Income Tax Appellate Tribunal - Delhi
Purshotam Ispat, New Delhi vs Ito, Ward- 40(1), New Delhi on 17 February, 2021
IN THE INCOME TAX APPELLATE TRIBUNAL
DELHI BENCH 'F', NEW DELHI
Before Sh. Amit Shukla, Judicial Member
Dr. B. R. R. Kumar, Accountant Member
(Through Video Conferencing)
ITA No. 5564/Del/2017 : Asstt. Year : 2013-14
Income Tax Officer, Vs Purshotam Ispat,
Ward-40(1), ND-4, Pitampura,
New Delhi New Delhi-110034
(APPELLANT) (RESPONDENT)
PAN No. AAIFP1640H
CO No. 226/Del/2017 : Asstt. Year : 2013-14
Purshotam Ispat, Vs Income Tax Officer,
ND-4, Pitampura, Ward-40(1),
New Delhi-110034 New Delhi
(APPELLANT) (RESPONDENT)
PAN No. AAIFP1640H
Assessee by : Sh. Satish Agarwal, CA
Revenue by : Sh. Apoorv Bhardwaj, Sr. DR
Date of Hearing: 01.02.2021 Date of Pronouncement: 17.02.2021
ORDER
Per Dr. B. R. R. Kumar, Accountant Member:
The present appeal by the revenue and the Cross Obje ction by the assessee are directed against the order of the ld. CIT(A)- 14, New Delhi dated 14.06.2017.
2. Following grounds have been raised by the revenue:
"1. On the facts and in the circumstances of the case, th e Ld . CIT(A) has erred in law and on facts in al lowing set-off of business loss against the commodity tradin g i ncome assessed u/s 68 of the Act of Rs.3,14,20,610/-.2 ITA No. 5564/Del/2017 & CO No. 226/Del/2017
Purshotam Ispat
2. On the facts and in the circumstan ces of th e case, the Ld. CIT(A) h as erred in law and on facts in allowing set-o ff business lo ss ag ainst commodity trading in come of R s. 3,14,20,610 /- assessed u /s 68 by h oldin g that amendmen t in section 115BBE is prospective in n ature withou t appreciating that th e above amendment i s clarificatory in natu re as evident from the amend men t.
3. On the facts and in the ci rcumstances of the case, the Ld. CIT(A) has erred in law and on the facts in al lowing set-o ff busin ess loss against commodity trad ing income of Rs. 3,14,20,6 10/- without appreciating the fact that the Hon'bl e Cou rts have held in pletho ra of judgmen ts that i nco me assessed u/s 68 does no t fall under the no rmal heads of income and thus no ad justments can be allowed from such incomes.
4. Th at the Ld. CIT(A) h as failed to appreciate that the Hon 'ble Keral a Hi gh Court in th e case of M/s Kerala Spo nge Iron Ltd Vs CIT (ITA No. 195/2014 dated 19 .08.2015 ), Hon'b le Gu jarat Hig h Co urt in the case of Fakir Mohmed Hasan Vs CIT(2001 ) [24 7 ITR 290 ], Hon'ble ITAT Ch andig arh in case o f ITO Vs Dul ari Dig ital Ph oto Services Pvt. Ltd. ( ITA No. 984/Ch d/2010) and Hon'ble ITAT Chennai in the case of the Deputy Commissioner o f In come Tax, Co rporate Ci rcle Vs M/s Shree Karthik Pap ers Ltd (ITA No. 325/Mds/201 5 A.V. 20 06-07 dated 06.04.2016 ) has held that in come assessed u/s 68 do es not fall under normal head of income and thus no ad justment can be allowed fro m such inco mes."
3. In CO No.226/Del/2017, the assessee has raised the following grounds:
"1. Th at the ld . CIT(Appeals) has grossly erred in not al lowing grou nd of the ap pellant th at a co mmodity profit of Rs.3,14,20,6 10/- could not b e taxed under section 68 of the Act.
2. That th e ld . CIT(Appeals) has grossly erred in confirmin g the action of the Assessing Officer in treating the commodity p ro fit of Rs.3,14,20,610/- as taxab le under section 68 of th e Act by holding it to be un expl ained."3 ITA No. 5564/Del/2017 & CO No. 226/Del/2017
Purshotam Ispat
4. The revenue came into appeal against the order of the ld. CIT (A) allowing the be nefit of provisions Section 115BBE of the Income Tax Act, 1961 to the income assessed u/s 68 for the assessment year 2013-14.
