kultej Singh Bains, Addl. CIT DR
सन
ु वाईक*तार.ख/Date of Hearing : 08.01.2020
उदघोषणाक*तार.ख/Date of Pronouncement : 29.01. 2020
आदे श/Order
Per Sanjay Garg, Judicial Member:
The present appeal has been preferred by the assessee against the order dated 11.03.2019 of the Commissioner of Income Tax (Appeals)-1, Panchkula [hereinafter referred to as 'CIT (A)'].
2. The assessee in this appeal has taken following grounds of appeal:-
1. That the learned CIT(A) has erred in law and on facts in confirming the actions of the DCIT in assessing the amount of Rs. 2,00,00,000/- as deemed income u/s 69 of the Act.
ITA No. 561-Chd-2019 M/s Sangeet Resorts, Ambala Cantt.
22. That the learned CIT(A) has erred in law and on facts in confirming the actions of the DCIT in not allowing set off of current year depreciation and current year business losses amounting Rs.
65,54,780/- from the additional income of Rs. 2,00,00,000/-.
3. That the learned CIT(A) has erred in law and on facts in confirming the actions of the DCIT in not completing the assessment as per the provisions of sec 115BBE as applicable to AY 2014-15. (Tax Effect = Rs. 22,27,969/-)
4. That the appellant craves leave to add, alter, amend or to substitute the above grounds of appeal either before or at the time of hearing of case.
3. The brief facts of the case are that the case of the assessee was selected for scrutiny being a survey case. During the course of the survey, the assessee had surrendered an additional income of Rs.
2,00,00,000/- (Rs.9,20,000/- on account of difference in cash in hand, Rs. 1,00,30,000/- on account of unaccounted investment in building & Rs.90,50,000/- on account of unaccounted amounts receivable). In the return of income filed, the assessee claimed setting off of the depreciation of Rs.52,36,004/- and business loss of Rs. 13,24,781/-
against the additional income declared. During the course of the assessment proceedings the Assessing Officer held that depreciation and other expenses could not be claimed against the additional income declared during the survey proceedings, by placing reliance on the ITA No. 561-Chd-2019 M/s Sangeet Resorts, Ambala Cantt.
3judicial pronouncement of the Hon'ble Punjab & Haryana High Court in the case of M/s Kim Pharma (P) Ltd. in ITA No. 106 of 2011 dated:
27.04.2011. The Assessing Officer, therefore disallowed the depreciation and business loss claimed by the assessee and completed the assessment u/s 143(3) of the Act an income of Rs.2,00,00,000/- vide order dated 30.12.2016.
3. The Ld. CIT(A) confirmed the action of the Assessing Officer in not allowing the set off of current year business loss from the additional income holding that the amendment brought to section 115BBE of the Income Tax Act, 1961 (in short 'the Act') w.e.f. 1.4.2017 was clarificatory in nature and, hence, applicable retrospectively.
4. However, before us, Ld. Counsel for the assessee relied upon the Circular No. 11 of 2019 of the CBDT, which reads as under:- "Circular No. 11/2019
Government of India Ministry of Finance Department of Revenue Central Board of Direct Taxes North-Block, New Delhi, dated the 19th of June, 2019 Subject: Clarification regarding non-allowability of set-off of losses against the deemed income under section 115BBE of the Income-tax Act, 1961 prior to assessment-year 2017-18-reg.
With effect from 01.04.2017, sub-section (2) of section 115BBE of the Income-tax Act, 1961 (Act) provides that where total income of an assessee includes any income referred to in section(s) 68/69/69A/69B/69C/69D of the Act, no deduction in respect of any expenditure or allowance or set off of any loss shall be allowed to the ITA No. 561-Chd-2019 M/s Sangeet Resorts, Ambala Cantt.4
assessee under any provisions of the Act in computing the income referred to in section 115BBE(1) of the Act.
2. In this regard, it has been brought to the notice of the Central Board of Direct Taxes(the Board) that in assessments prior to assessment year 2017-18, while some of the Assessing Officers have allowed set off of losses against the additions made by them under Section(s) 68/69/69A/69B/69C/69D, in some cases, set off of losses against the additions made under Section 115BBE(1) of the Act have not been allowed.
As the amendment inserting the words 'or set off of any loss' is applicable with effect from 1st of April, 2017 and applies from assessment year 2017-18 onwards, conflicting views have been taken by the Assessing Officers in assessments for years prior to assessment year 2017-18. The matter has been referred to the Board so that a consistent approach is adopted by the Assessing Officers while applying provision of section 115BBE in assessments for period prior to the assessment year 2017-18.
3. The Board has examined the matter. The Circular No. 3/2017 of the Board dated 20th January, 2017 which contains Explanatory notes to the provisions of the Finance Act, 2016, at para 46.2, regarding amendment made in section 115BBE(2) of the Act mentions that currently there is uncertainty on the issue of set-off of losses against income referred to in section 115BBE. It also further mentions that the pre-amended provision of section 115BBE of the Act did not convey the intention that losses shall not be allowed to be set-off against income referred to in section 115BBE of the Act and hence, the amendment was made vide the Finance Act, 2016.
4. Thus keeping the legislative intent behind amendment in section 115BBE(2) vide the Finance Act, 2016 to remove any ambiguity of interpretation, the Board is of the view that since the term 'or set off of any loss' was specifically inserted only vide the Finance Act 2016, w.e.f. 01.04.2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016-17.
5. The contents of this Circular may be circulated widely for information of all stakeholders and departmental officers. The pending assessments and litigations on this issue may be handled accordingly.
6. Hindi version to follow. Sd/-
RajarajeswawR.) Under Secretary (ITA.II), CBDT"
ITA No. 561-Chd-2019 M/s Sangeet Resorts, Ambala Cantt.
5
5. A perusal of the above circular reveals that the CBDT now has clarified the matter that the assessee will be entitled to set off of loss against income determine u/s 115BBE of the Act till assessment year 2016-17. The assessment year under consideration being assessment year 2014-15, the assessee is accordingly entitled to the set off of the current year losses against the deemed income.
The appeal of the assessee stands allowed.
Order pronounced in the Open Court on 29.01.2020.
Sd/- Sd/- (एन. के. सैनी / N.K. SAINI) (संजय गग" / SANJAY GARG) उपा$य% /Vice President या&यकसद'य/ Judicial Member Dated : 29.01.2020 "आर.के."
आदे शक*& त3ल4पअ5े4षत/ Copy of the order forwarded to :
1. अपीलाथ$/ The Appellant
2. &'यथ$/ The Respondent
3. आयकरआयु6त/ CIT
4. आयकरआयु6त (अपील)/ The CIT(A)
5. 4वभागीय& त न8ध, आयकरअपील.यआ8धकरण, च:डीगढ़/ DR, ITAT, CHANDIGARH
6. गाड फाईल/ Guard File