M/s. Godwin Resort & Hotel Pvt. Ltd., Meerut V. ACIT, Meerut

ITA 1841/DEL/2016

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 7808 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 6 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 14-10-2019
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: SMC 1
• Next Hearing Date: 27-09-2016
• Assessment Year: 2011-2012
• Appeal Filed On: 07-04-2016
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: S S RANA
• Keywords: Unexplained investment; Depreciation; Search and seizure; Document seized; Deemed to accrue or arise in india; Revised return; Documents seized; Unabsorbed depreciation
• Section: 40A(3); 201; 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G NEW DELHI BEFORE SHRI AMIT SHUKLA, JUDICIAL MEMBER AND SHRI B.R.R. KUMAR, ACCOUNTANT MEMBER I.T.A. NO.1841/DEL/2016 ASSESSMENT YEAR: 2011-12 M/S. GODWIN RESORT & HOTEL PVT. LTD., 38, 1 ST FLOOR CHETAN MEDICAL COMPLEX, CHIPPI TANK, MEERUT. VS. ACIT, CENTRAL CIRCLE, MEERUT. TAN/PAN: AADCG 3027H (APPELLANT) (RESPONDENT) APPELLANT BY: SHRI SANDEEP SAPRA, ADV. RESPONDENT BY: SHRI S.S. RANA, CIT-DR DATE OF HEARING: 28 08 2019 DATE OF PRONOUNCEMENT: 14 10 2019 O R D E R PER AMIT SHUKLA, JM: THE AFORESAID APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE IMPUGNED ORDER DATED 03.03.2016, PASSED BY COMMISSIONER OF INCOME TAX (APPEALS)-IV, KANPUR FOR THE QUANTUM OF ASSESSMENT PASSED U/S.143(3) FOR THE ASSESSMENT YEAR 2011-12. IN THE GROUNDS OF APPEAL, THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS: 1. THAT THE ID. CIT{A) HAS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE BY CONFIRMING THE ADDITIONS OF RS.26,68,50 0/- U/S. 69 OF THE INCOME TAX ACT, 1961 AS AGAINST THE ADDITION THEREO F U/S 40A(3) AS MADE BY THE ID. A.O. AND THE ACTION OF THE LD. CIT( A) IS TOTALLY UNJUST & I.T.A. NO.1841/DEL/2016 2 UNLAWFUL AS PARTICULARS OF ANY UNEXPLAINED INVESTME NT HAS NOT BEEN BROUGHT ON RECORD EITHER IN ASSESSMENT PROCEEDINGS OR IN APPEAL PROCEEDINGS TO JUSTIFY AN ADDITION U/S. 69 OF THE I NCOME TAX ACT. 1961. 2. THAT THE LD. CIT(A) HAS ERRED IN LAW BY CONFIRM ING THE ADDITION OF RS.85,000/- U/S. 69 BEING THE AMOUNT OF CASH FOUND WITH AN EMPLOYEE OF THE APPELLANT FROM HIS RESIDENCE AT THE TIME OF SEARCH OPERATION. 