Income Tax Appellate Tribunal - Chennai
Acit Central Circle 2 , Madurai vs M/S Stndard Spinning And Weaving Mills ... on 19 March, 2019
आयकर अपील य अ धकरण, 'सी' यायपीठ, चे नई।
IN THE INCOME TAX APPELLATE TRIBUNAL
'C' BENCH: CHENNAI
ी एन.आर.एस. गणेशन, या यक सद य एवं ी इंटूर रामा राव, लेखा सद य के सम$
BEFORE SHRI N.R.S. GANESAN, JUDICIAL MEMBER AND
SHRI INTURI RAMA RAO, ACCOUNTANT MEMBER
आयकर अपील सं./ITA Nos.454 & 455/Chny/2018
नधा%रण वष% /Assessment Years: 2013-14 & 2014-15
Asst. Commissioner of Income Tax, Vs. M/s. Standard Spinning and
Central Circle-2, Weaving Mills Ltd.,
Madurai. 5-2-15C,
Poothaiammal Building,
Sattur Road,
Sivakasi - 626 123.
[PAN: AADCS 6253K]
(अपीलाथ(/Appellant) ()*यथ(/Respondent)
अपीलाथ( क+ ओर से/ Assessee by : Shri V. Subbarayan, ITP
)*यथ( क+ ओर से /Revenue by : Shri Sailendra Mamidi, PCIT
सन
ु वाई क+ तार ख/Date of Hearing : 11.01.2019
घोषणा क+ तार ख /Date of pronouncement : 19.03.2019
आदे श / O R D E R
PER INTURI RAMA RAO, ACCOUNTANT MEMBER:
These two appeals filed by the Revenue directed against the common Order of the Learned Commissioner of Income Tax (Appeals)- 19, Chennai (hereinafter as 'CIT(A)') dated 27.11.2017 for the Assessment Years (AYs) 2013-14 & 2014-15.
2. Since, the identical facts and issue are involved in these appeals, we proceed to dispose the same vide this common order.
ITA Nos.454 & 455/Chny/2018 (AYs: 2013-14 & 2014-15) :- 2 -:
3. For the sake of convenience and clarity the facts relevant for the AY 2013-14 in ITA No.454/Chny/2018 are stated herein.
4. The Revenue raised the following grounds of appeal in ITA No.454/Chny/2018 for AY 2013-14:
"1. The Order of the learned Commissioner of Income Tax (Appeals) is erroneous on facts and circumstances of the case and in law.
2. The Id. CIT(A) erred in directing the AO to allow set off of business losses of earlier years against business incomes and allow set off of unabsorbed losses of previous years for the AY2013-14.
3. Having regard to the decision of the Hon'ble ITAT, Chennai in ITA No.1042/Mds/2012, AY 2003-04 in the case of M/s. AKR Poly Industries Vs ITO, wherein the Hon'ble ITAT had held that Sec.71 permits set off of losses from one head against income from another head of income as enumerated in Sec.14 of the IT Act and that sec. 68 cannot be assessed under any particular head of income including income from other sources under section.56 and had further held that the business loss assessed by the Assessing Officer cannot be set off against the amount taxed under section 68 as unexplained cash credits taxed u/s.68 (Sec.69A & C in the instant case) cannot be pegged to any head of income, ought to have upheld the addition made by the AO for the AY 2013-14.
4. For these grounds and any other ground including amendment of grounds that may be raised during the course of the appeal proceedings, the order of learned CIT(Appeals) may be set aside and that of the Assessing Officer be restored."
5. The brief facts of the case are as under:
The respondent-assessee is a company incorporated under the provisions of Companies Act, 1956. It is engaged in the business of spinning and weaving. The return of income for the AY 2013-14 was filed on 26.09.2013 disclosing as NIL income after setting off earlier business losses of Rs. 67,87,637/-. Against the said return of income, the assessment was completed by the Asst. CIT, Central Circle-2, Madurai at a total income of Rs. 2,31,00,000/- vide order dated 27.12.2016 ITA Nos.454 & 455/Chny/2018 (AYs: 2013-14 & 2014-15) :- 3 -:
passed u/s. 143(3) r/w. 153A of the Income Tax Act, 1961 (in short 'the Act'). While doing so, the AO brought to tax a sum of Rs. 2,30,00,000/- for the assessment year 2013-14 and Rs. 3 crores for the assessment year 2014-15 based on incriminating material and sworn statement u/s. 132(4) of the Act. Accordingly, the AO had completed the assessment by taxing undisclosed income under the provisions of s. 69A r/w. 115BBE of the Act.
6. Being aggrieved by the above additions, an appeal was preferred before ld. CIT(A), who vide impugned order while confirming the action of addition of undisclosed income of Rs. 2.30 crores for the assessment year 2013-14 and Rs. 3 crores for the assessment year 2014-15 had allowed the set off of brought forward business loss against the income from other sources. Being aggrieved by the decision of ld. CIT(A), the Revenue is in appeal before us in the present appeal.
7. The ld. Sr. Departmental Representative argued that the brought forward business loss cannot be set off against the income from other sources as the provisions of s. 71 of the Act, which permits only the set off of current year business loss against the income from other sources. Thus, he submitted that the order of ld. CIT(A) is against the very plain provision of the Act and therefore, the findings of ld. CIT(A) should be reversed. On the other hand, the ld. Counsel for the assessee submitted ITA Nos.454 & 455/Chny/2018 (AYs: 2013-14 & 2014-15) :- 4 -:
that the addition u/s. 69A of the Act should be assessed only under business income and therefore, the brought forward business loss should be set off against the current year business income.
8. We heard the rival submissions and perused the material on record. The only issue that arises for consideration in the present appeal is whether brought forward business loss can be set off against the income from other sources for the current year assessed u/s. 69A of the Act. The provision of s. 72 of the Act only permits the set off of the brought forward business losses against the current year's business profit. Undisputedly, the income is assessed under the head "income from other sources" and the provisions of s. 115BBE of the Act, are applicable once the addition are made specified sections 68, 69, 69A of the Act. Having regard to the plain provision of s. 72 of the Act, brought forward business loss cannot be set off against the income under head "income from other sources". Indisputedly, the additions are assessable under "income from other sources". The income from "undisclosed sources" is always assessable under "income from other sources" as held by Hon'ble Patna High Court in the case of Baldeo Prasad v. CIT [1987] 166 ITR 205 (Pat.). Further, there is nothing on record showing the availability of unabsorbed business losses for set off against current year business income. Furthermore, it is not established by leading evidence whether there is any brought forward business loss in the ITA Nos.454 & 455/Chny/2018 (AYs: 2013-14 & 2014-15) :- 5 -:
hands of the assessee. The ld. CIT(A) without discussing/referring to any material on record showing the availability of brought forward business loss had merely allowed the set off of brought forward business loss against the income from other sources. The ld. CIT(A) blindly ignored the plain provisions of s. 72 of the Act and allowed the set off of brought forward business loss. It is not even the case of the respondent- assessee before AO or ld. CIT(A) that undisclosed income can be taxed under head "business income". The head of income requires to be determined having regard to the factual background of the addition, which is a matter of fact. As observed by us supra, the ld. CIT(A) had not discussed any factual situation of the addition at all. Thus, the order of ld. CIT(A) is bereft of any reasoning or material. Therefore, we reverse the findings of the ld. CIT(A) and restore the order of assessment. Hence, the appeal filed by the Revenue stands allowed.
ITA No.455/Chny/2018 for AY 2014-15:
9. Since, the facts in ITA No.455/Chny/2018 for AY 2014-15 are identical to the facts in ITA No.454/Chny/2018 for AY 2013-14 for the reasons mentioned therein, we reverse the findings of ld. CIT(A) to allow the Revenue's appeal. Hence, the above captioned appeal filed by the Revenue is allowed.
ITA Nos.454 & 455/Chny/2018 (AYs: 2013-14 & 2014-15) :- 6 -:
10. In the result, both the appeals filed by the Revenue are allowed.
Order pronounced on the 19th day of March, 2019 in Chennai.
Sd/ Sd/-
(एन.आर.एस. गणेशन) (इंटूर रामा राव)
(N.R.S. GANESAN) (INTURI RAMA RAO)
या यक सद य/JUDICIAL MEMBER लेखा सद य/ACCOUNTANT MEMBER
चे नई/Chennai, 1दनांक/Dated: 19th March, 2019. EDN, Sr. P.S आदे श क+ ) त2ल3प अ4े3षत/Copy to:
1. अपीलाथ(/Appellant 2. )*यथ(/Respondent 3. आयकर आयु5त (अपील)/CIT(A) 4. आयकर आयु5त/CIT 5. 3वभागीय ) त न ध/DR 6. गाड% फाईल/GF