5. We have gone through the provisions of the Finance Bill 2016 and the memorandum thereof with re gard to the provisions of Section 115BBE and the income determined u/s 69 to 69D which have come into force w.e.f. 01.04.2017. We have also gone through the clarification issued by the CBDT which allows the set off income assessed u/s 68 with re fe rence to applicability of provisions of Section 115BBE. For the sake of ready reference and clarity, the Circular of the CBDT is reproduce d below:
Circular No. 11/2019Go vernment of India Ministry of Fin ance Department o f Revenue Central Board o f Direct Taxes North-Block, New Delhi, dated the 1 9th of June, 20 19 Sub ject: Clarification regard ing non -allowability of set-off of losses ag ainst the deemed income under section 11SBBE o f the Income- tax Act, 1961 prior to assessment-year 2 017-18-reg.
Wi th effect fro m 01.04.20 17, sub -secti on (2 ) of section 115BBE of the Income-tax Act, 196 1 (Act) provides that where total income of an assessee includes an y income referred to in section(s) 68 /69 /6 9A/69B/69C/69D of the Act, no d eduction in respect of an y expen diture or allowance or set off of any loss sh all be allowed to the assessee under any provisions of the Act in computing th e income referred to in section 11 5BBE(1) of the Act.
2. In thi s regard, it h as been brough t to the notice of the Central Board of Direct Taxes (the Board) that in assessments prior to assessmen t yea r 2 017-18, while so me of th e Assessi ng Officers 4 ITA No. 5564/Del/2017 & CO No. 226/Del/2017 Purshotam Ispat have allowed set off of losses again st th e addi tio ns made by them under Section(s) 68/69/69A/69B/69C/69D, in some cases, set off of losses against the ad ditions made un der Sectio n 115BBE (1 ) of the Act have not been allowed. As th e amendment insertin g the words 'or set off o f an y l oss' i s appli cable with effect from p t of April, 20 17 and applies from assessment yea r 20 17-18 onward s, conflicting views have been taken by th e Assessing Officers in assessmen ts for years p rio r to assessmen t year 2017-18. The matter has been referred to the Board so that a con sistent ap proach is adopted by the Assessi ng Officers while applying provisio n of section 115BBE in assessments for period prior to the assessmen t year 20 17-18.
3. The Board has examined the matter. The Circular No . 3 /2017 of the Board d ated 2 0th Janu ary, 201 7 which contains Explan atory no tes to the p ro visions of the Finance Act, 2016, at para 46.2, regard ing amendment made in section 115BBE(2) of the Act mentions th at currently there is uncertainty on the issu e of set-off of lo sses against in come referred to in section 115BBE. It also further mentions th at th e pre-amended provision of secti on 115BBE of the Act did not convey th e intention that losses shall not b e al lowed to be set-off ag ainst in come referred to i n section 115BBE of the Act and hen ce, the amendment was mad e vide the Fin ance Act, 2 016.
4. Thu s keeping th e legislative intent behind amend men t in section 11 5BBE(2) vide the Fin ance Act, 2016 to remo ve any ambiguity of interp retation, the Board is o f the view that since th e term 'or set off of any loss' was specifically inserted onl y vide the Fin ance Act 20 16, w.e.f. 01.0 4.2017 , an assessee is entitled to claim set-off of loss again st income d etermin ed under section 1 15BBE o f the Act till the assessment year 2 016-17.
5. The con tents of this Circular may be circulated wid ely for info rmation of all stakeh olders a nd dep artmental o ffi cers. The pending assessments and litigations on this i ssue may be h andled acco rd ingly.
Sd /-
(Rajarajeswari R.) Under Secretary (ITA.II), CBDT (F.No.22S/4S/2019-ITA.II) 5 ITA No. 5564/Del/2017 & CO No. 226/Del/2017 Purshotam Ispat
6. Thus, we find that since the case of the assessee belongs to the assessment year 2013-14, the assessee is eligible fo r the said benefit.
7. In the result, the appeal of the revenue is dismissed.
8. As regards to the Cross Obje ction filed by the assessee is concerned, since we have already dismissed the appeal of the revenue. Therefore, the Cross Objection filed by the assessee has become infructuous and dismissed.
Order Pronounced in the Open Court on 17 /02/2021.
Sd/- Sd/-
(Amit Shukla) (Dr. B. R. R. Kumar)
Judicial Member Accountant Member
Dated: 17/02/2021
*Subodh*
Copy forwarded to:
1. Appellant
2. Respondent
3. CIT
4. CIT(Appeals)
5. DR: ITAT
ASSISTANT REGISTRAR