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3. Aggrieved by the same, the assessee carried the matter in appeal before the Ld. CIT (Appeals) contending that it had fully explained the nature and source of the surrendered income as being collections from his BOT project and thus was nothing but its business income and the decision of the Hon'ble Punjab & Haryana High Court in the case of M/s Kim Pharma (P) Ltd. Vs. CIT, ITA No.106 of 2011 supported its stand. It was further contended that the surrendered income being in the nature of business, the set off of business losses and business depreciation was allowable against the same. The learned Commissioner of Income Tax, after considering the assessees submissions, held that the assessee had not satisfactorily explained the nature and source of the surrendered income and, therefore, it could not be regarded as its business income but was to be treated as its deemed income, which could not be considered even under the head 'income from other sources' and as a consequence thereof set off of losses was also not available to the assessee, as held by the Hon'ble Jurisdictional High Court in the case of M/s Kim Pharma (P) Ltd. (supra). The relevant findings of the Ld. CIT (Appeals) at pages 6 and 7 of its order are as follow:

10. Having said so, we find that first question to be addressed in the present case before us is whether this surrendered income of Rs.1.75 crores could be attributed to the business of the assessee and thus assessed under the head 'business income'.

11. The Ld. counsel for the assessee in support of its above contentions drew our attention to the letter addressed to the ACIT, Central Circle-II, Chandigarh dated 20.7.2012 during the course of assessment proceedings placed at Paper Book page No.18 and disclosing the source of the surrendered income as being from the normal business collections from the BOT project undertaken by it of the construction of Kangra Bus Stand and Mcleodganj Bus Stand. The relevant submissions made by the assessee vide its letter are as under:

"A sum of Rs. 1.75 crore was surrendered as income from normal business as collections from the BOT project utilized in construction through the promoter Sh. Vijay Kumar Sood and duly declared in the computation sheet during the year."

12. To this, the Ld. DR countered stating that while recording the statement of Shri Vijay Sood u/s 132(4) of the Act, he had given a general explanation regarding the surrendered income reproduced in the assessment order as follows:

15. Having heard both the parties, we find that one fact which emerges undoubtedly from the above arguments made before us is that the surrender is on account of excess/undisclosed amount invested in the BOT project undertaken by the assessee. The Ld. DR drew our attention to the Directors' report annexed to the audited Balance Sheet for the impugned year in this regard stating so at point No.1 of their report and the assessee has pointed out its submissions made before the Assessing Officer vide their letter dated 20.7.2012 in this regard. Therefore, undoubtedly we find that the surrender is on account of investment in the business project of the assessee. The assessee, we find, has explained the source of the same as being on account of collections from the BOT project.