Shri Sumer Bhurmal Kothari, Ahmedabad V. The Income Tax Officer, Ward-3(1)(4), Ahmedabad

ITA 2868/AHD/2015

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 9815 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 month(s) 27 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2012-2013
• Appeal Filed On: 12-10-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: D V SINGH
• Keywords: Capital asset; Business income; Salary income
• Section: 143(3)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AHMEDABAD A BENCH BEFORE: S H RI ANIL CHATURVEDI , ACCOUNTANT MEMBER AND SHR I S. S. GODARA , JUDICIAL MEMBER SHRI SUMER BURMAL KOTHARI, 403 - 404, FLORENCE, OPP. ASHRAM ROAD POST OFFICE, ASHRAM ROAD, AHMEDABAD - 380009 PAN: ACKPK8435H (APPELLANT) VS ITO, WARD 3(1)(4), AHMEDABAD (RESPONDENT) REVENUE BY : S H RI D.V. SIN GH, D . R. ASSESSEE BY: S H RI HARDIK VORA , A.R. DATE OF HEARING : 04 - 01 - 2 016 DATE OF PRONOUNCEMENT : 08 - 01 - 2 016 / ORDER P ER : S. S. GODARA , JUDICIAL MEMBER : - THIS ASSESSEE S APPEAL FOR A.Y. 2012 - 13 , AR ISES FROM ORDER OF THE CIT(A) - 9, AHMEDABAD DATED 06 - 07 - 2015 IN APPEAL NO. CIT(A) - 9/596 / ITO, WD - 3(1)(4)/14 - 15 , IN PROCEEDINGS UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961; IN SHORT THE ACT . I T A NO . 2868 / A HD/20 15 A SSESSMENT YEAR 2012 - 13 I.T.A NO. 2868/AHD/2015 A.Y. 2012 - 13 PAGE NO SUMER BHURMAL KOTHARI VS. ITO 2 2. THE ASSESSEE S SOLE SUBSTANTIVE GROUND CHALLENGES ACTION OF BOTH THE LOWER AUTHORITIES IN NOT ALLOWING IT SET OFF OF LOSS OF RS. 7,81,608/ - UNDER THE HEAD INCOME FROM OTHER SOURCES AGAINST SALARY INCOME OF RS. 8 LACS. THERE IS NO DISPUTE SO FAR AS FACTS O F THE CASE ARE CONCERNED. THE ASSESSEE CLAIMED THE ABOVE SET OFF BEFORE THE ASSESSING OFFICER. HE DISALLOWED THE SAME IN A REGULAR ASSESSMENT FRAMED ON 04 - 03 - 2015 INTER ALIA HOLDING THAT LOSS ARISING FROM THE HEAD OTHER SOURCES CANNOT BE SET OFF AGAINST SALARY OR BUSINESS INCOME, SECTION 57 PROVIDES DEDUCTION ONLY FOR WORKING OF INCOME CHARGEABLE UNDER THE HEAD INCOME FROM THE OTHER SOURCES AND THE LOSS CHAPTER IN THE ACT DOES NOT PROVIDE FOR ANY SUCH SET OFF, THE CRUCIAL EXPRESSION SUBJECT TO PROVISIONS IN THIS CHAPTER DOES NOT PRESCRIBE SUCH A LOSS TO BE SET OFF ETC. THE CIT(A) UPHOLDS THIS REASONING BY A NON - SPEAKING ORDER. WE DO NOT WISH TO COME TO THIS TECHNICAL ASPECT AND ADVERT TO THE ISSUE ITSELF. 3. WE NOTICE FROM CHAPTER VI OF THE ACT THA T THE SAME PRESCRIBE S AGGREGATION OF INCOME AND SET OFF OR CARRY FORWARD OF LOSSES. LOSS SET OFF PROVISION IN CASE OF INTER HEAD INCOME COMES U/S. 70. SECTION 71 APPLIES IN CASE OF INTRA HEAD LOSSES AS UNDER: - [SET OFF OF LOSS F R O M ONE HEAD AGAINST INC OME F R O M ANOTHER. 71 (1) WHERE IN RESPECT OF ANY ASSESSMENT YEAR THE NET RESULT OF THE COMPUTATION UNDER ANY HEAD OF INCOME , OTHER THAN CAPITAL GAINS , IS A LOSS A ND THE ASSESSEE HAS NO INCOME UNDER THE HEAD CAPITAL GAINS , HE SH A LL SUBJECT TO THE PROVI SIONS OF THIS CHAPTER , BE ENTITLED TO HAVE THE AMOUNT OF SUCH LOSS SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDER ANY OTHER HEAD. I.T.A NO. 2868/AHD/2015 A.Y. 2012 - 13 PAGE NO SUMER BHURMAL KOTHARI VS. ITO 3 (2) WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NET RESULT OF THE COMPUTATION UNDER ANY HEAD OF INCOME, OTHER THAN CAPITAL GAINS , IS A LOSS AND THE ASSESEE HAS INCOME ASSESSABLE UNDER THE HEAD CAPITAL GAINS , SUCH LOSS MAY, SUBJECT TO THE PROVISIONS OF THIS CHAPTER, BE SET OFF AGAINST HIS INCOME, IF ANY, ASSESSABLE FOR THAT ASSESSMENT YEAR UNDE R ANY HEAD OF INCOME INCLUDING THE HEAD CAPITAL GAINS (WHETH E R RELATING TO SHORT - TERM CAPITAL ASSE T S OR ANY OTHER CAPITAL ASSETS). [(2A) N OTWITHSTANDING ANYTHING CONTAINED IN SUB - SECTION (1) OR SUB - SECTION (2), WHERE IN RESPECT OF ANY ASSESSMENT YEAR, T HE NET RESULT OF THE COMPUTATION UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION I S A LOSS AND THE ASSESSEE HAS INCOME ASSESSABLE UNDER THE HEAD SALARIES , THE ASSESSEE HAS SHALL NOT BE ENTITLED TO HAVE SUCH LOSS SET OFF AGAINST SUCH INCOME.] (3)WHERE IN RESPECT OF ANY ASSESSMENT YEAR, THE NET RESULT OF TH E COMPUTATION UNDER THE HEAD CAPITAL GAINS IS A LOSS AND THE ASSESSEE HAS INCOME ASSESSABLE UNDER ANY OTH ER HEAD OF INCOME, TH E ASSESSEE SHALL NOT BE ENTITLED TO HAVE SUCH LOSS SET OFF AGA INST INCOME UNDER THE OTHER HEAD.] [(4) WHERE THE NET RESULT OF THE COMPUTATION UNDER THE HEAD INCOME FROM HOUSE PROPERTY IS A LOSS, IN RESPECT OF THE ASSESSMENT YEARS COMMENCING ON THE 1 ST DAY OF APRIL, 1995 AND THE 1 ST DAY OF APRIL, 1996, SUCH LOSS SH ALL BE FIRST SET OFF UNDER SUB - SECTIONS (1) AND (2) AND THEREAFTER THE LOSS REFERRED TO IN SECTION 71A SHALL BE SET OFF IN THE RELEVANT ASSESSMENT YEAR IN ACCORDANCE WITH THE PROVISIONS OF THAT SECTION.] 4. A PERUSAL OF SECTION 71 MAKES IT CLEAR THAT IT IS ENABLING PROVISION WHICH ALLOWS SET OFF OF LOSS IN CASE THE NET RESULT OF COMPUTATION UNDER ANY HEAD OF INCOME OTHER CAPITAL GAINS IS A LOSS AND THERE ARE NO CAPITAL GAINS IN THE RESPECTIVELY ASSESSMENT YEAR. THE SAME HAS BEEN MADE SUBJECT TO OTHER PROVISIONS OF CHAPTER VI. SUB - SECTION 1 ITSELF CLARIFIES THAT THIS SET OFF OF LOSS CANNOT BE RESORTED TO AGAINST INCOME ASSESSABLE FOR THE VERY ASSESSMENT YEAR UNDER I.T.A NO. 2868/AHD/2015 A.Y. 2012 - 13 PAGE NO SUMER BHURMAL KOTHARI VS. ITO 4 ANY OTHER HEAD. WE PAUSE HERE FOR A SECOND AND REVERT BACK TO FACTS OF THE CASE. THE ASSESSE E S LOSS FROM OTHER SOURCES IS NOT IN DISPUTE AND SO IS HIS INCOME FROM THE OTHER HEAD OF SALARY. NEXT COMES SUB - SECTION 2 WHICH APPLIES IN CASE THE NET RESULT OF COMPUTATION UNDER ANY HEAD OF INCOME OTHER THAN CAPITAL GAINS IS LOSS AND THE ASSESSEE HAS INCOME ASSESSABLE UND ER THE HEAD CAPITAL GAINS. THIS SUB - SECTION OBVIOUSLY DOES NOT APPLY TO FACTS OF THE INSTANT CASE. THIS IS FOLLOWED SUB - SECTION 2(A) INSERTED IN THE ACT W.E.F. 01 - 04 - 2005 BY THE FINANCE ACT, 2004. THIS SUB - SECTION STARTS WITH A NON - OBSTANTE CLAUSE TO AB OVE STATED SUB - SECTION 1 AND 2 BARS SET OFF OF LOSS ARISING FROM PROFITS AND GAINS FROM BU SINESS OR PROFESSION AGAINST SA LARY INCOME. THE SAME ALSO DOES NOT APPLY IN THE FACTS OF THE CASE. WE COME TO SUB - SECTION 3 PRESCRIBING SET OFF OF LOSS ARISING FROM CA PITAL GAINS. WE DO NOT ENTER INTO A LENGTHY DISCUSSION AND OBSERVE THAT THE LOSS IN QUESTION IS UNDER THE OTHER SOURCES. SIMILAR IS THE SITUATION IN SUB - SECTION 4 APPLICABLE IN CASE OF INCOME FROM HOUSE PROPERTY. WE ARE OF THE OPINION THAT SUB - SECTION S 2 TO 4 HEREINABOVE DO NOT ACT AN EXCEPTION TO SECTION 71(1) EXCEPT TO THE EXTENT INDICATED THEREIN. WE PROCEED FURTHER IN THIS CHAPTER AND FIND THAT SECTION 74A ONLY DEALS WITH LOSSES FROM CERTAIN SPECIFIED SOURCES FALLING UNDER THE HEAD INCOME FROM OTHER SOURCES . THE ONLY SPECIFIED SOURCE THEREIN IS HORSE RACING WHICH OBVIOUSLY DOES NOT APPLY IN THE INSTANT CASE. 5. THE REVENUE STRONGLY SUPPORTS BOTH THE LOWER AUTHORITIES VIEWS A LOSS ARISING FROM THE HEAD OTHER SOURCES IS NOT TO BE SET OFF AGAINST SAL ARY INCOME. WE HAVE THOROUGHLY ANALYZED RELEVANT I.T.A NO. 2868/AHD/2015 A.Y. 2012 - 13 PAGE NO SUMER BHURMAL KOTHARI VS. ITO 5 PROVISIONS OF SECTION 71 HEREINABOVE. WE FIND THAT ALL NEGATIVE COVENA NTS IN SECTION 71 SUB - SECTIONS 2 TO 4(SUPRA) NOWHERE COVER FACTS OF THE INSTANT CASE. WE REITERATE THAT SUCH CLAUSES BARRING APPLICATI ON OF BENEFICIAL PROVISION HAVE TO BE LITERALLY INTERPRETED AND SCOPE THEREOF CANNOT BE WIDENED. WE ACCORDINGLY CONCLUDE THAT THE ASSESSEE S CASE SEEKING SET OFF OF HIS LOSS ARISING FROM OTHER SOURCES OF RS. 7,81, 608/ - DESERVES TO BE SET OFF AGAINST HIS SALARY INCOME OF RS. 8 LACS (SUPRA) AS P ER SECTION 71(1) OF THE ACT. WE ORDER ACCORDINGLY. THE IMPUGNED DISALLOWANCE OF SET OFF OF LOSS IS DELETED. 6. THIS ASSESSEE S APPEAL IS ALLOWED ORDER PR ONOUNCED IN THE OPEN C OURT ON 08 - 01 - 201 6 SD/ - SD/ - ( ANIL CHATURVEDI ) ( S. S. GODARA ) ACCOUNTANT MEMBER JUDICIAL MEMBER AHMEDABAD : DATED 08 /01/2016 AK / COPY OF ORDER FORWARDED TO: - 1. ASSESSEE 2. REVENUE 3. CONCERNED CIT 4. CIT (A) 5. DR, ITAT, AHMEDABAD 6. GUARD FILE. BY ORDER/ , / ,