3. THAT THE LD. CIT (A)HAS ERRED IN LAW BY DIRECTIN G THAT THE DEPRECIATION FOR THE YEAR UNDER REFERENCE SHALL NOT BE AVAILABLE FOR SET OFF AGAINST ADDITION CONFIRMED U/S. 69 AS ABOVE AND DIRECTING THE SAME TO BE CARRIED FORWARD FOR SET OFF IN SUCCEEDIN G YEARS AS THE LD. CIT(A) DID NOT HAVE POWERS TO ISSUE SUCH DIRECTIONS , WHICH ARE AGAINST THE EXPRESS PROVISIONS OF LAW. 4. THAT THE LD. CIT(A) HAS ERRED IN LAW AS WELL AS ON THE FACTS OF THE CASE BY CONFIRMING THE ADDITIONS AS ABOVE IGNORING APPELLANTS SUBMISSIONS TO THE EFFECT THAT THE APPELLANT COMPAN Y WAS UNDER ERECTION AND THE TOTAL ADDITIONS RELATED TO THE PER IOD BEFORE COMMENCEMENT OF ITS BUSINESS W.E.F. 01.03.2011 AS B EFORE THAT DATE THE APPELLANT COULD NOT BE ASSUMED TO HAVE EARNED A NY INCOME FROM ANY SOURCE. 2. THE FACTS IN BRIEF ARE THAT THE ASSESSEE-COMPAN Y IS ENGAGED IN THE HOTEL BUSINESS. A SEARCH AND SEIZURE OPERATION WAS CARRIED OUT IN THE PREMISES OF THE ASSESSEE IN MEERUT ON 09.09.2010 AND IN GOA. DURING THE COURSE OF SEARCH, CERTAIN DOCUMENTS WERE SEIZED FROM GOA MARKED AS ANNEXURE A -3 AND SPECIFICALLY PAGES 67 AND 68, WHICH CONTAINED D ETAILS OF PAYMENT RECEIVED BY SHRI MANDEEP SINGH FROM SHRI JI TENDRA SINGH BAJWA AND SHRI BHUPENDRA SINGH BAJWA, IN CASH I.T.A. NO.1841/DEL/2016 3 DURING THE PERIOD 26.09.2009 TO 01.09.2010. A SHOW CAUSE NOTICE WAS ISSUED TO THE ASSESSEE AS WHY THE AMOUNT OF RS. 26,68,500/- GIVEN IN CASH TO SHRI MANDEEP SINGH WHI CH ACTUALLY RELATES TO ASSESSEE SHOULD NOT BE ADDED AS INCOME OF THE ASSESSEE FOR ASSESSMENT YEAR 2011-12. IN RESPON SE, ASSESSEE SUBMITTED THAT THE HOTEL WAS AT CONSTRUCTI ON STAGE AND NO EXPENSES HAS BEEN CLAIMED AS DEDUCTION IN TH E PROFIT & LOSS ACCOUNT AND MOST IMPORTANTLY, THE ADDRESS ME NTIONED IN THE SEIZED ANNEXURE IS THE PERSONAL RESIDENCE OF SHRI MANDEEP SINGH, WHO HAD INDEPENDENT CONSTRUCTION BUS INESS AND THE PAPER FOUND FROM HIS PREMISES RELATES TO HI M. HOWEVER, THE LD. ASSESSING OFFICER DID NOT ACCEPT T HE ASSESSEES CONTENTION ON THE GROUND THAT NO DOCUMEN TARY EVIDENCES HAVE BEEN PROVIDED TO PROVE THAT THE SAID ANNEXURE DOES NOT BELONG TO THE ASSESSEE AND THE PREMISE SEA RCHED BELONGS TO SHRI MANDEEP SINGH. DURING THE SEARCH PROCEEDINGS, SHRI MANDEEP SINGH HAS ACCEPTED THAT H E IS WORKING AS AN EMPLOYEE OF THE COMPANY. ACCORDINGLY, ASSESSING OFFICER HAS MADE DISALLOWANCE U/S. 40A (3 ) OF RS.26,68,500/- BEING EXPENSES INCURRED IN CASH. FUR THER, ADDITION OF RS.85,000/- HAS BEEN MADE ON ACCOUNT OF CASH SEIZED AND FOUND DURING THE SEARCH FROM THE PREMISE S OF THE ASSESSEE COMPANY FOR WHICH NO EXPLANATION WAS OFFER ED. 3. IN THE FIRST APPEAL, LD. CIT (A) HELD THAT ADDIT ION CANNOT BE MADE U/S. 40A (3), BECAUSE THE HOTEL WAS UNDER CONSTRUCTION AND NO EXPENSES HAVE BEEN CLAIMED IN T HE PROFIT & LOSS ACOUNT. HOWEVER, HE HAS MADE THE ADDITION U/ S.69 ON I.T.A. NO.1841/DEL/2016 4 THE GROUND THAT THESE PAYMENTS TOWARDS CAPITAL-WORK -IN- PROGRESS. THE ASSESSEE HAD ALSO RAISED ALTERNATIVE PLEA THAT THERE WAS A CLAIM OF LOSS OF RS.39,05,893/- WHICH I NCLUDES LOSS ON DEPRECIATION OF FIXED ASSETS AND BUSINESS L OSS. HOWEVER, THE LD. CIT (A) REJECTED THE SAID CONTENTI ON HOLDING THAT THIS LOSS IS NOT AVAILABLE FOR SET OFF AGAINST ADDITION CONFIRMED U/S.69 OF THE ACT. REGARDING ADDITION OF RS.85,000/- BEING CASH FOUND DURING THE SEARCH MADE U/S 68, THE SAME HAS BEEN CONFIRMED BY THE LD. CIT(A) O N THE GROUND THAT NO EXPLANATION WAS GIVEN EITHER BEFORE THE ASSESSING OFFICER OR BEFORE HIM. 5. BEFORE US, LD. COUNSEL FOR THE ASSESSEE, MR. SAN DEEP SAPRA, SUBMITTED THAT THE ADDITION WAS MADE U/S. 40 A (3) AND LD. CIT(A) WITHOUT GIVING OPPORTUNITY TO THE AS SESSEE HAS CONFIRMED THE SAME U/S.69. ACCORDINGLY, SUCH AN ADD ITION IS BEYOND THE SCOPE OF POWERS OF LD. CIT (A). ON MERIT S, HE SUBMITTED THAT THE SEIZED MATERIAL/DOCUMENTS, ON TH E BASIS OF WHICH ADDITION HAS BEEN MADE, WAS FOUND FROM 126 6/B, 2ND FLOOR, SAN PAULO, OPPOSITE CAFE COFFEE DAY NEAR FOOTBALL GROUND, CANDOLIM, NORTH GOA WHICH HAPPENED TO BE TH E RESIDENCE OF SH. MANDEEP SINGH AND NOT FROM THE PRE MISES OF THE ASSESSEE-COMPANY. DURING THE COURSE OF ASSESSME NT PROCEEDINGS, IT WAS SUBMITTED THAT SHRI MANDEEP SIN GH WAS AN EMPLOYEE OF THE ASSESSEE-COMPANY BUT CARRIED OUT HIS OWN INDEPENDENT CONSTRUCTION BUSINESS ALSO. THEREFO RE, THE SEIZED DOCUMENTS COULD NOT BE RECORDED AS BOOKS OF ACCOUNTS I.T.A. NO.1841/DEL/2016 5 OF THE ASSESSEE-COMPANY AS NEITHER THE NAME NOR THE STAMP OF THE ASSESSEE -COMPANY IS THERE IN THE SAID DOCUM ENTS. 6. FURTHER, AUTHORITIES BELOW HAVE NOT BROUGHT ANY EVIDENCE ON RECORD TO PROVE THAT THE CASH PAYMENT R ECEIVED BY SHRI MANDEEP SINGH WERE UNACCOUNTED INVESTMENTS OF THE ASSESSEE-COMPANY NOR THERE WAS ANYTHING TO PROVE TH AT CASH PAYMENTS MADE BY SHRI MANDEEP SINGH TO VARIOUS PART IES WERE UNACCOUNTED INVESTMENTS OF THE ASSESSEE. EVEN DURING THE COURSE OF POST SEARCH INQUIRY, STATEMENT ON OAT H OF SHRI JITENDRA SINGH BAJWA WAS RECORDED WHO WAS CONFRONTE D WITH REGARD TO CASH PAYMENT RECEIVED BY SHRI MANDEEP SIN GH. HE CLEARLY SUBMITTED THAT HE IS NOT AWARE WHAT SHRI MA NDEEP SINGH WAS WRITING IN HIS BOOKS AND DENIED SUCH CASH PAYMENTS TO SHRI MANDEEP SINGH AND NO STATEMENT OF SHRI BHUPENDRA SINGH BAJWA WAS RECORDED. NO EVIDENCE WAS BROUGHT ON RECORD TO PROVE THAT, EITHER THE SEIZED MATERIAL BELONGED TO ASSESSEE-COMPANY OR THE RECEIPTS/EXPENS ES NOTED THEREIN PERTAINED TO THE ASSESSEE, THEREFORE, NO AD DITION SHOULD BE MADE. 7. LASTLY, WITH REGARD TO THE ADDITION OF RS.26,68, 500/- MADE U/S 69 AS WELL AS RS.85,000/- MADE U/S.68, HE SUBMITTED THAT LD. CIT(A) HAS ERRED IN LAW IN NOT A LLOWING THE ADDITION MADE TO BE SET OFF AGAINST UNABSORBED DEPR ECIATION AND BUSINESS LOSS. IN SUPPORT, HE STRONGLY RELIED U PON THE CBDT CIRCULAR NO. 11/2019 DATED 19.06.2019 WHEREIN CBDT HAS CLARIFIED THAT PRIOR TO ASSESSMENT YEAR 20 17-18 I.T.A. NO.1841/DEL/2016 6 INCOME REFERRED TO IN SECTION 115 BBE(1) IS ALLOWED TO BE SET OFF FROM THE LOSSES COMING FROM THE EARLIER YEAR OR DURING THE YEAR PRIOR TO THE AMENDMENT BROUGHT IN THE FINANCE ACT, 2016 W.E.F. 01.04.2017. HE ALSO PLACED RELIANCE UPO N THE DECISION OF ITAT INDORE BENCH IN CASE OF PUMARTH PROPERTIES & HOLDING PVT. LTD. VS. DCIT IN ITA NO.954/IND/2016 DATED 31.01.2018 . 8. ON THE OTHER HAND, LD. DR STRONGLY RELIED UPON T HE ORDER OF THE ASSESSING OFFICER AND LD. CIT (A) AND SUBMIT TED THAT THE ADDITIONS MADE U/S.69 DESERVES TO BE CONFIRMED BECAUSE THE ASSESSEE HAD FAILED TO GIVE PROPER EXPLANATION. HE ALSO RELIED UPON THE FOLLOWING JUDGMENTS: 1 KAHAN UDYOQ VS CIT T20131 38 TAXMANN.COM 261 (DELHI)/[2013] 219 TAXMAN 23 (DELHI MAG.) WHERE HONBLE DELHI HIGH COURT HELD THAT WHERE APPE LLANT FAILED TO EXPLAIN PURPOSE AND NATURE OF EXPENDITURE DISCLO SED IN SEARCH AND SAME WAS ALSO NOT RECORDED IN BOOKS OF ACCOUNT, ADDITION WAS TO BE MADE UNDER SECTION 69C. 2. ROGER ENTERPRISES P. LTD. V. CIT (2016) 72 TAXMANN.C OM 167 (SC) SLP DISMISSED AGAINST HIGH COURT'S RULING THAT WHER E EVIDENCE OF ONE OF TWO WITNESSES WAS BY ITSELF SUFFICIENT TO DRAW ADVERSE INFERENCE AGAINST ASSESSEE THAT COMMISSION PAYMENTS MADE BY IT WERE FICTITIOUS, REFUSAL BY ASSESSEE TO CROSS- E XAMINE SAID WITNESS MUST FOLLOW THAT ASSESSEE HAD ACCEPTED SAID WITNESS AND COMMISSION PAYMENTS WERE RIGHTLY DISALLOWED I.T.A. NO.1841/DEL/2016 7 3. ROGER ENTERPRISES P. LTD. V. CIT F20161 67 TAXMAN N.COM 344 (DELHI)/(2016) 238 TAXMAN 434 (DELHI)/(2016) 382 ITR 639 (DELHI) DELHI HIGH COURT HELD THAT WHERE EVIDENCE OF ONE OF TWO WITNESSES WAS BY ITSELF SUFFICIENT TO DRAW ADVERSE INFERENCE AGAINST ASSESSEE THAT COMMISSION PAYMENTS MADE BY I T WERE FICTITIOUS AND ASSESSEE DECLINED TO CROSS-EXAMINE S AID WITNESS ON GROUND THAT IT HAD TO BE PRECEDED BY CROSS-EXAMI NATION OF OTHER WITNESS, IT MUST FOLLOW THAT ASSESSEE HAD ACC EPTED SAID WITNESS AND COMMISSION PAYMENTS WERE RIGHTLY DISALL OWED. 9. WE HAVE HEARD THE RIVAL SUBMISSIONS AND ALSO PER USED THE RELEVANT FINDINGS GIVEN IN THE IMPUGNED ORDERS AS WELL AS MATERIAL REFERRED TO BEFORE US. THE IMPUGNED ADDITI ON RELATES TO ADDITION OF RS.26,68,500/- MADE U/S 69 BASED ON SEIZED DOCUMENTS FOUND FROM 1266/B, 2ND FLOOR, SAN PAULO, OPPOSITE CAFE COFFEE DAY NEAR FOOTBALL GROUND, CAND OLIM, NORTH GOA, WHICH IS A RESIDENCE OF SRI MANDEEP SING H. THESE SEIZED ANNEXURE REFERRED TO CERTAIN CASH PAYMENTS R ECEIVED BY SHRI MANDEEP SINGH WHICH HAS BEEN TREATED TO BE AS UNEXPLAINED PAYMENTS/INVESTMENTS MADE BY THE ASSESS EE- COMPANY IN THE CONSTRUCTION OF THE HOTEL. FROM THE DOCUMENTS PLACED IN THE PAPER BOOK AS WELL AS OBSER VATIONS NOTED IN THE IMPUGNED ASSESSMENT ORDER, IT IS AN AD MITTED FACT THAT THESE SEIZED DOCUMENTS WAS NOT FOUND FROM THE PREMISES OF THE ASSESSEE COMPANY ALBEIT IT WAS FROM THE PREMISES OF SHRI MANDEEP SINGH IN GOA, WHO WAS AN EMPLOYEE OF THE ASSESSEE-COMPANY AT THE RELEVANT TI ME. THE I.T.A. NO.1841/DEL/2016 8 ASSESSEE HAD SUBMITTED THAT HE HAD HIS OWN INDEPEND ENT CONSTRUCTION BUSINESS ALSO. HOWEVER, NEITHER THE ST ATEMENT OF SHRI MANDEEP SINGH WAS RECORDED NOR ANY EVIDENCE HA S BEEN PRODUCED BY THE ASSESSEE THAT HE CARRIED ON ANY IND EPENDENT CONSTRUCTION BUSINESS. HOWEVER IF ONE GOES BY THE PRESUMPTION UNDER THE LAW, THEN IF THE DOCUMENTS HA VE NOT BEEN FOUND FROM THE PREMISES OF THE ASSESSEE, THEN PRESUMPTION U/S.132(4A) R.W.S. 292C CANNOT BE DRAWN AGAINST THE ASSESSEE. HOWEVER, WITHOUT GOING INTO T HE MERITS OF THE ADDITION MADE U/S.69 OF RS.26,68,500/- AND C ASH OF RS.85,000/- FOUND WITH AN EMPLOYEE OF THE ASSESSEE MADE U/S 68 OF THE ACT, WE FIND SUBSTANCE IN THE ARGUMEN T RAISED BY THE LD. COUNSEL THAT SAID ADDITION SHOULD BE SET OFF FROM THE LOSSES ON ACCOUNT OF DEPRECIATION OF RS.38,13,8 22/- AND BUSINESS LOSS OF RS.92,071/-. THE SAID LOSS WAS CLA IMED IN THE REVISED RETURN AND IT CONSISTS OF LOSS ARISING FROM DEPRECIATION PUT TO USE W.E.F. 01.03.2011 AND BUSIN ESS LOSS DURING THE YEAR. THOUGH, THE ASSESSING OFFICER HAS DISALLOWED THE UNABSORBED DEPRECIATION, HOWEVER, THE LD. CIT ( A) IN PARAGRAPH 6.2 HAS GIVEN DIRECTION TO THE ASSESSING OFFICER TO CALCULATE THE DEPRECIATION ALLOWANCE AS PER SECTION 32(1) READ WITH EXPLANATION 5 OF THE ACT. THE RELEVANT OBSERVA TION AND THE FINDING OF THE LD. CIT (A) IN THIS REGARD READ AS UNDER: 6.2 I HAVE GONE THROUGH THE SUBMISSION OF APPELLAN T. THE APPELLANT HAS ALSO RELIED CIRCULAR NO.14 DATED 11.0 4.55 OF CBDT AND HE HAS FURTHER PLACED RELIANCE ON L. HRIDAY NAR AYAN VS. CIT, 78 ITR 26 (SC) & PARASURAM PRTRAY WORKS CO. LTD. VS . ITO 106 ITR 1 (SC). IN WHICH IT HAS BEEN HELD THAT ASSESSIN G OFFICER IS I.T.A. NO.1841/DEL/2016 9 DUTY BOUND TO COMPLETE THE ASSESSMENT OF ASSESSEES INCOME AND MISTAKE OF ASSESSEE CANNOT BE TAKEN ADVANTAGE B Y HIM. THERE IS FORCE IN THE ARGUMENT OF AR. SINCE THE ASS ESSING OFFICER HAS GIVEN NO FINDING AS TO WHY HE HAS IGNORED THE C LAIM OF DEPRECIATION ALLOWANCE, THEREFORE, IN VIEW OF FACTU AL AND LEGAL POSITION, HE IS DIRECTED TO CALCULATE THE DEPRECIAT ION ALLOWANCE AS PER SECTION 32(1) READ WITH EXPLANATION 5 OF THE AC T. HOWEVER, LD. CIT (A) HAS HELD THAT THIS LOSS WIL L NOT BE AVAILABLE OF SET OFF AGAINST THE ADDITION CONFIRMED U/S.69. 10. AS POINTED OUT BY THE LD. COUNSEL CBDT CIRCULAR NO.11/2019 DATED 19 TH JUNE, 2019, HAS CLARIFIED REGARDING NON AVAILABLE OF SET OFF LOSS AGAINST THE DEEMED IN COME U/S.115BBE PRIOR TO THE ASSESSMENT YEAR 2017-18. TH E RELEVANT CIRCULAR 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, 201 9 SUBJECT: CLARIFICATION REGARDING NON-ALLOWABILITY O F SET-OFF OF LOSSES AGAINST THE DEEMED INCOME UNDER SECTION 115B BE OF THE INCOME-TAX ACT, 1961 PRIOR TO ASSESSMENT-YEAR 2017- 18-REG. WITH EFFECT FROM 01.04.2017, SUB-SECTION (2) OF SE CTION 115BBE OF THE INCOME-TAX ACT, 1961 (ACT) PROVIDES THAT WHE RE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME REFERRED TO IN SECTION(S) 68/69/69A/69B/69C/69D OF THE ACT, NO DED UCTION IN RESPECT OF ANY EXPENDITURE OR ALLOWANCE OR SET OFF OF ANY LOSS I.T.A. NO.1841/DEL/2016 10 SHALL BE ALLOWED TO THE ASSESSEE UNDER ANY PROVISIO NS OF THE ACT IN COMPUTING THE INCOME REFERRED TO IN SECTION 115B BE(1) OF THE ACT. 2. IN THIS REGARD, IT HAS BEEN BROUGHT TO THE NOTI CE OF THE CENTRAL BOARD OF DIRECT TAXES (THE BOARD) THAT IN ASSESSMEN TS PRIOR TO ASSESSMENT YEAR 2017-18, WHILE SOME OF THE ASSESSIN G OFFICERS HAVE ALLOWED SET OFF OF LOSSES AGAINST THE ADDITION S MADE BY THEM UNDER SECTION(S) 68/69/69A/698/69C/69D, IN SOM E 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 APP LICABLE WITH EFFECT FROM 1ST OF APRIL, 2017 AND APPLIES FROM ASS ESSMENT YEAR 2017-18 ONWARDS, CONFLICTING VIEWS HAVE BEEN TAKEN BY THE ASSESSING OFFICERS IN ASSESSMENTS FOR YEARS PRIOR T O ASSESSMENT YEAR 2017-18. THE MATTER HAS BEEN REFERRED TO THE B OARD SO THAT A CONSISTENT APPROACH IS ADOPTED BY THE ASSESSING O FFICERS 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 CONTAIN S EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT, 2016, AT PARA 46.2, REGARDING AMENDMENT MADE IN SECTION 1156 BE(2) OF THE ACT MENTIONS THAT CURRENTLY THERE IS UNCERTAINT Y ON THE ISSUE OF SET-OFF OF LOSSES AGAINST INCOME REFERRED TO IN SECTION 115BBE. IT ALSO FURTHER MENTIONS THAT THE PRE-AMENDED PROVI SION OF SECTION 115BBE OF THE ACT DID NOT CONVEY THE INTENT ION THAT LOSSES SHALL NOT BE ALLOWED TO BE SET-OFF AGAINST I NCOME REFERRED TO IN SECTION 115BBE OF THE ACT AND HENCE, THE AMEN DMENT WAS MADE VIDE THE FINANCE ACT, 2016. I.T.A. NO.1841/DEL/2016 11 4. THUS KEEPING THE LEGISLATIVE INTENT BEHIND AMEND MENT IN SECTION 115BBE (2) VIDE THE FINANCE ACT, 2016 TO RE MOVE ANY AMBIGUITY OF INTERPRETATION, THE BOARD IS OF THE VI EW 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 ASSESSE E 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 OF FICERS. THE PENDING ASSESSMENTS AND LITIGATIONS ON THIS ISSUE M AY BE HANDLED ACCORDINGLY. 11. THE AFORESAID CIRCULAR THUS CLEARLY PROVIDES TH AT THE ASSESSING OFFICER SHOULD ALLOW THE SAID LOSS AGAINS T THE ADDITION MADE U/S.68/69 ETC. AND THE AMENDMENT BROU GHT BY THE FINANCE ACT, 2016 IS W.E.F. 01.04.2017 AND ANY DENIAL OF SUCH SET OFF IS ONLY APPLICABLE FROM THE ASSESSMENT YEAR 2017-18; AND ASSESSMENT FOR THE PERIOD PRIOR TO ASS ESSMENT YEAR 2017-18, SUCH SET OFF WOULD BE ALLOWED AGAINST INCOME DETERMINED U/S.115BBE. THUS, IN VIEW OF CLEAR CUT CLARIFICATION BY THE CBDT, WE HOLD THAT THE ADDITIO N OF RS.26,68,500/- MADE U/S. 69 AND ADDITION OF RS.85,0 00/- MADE U/S.68 IS LIABLE TO BE SET OFF FROM THE LOSS A GGREGATING TO RS.39,05,893/-. ACCORDINGLY, THE ADDITIONS MADE BY THE ASSESSING OFFICER AND CONFIRMED BY THE LD. CIT (A) WOULD BE LIABLE TO BE SET OFF FROM SUCH LOSSES. WITH THIS DI RECTION, THE APPEAL OF THE ASSESSEE IS PARTLY ALLOWED. I.T.A. NO.1841/DEL/2016 12 12. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS PA RTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 14 TH OCTOBER, 2019. SD/- SD/- [B.R.R. KUMAR] [AMIT SHUKLA] [ACCOUNTANT MEMBER] JUDICIAL MEMBER DATED: 14 TH OCTOBER, 2019 PKK: