OSHO MINERALS INDIA PVT. LTD., MUMBAI V. PR. CIT - 3 , MUMBAI

ITA 3073/MUM/2019

• Counselvise Citation: [2019] 112 COUNSELVISE.COM (IT) 1081 (ITAT-MUMBAI)
• Duration Of Justice: 5 month(s) 22 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-10-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2014-2015
• Appeal Filed On: 09-05-2019
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: AWUNG ASHI GINSON
• Assessee Lawyers: GO VIND AGGARWAL
• Keywords: Unexplained cash credit; Depreciation; Set aside
• Section: 143(3); 201; 68; 263

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCHES C , MUMBAI BEFORE S HRI S. R IFAUR RA HMAN (AM ) AND SHRI RAM LAL NEGI (JM) ITA NO. 3073/MUM/2019 ASSESSMENT Y EAR: 2014 - 15 OSHO MINERALS INDIA PVT. LTD., 11 TH FLOOR, PENINSULA BUSINESS PARK B WING, LOWER PAREL, MUMBAI 400013 PAN: AABCR8691J VS. THE PRINCIPAL COMMISSIONER OF INCOME TAX - 3, ROOM NO. 612, 6 TH FLOOR, AAYKAR BHAVAN, M.K. ROAD, MUMBAI - 400020 (APPELLANT) (RESPONDENT) ASSESSEE BY : SHRI GOVIND AGGARWAL (A R) REVENUE BY : SHRI AWUNG ASHI GINSON ( CIT DR ) DATE OF HEARING: 18 /09 /201 9 DATE OF PRONOUNCEMENT: 31 / 10 /201 9 O R D E R PER RAM LAL NEGI, JM THIS APPEAL HAS BEEN FILED BY THE ASSESSEE AGAINST THE ORDER DATED 25.03. 2019 PASSED BY THE LD. PRINCIPAL COMMISSIONER OF INCOME TAX 3 (FOR SHORT THE PCIT) , MUMBAI, FOR THE ASSESSMENT YEAR 2014 - 15 , WHEREBY THE LD. PCIT HAS REVISED T HE ASSESSMENT ORDER PASSED BY THE AO U/S 143 (3) OF THE ACT BY EXERCISING JURISDICTION U/S 263 O F THE INCOME TAX ACT, 1961 (FOR SHORT THE ACT). 2. IN THIS CASE, THE AO PASSED ASSESSMENT ORDER U/S 143(3) OF THE ACT, DETERMINING THE TOTAL LOSS OF THE ASSESSEE AT RS. 6,63,85,814/ - AS AGAINST THE LOSS OF RS 9,27,07,655/ - FILED BY THE ASSESSEE IN ITS RE TURN OF INCOME. SUBSEQUENTLY, THE LD. PR.CIT REVISED THE ASSESSMENT ORDER PASSED BY THE AO EXERCISING THE JURISDICTION U/S 263 OF THE ACT, ON THE GROUND THAT IN THE ORDER U/S 143(3) OF THE ACT THE AO HAS MADE ADDITION OF RS. 2,40,16,841/ - AFTER 2 ITA NO. 3073 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 HOLDING THE UNSECURED LOANS FROM FOUR PARTIES AS UNEXPLAINED CASH CREDITS U/S 68 OF THE ACT, HOWEVER, WHILE COMPUTING TAX THE AO ALLOWED SET OFF LOSSES AGAINST THIS INCOME U/S 68 IN VIOLATION OF THE PROVISIONS OF SECTION 115BBE. THE ASSESSEE IS IN APPEAL AGAINST THE ACTION OF THE LD. PR. CIT. 3 . THE ASSESSEE HAS CHALLENGED THE IMPUGNED ORDER PASSED BY THE LD. CIT (A) ON THE FOLLOWING EFFECTIVE GROUNDS : - 1. THE LEARNED PCIT HAS ERRED IN LAW AND ON THE FACTS OF THE CASE, IN NOT ALLOWING TO SET - OFF THE LOSS AGAINST THE ADDITION OF INCOME U/S 68 OF THE ACT WITHOUT APPRECIATING THE FACT THAT THE PROVISIONS OF SECTION 115BBE HAS BEEN AMENDED PROSPECTIVELY. 2. THE LEARNED PCIT HAS ERRED IN LAW AND ON THE FACTS OF THE CASE IN INTIMATING REVISIONARY PROVISIONS U/S 263 OF TH E INCOME TAX ACT, 1961. 4. AT THE OUTSET, THE LD. COUNSEL FOR THE ASSESSEE POINTED OUT THAT PROVISIONS OF SECTION 115BBE ARE NOT APPLICABLE IN THE CASE OF THE ASSESSEE AS THE AMENDMENT INSERTING THE WORDS SET OFF OF LOSS IS APPLICABLE WITH EFFECT FROM 1 ST . APRIL 2017 APPLICABLE FROM THE ASSESSMENT YEAR 2017 - 18 ONWARDS. THE LD. COUNSEL INVITED OUR ATTENTION TO THE CIRCULAR NO 11/2019 DATED 19 TH OF JUNE 2019 ISSUED BY THE GOVERNMENT OF INDIA , MINISTRY OF FINANCE ,DEPARTMENT OF REVENUE CBDT, NORTH BLOCK, NEW NELHI (COPY PLACED ON RECORD) WHICH CLARIFIES THAT THE AMENDMENT IN SECTION 115BBE(2) IS APPLICABLE WITH EFFECT FROM THE ASSESSMENT YEAR 2017 - 18 ONWARDS. THE LD. COUNSEL FURTHER SUBMITTED THAT IN VIEW OF THE AFORESAID FACTS, THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT IS NOT SUSTAINABLE IN LAW AND LIABLE TO BE QUASHED. THE LD. COUNSEL RELIED ON THE ORDER OF THE JAIPUR TRIBUNAL IN THE CASE OF NAVJEEVAN TRADE & COMMERCE (P) LTD VS. ITO ITA NO 575/JP/2018 DATED 03.08.2018 TO SUBSTANTIATE ITS CLAIM. 5. ON THE OTHER HAND, THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON THE OODER PASSED BY THE LD PR. CIT. 6 . WE HAVE CAREFULLY GONE THROUGH THE MATERIAL ON RECORD INCLUDING THE CIRCULAR OF THE CBDT AND THE DECISION OF THE ITAT RELIED UPON BY THE LD. 3 ITA NO. 3073 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 COUNSEL. AS P OINTED OUT BY THE LD. COUNSEL FOR THE ASSESSEETHE CBDT HAS CLARIFIED THE ISSUE REGARDING APPLICABILITY OF THE PROVISIONS UNDER SECTION 115BBE OF THE ACT . PARA 4 PARA OF THE CIRCULAR READS AS UNDER: 4. THUS KEEPING IN THE LEGISLSTIVE INTENT BEHIND AMENDM ENT IN SECTION 115BBE(2) VIDE THE FINANCE ACT, 2016 TO REMOVE ANY AMBIGUITY OF INTERPRETATION, THE BOARD IS OF THE VIEW THAT SINCE, THE TERM R SET OFF OF ANY LOSSWAS SPECIFICALLY INSERTED ONLY VIDE FINANCE ACT 2016, W.E.F. 01.04.2017, AN ASSESSEE IS ENTI TLED TO CLAIM SET OFF OF LOSSES AGAINST INCOME DETERMINED UNDER SECTION 115BBE OF THE ACT TILL THE ASSESSMENT YEAR 2016 - 17. 6. SUB SECTION (2) OF SECTION 115BBE OF THE INCOME TAX ACT, 1961 READS AS UNDER: - N OTWITHSTANDING ANYTHING CONTAINED IN THIS ACT, NO DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ALLOWANCE OR SET OFF OF ANY LOSS SHALL BE ALLOWED TO THE ASSESSEE UNDER ANY PROVISION OF THIS ACT IN COMPUTING HIS INCOME REFERRED TO IN CLAUSE (A) AND CLAUSE (B) OF SUB SECTION (1). 7. AS IS CLEAR FROM THE SA ID CIRCULAR THAT THE TERM OR SET OFF OF ANY LOSS HAS BEEN INSERTED VIDE FINANCE A CT, 2016 AND THE ASSESSEE IS ENTITLED TO CLAIM SET OFF OF LOSSES AGAINST INCOME DETERMINED UNDER SECTION 115BBE OF THE ACT, TILL THE ASSESSMENT YEAR 2016 - 1 7. SINCE THE ASSESSEES APPEAL PERTAINS TO THE ASSESSMENT YEAR 2014 - 15, IT WAS ENTITLED TO CLAIM SET OFF LOSSES AGAINST INCOME DETERMINED UNDER SECTION 115BBE OF THE ACT. THEREFORE, IN OUR CONSIDERED VIEW, SINCE THE IMPUGNED ORDER PASSED BY THE LD . PR.CIT IS CONTRARY TO THE EXPRESSED PROVISIONS OF THE ACT THE SAME IS LIABLE TO BE SET ASIDE. 8. FURTHER, HE JAIPUR BENCH OF THE ITAT HAS HELD IN THE CASE OF NAVJEEVAN TRADE & COMMERCE (P) LTD VS. ITO ( SUPRA) HAS HELD THAT SINCE THE AMENDMENT BROUGHT BY THE FINA NCE ACT, 2016 IN SECTION 115BBE(2) WAS EFFECTIVE FROM ASSESSMENT YEAR 2017 - 18, THE ASSESSEE WAS ELIGIBLE TO CLAIM SET OFF OF CURRENT YEAR BUSINESS LOSS INCLUDING DEPRECIATION, AGAINST CURRENT YEAR INCOME UNDER THE HEAD INCOME ASSESSED FROM OTHER SOURCES, U NDER SECTION 71 OF THE ACT. THE ASSESSEE IN THIS CASE HAD DECLARED COMMISSION AN D BROKERAGE INCOME IN ITS 4 ITA NO. 3073 / MUM/2019 ASSESSMENT YEAR: 2014 - 1 5 PROFIT AND LOSS ACCOUNT AND OFFERED THE SAME TO TAX UNDER THE HEAD PROFIT AND GAIN OF THE BUSINESS. THE AO TREATED IT AS UNEXPLAINED CASH CREDIT AND B ROUGHT TO TAX UNDER SECTION 68 READ WITH SECTION 115JBBE. HENCE, THE ASSESSEES CASE IS ALSO COVERED BY THE DECISION OF THE JAIPUR BENCH OF THE TRIBUNAL. 9. SINCE, THE IMPUGNED ORDER PASSED BY THE LD. PR. CIT U/S 263 IS CONTRARY TO THE PROVISIONS OF THE AC T AND CONTRARY TO THE DECISION OF THE JAIPUR BENCH OF TRIBUNAL DISCUSSED ABOVE, WE ALLOW THE SOLE GROUND OF APPEAL OF THE ASSESSEE AND QUASH THE SAID ORDER HOLDING THE SAME AS NOT SUSTAINABLE AND BAD IN LAW. IN THE RESULT, APPEAL FILED BY THE ASSESSEE FO R ASSESSMENT YEAR 2014 - 2015 IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 31 ST . OCTO BER , 2019 . SD/ - SD/ - ( S. RIF A UR REHMAN ) ( RAM LAL NEGI ) ACCOUNTANT MEMBER JUDICIAL MEMBER MUMBAI ; DATED: 31 / 10 / 201 9 ALINDRA, PS / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - 4. / CIT 5. , , / DR, ITAT, MUMBAI 6. / GUARD FILE . / BY ORDER, //TRUE COPY// / (DY./ASSTT. REGISTRAR) , / ITAT, MUMBAI