M/s. Shaktiman Cements Ltd., Punjab V. ACIT, Karnal

ITA 2779/DEL/2017

• Counselvise Citation: [2020] 111 COUNSELVISE.COM (IT) 6761 (ITAT-DELHI)
• Duration Of Justice: 2 year(s) 9 month(s) 3 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-02-2020
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: G
• Assessment Year: 2013-2014
• Appeal Filed On: 04-05-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Deemed to accrue or arise in india
• Section: 201; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH G, NEW DELHI BEFORE SH. N. K. CHOUDHARY, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER ITA NO. 2779/DEL/2017 : ASSTT. YEAR : 201 3-14 M/S SHAKTIMAN CEMENTS LTD., C/O RAJIV GOEL & ASSOCIATES, CHARTERED ACCOUNTANT, 179, BANK ROAD, AMBALA CANTT. VS ASSISTANT COMMISSIONER OF INCOME TAX, CENTRAL CIRCLE, KARNAL (APPELLANT) (RESPONDENT) PAN NO. AA CCS1259A ASSESSEE BY : SH. ROHIT GOEL, CA REVENUE BY : SH. H. K. CHOUDHARY, CIT DR DATE OF HEARING: 06 . 0 2 .2020 DATE OF PRONOUNCEMENT: 07 .02 .2020 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN FILED BY THE ASSESSEE A GAINST THE ORDER OF LD. CIT(A)-3, GURGAON DATED 17.02.2017 . 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE ASSESS EE: 1. THE LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE DISALLOWANCE FOR SET OFF UNABSORBED DEPRECIATIO N AND BUSINESS LOSS OF EARLIER YEAR AND CURRENT YEAR AGAINST THE INCOME DECLARED AND ASSESSED U/S 68 AMOUNTING RS. 1,09,40,000/-. 2. THAT LEARNED COMMISSIONER OF INCOME TAX (APPEALS) HAS ERRED IN LAW AND FACTS IN CONFIRMING THE ACTION OF AO THAT INCOME U/S 68 IS ASSESSABLE A S DEEMED INCOME IGNORING THE PROVISIONS OF SECTION 115BBE INTRODUCED FROM AY 2013-14 AND RESTRICTION ON LOSS SET OFF U/S 115BBE (2) INTRODUCED W.E.F. 1- 4- 2017 AND NOT RETROSPECTIVELY FROM AY 2013-14. ITA NO. 2779/DEL/2017 SHAKTIMAN CEMENTS LTD. 2 3. THE MOOT ISSUE REVOLVES AROUND GROUND NO. 2 WHER EIN THE LD. CIT (A) HELD THAT THE PROVISIONS OF SECTION 115 BBE INTRODUCED W.E.F. 01.04.2017 IS APPLICABLE TO RETR OSPECTIVELY FOR THE ASSESSMENT YEAR 2013-14 REGARDING SET-OFF O F LOSSES AGAINST UNDISCLOSED INCOME. 4. WE HAVE LAID OUR EYES ON THE CIRCULAR NO. 11/201 9 DATED 19.06.2019 ISSUED BY CBDT. THE ENTIRE TEXT OF THE C IRCULAR IS 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 SEC TION 115BBE OF THE INCOME-TAX ACT, 1961 (ACT ) PROVIDES THAT WHERE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME REFERRED TO IN S ECT ION(S) 68/69/69A/69B/69C/69D OF THE ACT, NO DEDUCTION IN R ESPECT OF ANY EXPENDITURE OR ALLOWANCE OR SET OFF OF ANY LOSS SHALL BE ALLOWED TO THE 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 NOTIC E 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/69B/69C/69D, IN SOME CAS ES, SET OFF OF LOSSES AGAINST THE ADDITIONS MADE UNDER SECTION 115BBE(1) OF THE ACT HAVE NOT BEEN ALLOWED. AS THE AMENDMENT INS ERTING THE WORDS OR SET OFF OF ANY LOSS IS APPLICABLE WITH E FFECT FROM P T OF APRIL, 2017 AND APPLIES FROM ASSESSMENT YEAR 2017-1 8 ONWARDS, CONFLICTING VIEWS HAVE BEEN TAKEN BY THE ASSESSING OFFICERS IN ITA NO. 2779/DEL/2017 SHAKTIMAN CEMENTS LTD. 3 ASSESSMENTS FOR YEARS PRIOR TO ASSESSMENT YEAR 2017 -18. THE MATTER HAS BEEN REFERRED TO THE BOARD SO THAT A CON SISTENT APPROACH IS ADOPTED BY THE ASSESSING OFFICERS WHILE APPLYING PROVISION OF SECTION 115BBE IN ASSESSMENTS FOR PERI OD PRIOR TO THE ASSESSMENT YEAR 2017-18. 3. THE BOARD HAS EXAMINED THE MATTER. THE CIRCULAR NO. 3/2017 OF THE BOARD DATED 20 TH JANUARY, 2017 WHICH CONTAINS EXPLANATORY NOTES TO THE PROVISIONS OF THE FINANCE ACT, 2016, A T PARA 46.2, REGARDING AMENDMENT MADE IN SECTION 115BBE(2) OF TH E 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 REFERRE D 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 AMEND MENT IN SECTION 115BBE(2) VIDE THE FINANCE ACT, 2016 TO REM OVE 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.EJ. 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 OF FICERS. THE PENDING ASSESSMENTS AND LITIGATIONS ON THIS ISSUE M AY BE HANDLED ACCORDINGLY. 6. HINDI VERSION TO FOLLOW. (RAJARAJESWARI R.) UNDER SECRETARY (ITA.II), CBDT (F.NO.22S/4S/2019-ITA.II) ITA NO. 2779/DEL/2017 SHAKTIMAN CEMENTS LTD. 4 5. ON GOING THROUGH THE PARA NO. 4, WE FIND, THE CB DT CATEGORICALLY HELD THAT THE ASSESSEE IS ENTITLED TO SET-OFF OF LOSSES TILL THE ASSESSMENT YEAR 2016-17. THE CASE O F THE ASSESSEE BEFORE US PERTAINS TO ASSESSMENT YEAR 2013 -14 AND HENCE THE SET-OFF CLAIMED BY THE ASSESSEE ON THE UN DISCLOSED INCOME IS LEGALLY VALID. HENCE, THE ADDITION MADE B Y THE ASSESSING OFFICER IS HEREBY DIRECTED TO BE DELETED. 6. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS ALL OWED. ORDER PRONOUNCED IN THE OPEN COURT ON 07/02/2020. SD/- SD/- (N. K. CHOUDHARY) (DR. B.R.R. KUMAR) JUDICIAL MEMBER ACCOUNTANT M EMBER DATED: 07/02/2020 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR