Oberoi Motors, Ambala V. ACIT, Central circle, Karnal

ITA 3513/DEL/2018

• Counselvise Citation: [2021] 107 COUNSELVISE.COM (IT) 8039 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 3 month(s) 14 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 25-08-2021
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: E
• Assessment Year: 2013-2014
• Appeal Filed On: 11-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: PRAMITA M BISWAS
• Keywords: Business income; Depreciation; Business expenditure; Deemed to accrue or arise in india; Unabsorbed depreciation; Set aside
• Section: 133A; 72; 13; 68

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI E BENCH: NEW DELHI (THROUGH VIDEO CONFERENCING ) BEFORE SHRI KUL BHARAT, JUDICIAL MEMBER & SHRI O.P.KANT, ACCOUNTANT MEMBER ITA NO.3513/DEL/2018 ASSESSMENT YEAR : 2013-14 OBEROI MOTORS, C/O-RAJIV GOEL & ASSOCIATES, 179, BANK ROAD, AMBALA CANTT., HARYANA PAN-AAAFQ5401H VS ACIT, CENTRAL CIRCLE, KARNAL. APPELLANT RESPONDENT APPELLANT BY SH.ROHIT GOEL, CA RESPONDENT BY MS. PRAMITA M.BISWAS, CIT DR DATE OF HEARING 14.07.2021 DATE OF PRONOUNCEMENT 25 .0 8 .2021 ORDER PER KUL BHARAT, JM : THIS APPEAL FILED BY THE ASSESSEE FOR THE ASSESSMEN T YEAR 2013-14 IS DIRECTED AGAINST THE ORDER OF LD. CIT(A)-2, GURGAON DATED 01.02.2018. THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL:- 1. 'THE LEARNED CIT(APPEALS) HAS ERRED IN LAW AND F ACTS IN NOT ALLOWING THE SET OFF OF BUSINESS LOSS AND UNABSORBE D DEPRECIATION OF SCOOTER BUSINESS AS HELD TO BE ELIGIBLE FOR CARRIED FORWARD AGAINST PROPERTY DEALING INCOME OF RS.25,00,000/- FOR THE Y EAR. 2. THAT LEARNED CIT(A) HAS ERRED IN LAW AND FACTS I N COMPUTING THE INCOME FROM PROPERTY DEALING BUSINESS UNDER DEEMED INCOME IN PLACE OF INCOME FROM BUSINESS. 3. THAT APPELLANT CRAVES LEAVE TO ADD, ALTER, AMEND OR TO SUBSTITUTE THE ABOVE GROUNDS OF APPEAL EITHER BEFORE OR AT THE TIME OF HEARING OF CASE. ITA NO. 3513/DEL/2018 2 | P A GE 2. THE ONLY EFFECTIVE GROUND RAISED BY THE ASSESSEE IN THIS APPEAL IS AGAINST THE DECLINING THE CLAIM OF SET OFF OF BUSIN ESS LOSS AND UNABSORBED DEPRECIATION OF SCOOTER BUSINESS AGAINST PROPERTY DEALING INCOME OF RS.25,00,000/-. 3. THE FACTS GIVING RISE TO THE PRESENT APPEAL ARE THAT A SURVEY OPERATION U/S 133A OF THE INCOME TAX ACT, 1961 (THE ACT) WA S CONDUCTED AT THE PREMISES OF THE ASSESSEE FIRM ON 04.09.2012. SUBSE QUENTLY, THE CASE OF THE ASSESSEE WAS PICKED UP FOR SCRUTINY ASSESSMENT. THE ASSESSING OFFICER OBSERVED THAT THE ASSESSEE FIRM CLAIMED GROSS PROF IT OF RS.7,07,208/- AND NET LOSS OF RS.4,99,856/- IN THE PROFIT & LOSS A/C. FURTHER, IN THE COMPUTATION OF INCOME U/S 68 OF THE ACT AMOUNTING T O RS.25,00,000/- WHICH WAS SURRENDERED DURING THE COURSE OF SURVEY, HAS BEEN ADDED IN THE BUSINESS INCOME. HE FURTHER OBSERVED THAT THE ASSE SSEE AFTER SURRENDERING INCOME, FILED RETURN OF INCOME AND CLAIMED SET OFF OF THE CURRENT YEAR BUSINESS LOSS AGAINST THE SURRENDERED INCOME. THE ASSESSING OFFICER AFTER CONSIDERING THE SUBMISSIONS OF THE ASSESSEE HELD TH AT THE SET OFF COULD NOT BE ALLOWED HENCE, HE MADE ADDITION OF RS.25,00,000/ -. 4. AGGRIEVED AGAINST THIS, THE ASSESSEE PREFERRED A PPEAL BEFORE LD.CIT(A) WHO AFTER CONSIDERING THE SUBMISSIONS, SUSTAINED TH E ADDITION. 5. LD. COUNSEL FOR THE ASSESSEE VEHEMENTLY ARGUED T HAT THE AUTHORITIES BELOW WERE NOT JUSTIFIED IN SUSTAINING THE ADDITION. HE SUBMITTED THAT THE SURRENDERED INCOME WAS DISCLOSED AS BUSINESS INCOME ITA NO. 3513/DEL/2018 3 | P A GE THEREFORE, THE ASSESSEE HAD RIGHTLY CLAIMED SET OFF OF LOSS AGAINST THIS INCOME. 6. PER CONTRA, LD.CIT DR OPPOSED THESE SUBMISSIONS AND SUPPORTED THE DECISION OF AUTHORITIES BELOW. LD.CIT DR TOOK US THROUGH THE IMPUGNED ORDER TO BUTTRESS THE CONTENTIONS THAT THE RE IS NO INFIRMITY INTO THE FINDINGS OF AUTHORITIES BELOW. 7. LD. COUNSEL FOR THE ASSESSEE PLACED RELIANCE ON THE JUDGEMENT OF HONBLE SUPREME COURT IN THE CASE OF LAKSHMICHAND BAIJNATH V. COMMISSIONER OF INCOME-TAX, [1959] 35 ITR 416 (SC). LD. COUNSEL FOR THE ASSESSEE FURTHER SUBMITTED THAT UNDER THE IDENTICAL FACTS, IN THE CASE OF M/S. KIRTIMAN CEMENTS PACKAGING INDUSTRIES LTD. VS ACIT IN ITA NO.2777, 2778/DEL/2017 ORDER DATED 15.05.2018 RELATING TO ASSESSMENT YEARS 2012- 13 & 2013-14 WHEREIN THE TRIBUNAL WAS PLEASED TO ALLOW SET OFF ALL THE LOSSES WHICH WERE DENIED BY THE AUTHORITIES BELOW. HE CONTENDED THAT CBDT VIDE ITS CIRCULAR NO.11/2019 HAS CLARIFIED THA T PRIOR TO 01.04.2017 SET OFF OF LOSSES AGAINST THE DEEMED INCOME IS ALLO WABLE. LD. COUNSEL FOR THE ASSESSEE ALSO PLACED RELIANCE ON THE DECISION OF ACE INFRACITY DEVELOPERS P. LTD. VS DCIT IN ITA NO.1087/DEL/2018 ORDER DATED 05.03.2021 . 8. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. THERE IS NO DISPUTE WITH RE CORD TO FACT THAT THE ISSUE IN QUESTION IS WHETHER THE INCOME DECLARED IN THE C OURSE OF SURVEY AND DISCLOSED IN THE RETURN OF INCOME AS BUSINESS INCOM E, COULD BE ELIGIBLE FOR ITA NO. 3513/DEL/2018 4 | P A GE SET OFF OF LOSS OR NOT, IN THE CASE OF M/S. KIRTIMAN CEMENTS PACKAGING INDUSTRIES LTD. VS ACIT (SUPRA) VIDE ORDER DATED 15.05.2018. THE RELEVANT PARAS ARE REPRODUCED HEREUNDER FOR READY-REFERENCE: - 10.2. THE ITAT, DELHI BENCH IN THE CASE OF ACIT, C IRCLE-1, MUZAFFARNAGAR VS. M/S. PUSHKAR STEELS P. LTD., MUZA FFARNAGAR IN TA.NO.5473/DEL./2011 DATED 29.02.2012 HAVE DIRECTED THE A.O. TO EXAMINE THE ISSUE IN THE LIGHT OF DECISION OF THE S PECIAL BENCH IN THE CASE OF DCIT VS. TIMES OF GUARANTY LIMITED (2010) 1 31 TTJ 257 (MUM.) (SB). THE ISSUE IS, THEREFORE, COVERED IN FAVOUR OF THE ASSESSEE BY THE ABOVE ORDERS OF DIFFERENT BENCHES OF THE TRIBUNAL. IT MAY ALSO BE NOTED HERE THAT A.O. DENIED THE CLAIM OF ASSESSEE-COMPANY BECAUSE DECISION OF THE CHANDIGADH BENCH IN THE CASE OF M/S. LIBERTY PLYWOOD PRIVATE LTD., AMBALA CANTT. VS. ACIT, AMBALA (SUPRA) HAVE N OT BEEN ACCEPTED BY THE DEPARTMENT AND DEPARTMENT INTENDS TO FILE AP PEAL BEFORE THE HONBLE PUNJAB & HARYANA HIGH COURT. THE ASSESSEE-C OMPANY HAS FILED COPY OF THE JUDGMENT OF THE HONBLE PUNJAB & HARYANA HIGH COURT IN THE CASE OF CIT VS. M/S. LIBERTY PLYWOOD P RIVATE LTD., IN ITA.NO.118 OF 2015 DATED 25.01.2016 IN WHICH THE DE PARTMENTAL APPEAL HAVE BEEN DISMISSED ON ACCOUNT OF LOW TAX EF FECT. THEREFORE, THE ONLY REASON GIVEN BY THE A.O. FOR DENYING THE C LAIM OF ASSESSEE- COMPANY NO MORE SURVIVES. IT MAY ALSO BE NOTED HERE THAT EVERY INCOME IS TO BE ASSESSED UNDER SECTION 14 OF THE I. T. ACT AND LOSS TO BE ADJUSTED UNDER SECTION 70 TO 72 OF THE I.T. ACT. IN ORDER TO ASSESS AN INCOME UNDER THE HEAD INCOME AND THERE MUST BE SO ME EXPRESS PROVISION OF LAW AS IS HELD BY THE HONBLE SUPREME COURT IN THE CASE OF D.P. SINDHU 273 ITR 1. EACH INCOME IS TO BE ASSESSE D UNDER FIVE HEADS OF INCOME, OTHERWISE, THE SAME IS NOT TAXABLE AT ALL. SIMILAR PROVISIONS FOR SET-OFF OF LOSS ARE DEFINED UNDER SE CTIONS 70 TO 72 OF THE I.T. ACT. AS PER SECTION 72, CARRIED FORWARD OF BUS INESS LOSS IS NOT TO BE ALLOWED TO BE SET-OFF AGAINST ANY OTHER HEAD OF INC OME OTHER THAN INCOME FROM BUSINESS. INTER HEAD SET-OFF OF BUSINES S LOSS IS ALLOWED ITA NO. 3513/DEL/2018 5 | P A GE UNDER SECTION 71 AGAINST ALL OTHER INCOME EXCEPT IN COME FROM SALARY. SAME HEAD ADJUSTMENT OF BUSINESS LOSS AGAINST OTHER BUSINESS INCOME IS ALLOWED UNDER SECTION 70 OF THE ACT. AS SUCH, PR OVISIONS OF LAW ON UNABSORBED DEPRECATION WHICH IS ALLOWED AS DEPRECIA TION OF CURRENT YEAR UNDER SECTION 32(2) FALL IN SECTION 71 AND NOT UNDER SECTION 72, AS SUCH, ALLOWABLE AS BUSINESS EXPENDITURE. THEREFOR E, FINDINGS OF THE A.O. IS NOT CORRECT THAT SURRENDERED INCOME CANNOT BE ASSESSED EVEN UNDER THE HEAD INCOME FROM OTHER SOURCES. IT MAY ALSO BE NOTED HERE THAT AFTER INSERTION OF SECTION 115BBE, ANY INCOME ASSESSED UNDER SECTIONS 68 TO 69D WILL BE TAXED UNDER SECTION 115B BE AND NOT UNDER REGULAR PROVISIONS W.E.F. A.Y. 2013-2014. FURTHER, SECTION 115BBE HAS GOT AMENDED W.E.F. A.Y. 2017-2018 THAT LOSS WILL NO T BE ALLOWED AGAINST SUCH INCOME. THEREFORE, IT IS CLEAR THAT W. E.F. A.Y. 2017-2018 ANY TYPE OF LOSS WILL NOT BE ALLOWED DEDUCTION AND THIS AMENDMENT IS NOT RETROSPECTIVE IN NATURE. THEREFORE, CLAIM OF AS SESSEE-COMPANY SHALL HAVE TO BE ALLOWED BY AUTHORITIES BELOW. THE ISSUE IS COVERED IN FAVOUR OF THE ASSESSEE-COMPANY BY THE ABOVE ORDERS OF VARI OUS BENCHES OF THE TRIBUNAL. WE, THEREFORE, SET ASIDE THE ORDERS O F THE AUTHORITIES BELOW AND DIRECT THE A.O. TO ALLOW SET-OFF OF THE D EPRECIATION OF ASSESSEE-COMPANY AGAINST THE INCOME SURRENDERED DUR ING THE COURSE OF SURVEY. THE APPEAL OF ASSESSEE-COMPANY IS ACCORD INGLY ALLOWED. 9. MOREOVER, PARA 4 ENCLOSED AT PAGES 24 TO 25 OF THE CBDT CIRCULAR NO.11/2019 READS AS UNDER:- 4. THUS KEEPING THE LEGISLATIVE INTENT BEHIND AME NDMENT IN SECTION 115BBE(2) VIDE THE FINANCE ACT, 2016 TO REM OVE ANY AMBIGUITY OF INTERPRETATION, THE BOARD IS OF THE VIEW THAT SI NCE THE TERM 'OR SET OFF OF ANY LOSS' WAS SPECIFICALLY INSERTED ONLY VIDE TH E FINANCE ACT 2016, W.E.F. 01.04.2017, AN ASSESSEE IS ENTITLED TO CLAIM SET-OFF OF LOSS AGAINST INCOME DETERMINED UNDER SECTION 115BBE OF T HE ACT TILL THE ASSESSMENT YEAR 2016-17. ITA NO. 3513/DEL/2018 6 | P A GE 10. IN THE LIGHT OF THE AFORESAID DECISIONS AND MOR E PARTICULAR CIRCULAR ISSUED BY CBDT, CIRCULAR NO.1/2019 DATED 18.06.2019 , THE CLAIM OF THE ASSESSEE FOR SET OFF OF LOSS WOULD BE ALLOWABLE. A S IT IS CLARIFIED BY THE CBDT THAT SECTION 115BBE(2) CAME INTO STATUTE BOOK W.E.F. 01.04.2017, WE HOLD ACCORDINGLY. THE ASSESSING OFFICER IS HEREBY DIRECTED TO ALLOW THE CLAIM OF SET OFF OF LOSS AGAINST THE BUSINESS INCOM E DISCLOSED DURING THE COURSE OF SURVEY PROCEEDINGS. THUS, GROUND NOS.1 & 2 RAISED BY THE ASSESSEE ARE ALLOWED. 11. GROUND NO.3 RAISED BY THE ASSESSEE IS GENERAL I N NATURE, NEEDS NO ADJUDICATION. 12. IT IS SEEN FROM THE SUBMISSIONS MADE BY THE ASS ESSEE IN BRIEF OF SUBMISSIONS OF SYNOPSIS REGARDING GROUND NO.5 WHERE IN DISALLOWANCE OF SALARY PAID TO PARTNER OF RS.1,50,000/-. NO SUCH G ROUND IS FOUND IN FORM NO.36. THEREFORE, THE SUBMISSIONS OF THE ASSESSEE ARE REJECTED. 13. IN THE RESULT, THE APPEAL OF THE ASSESSEE IS AL LOWED. ABOVE DECISION WAS PRONOUNCED ON CONCLUSION OF VIRT UAL HEARING IN THE PRESENCE OF BOTH THE PARTIES ON 25 TH AUGUST, 2021. SD/- SD/- (O.P.KANT) (KUL B HARAT) ACCOUNTANT MEMBER JUDICIA L MEMBER *AMIT KUMAR* ITA NO. 3513/DEL/2018 7 | P A GE COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR ITAT, NEW DELHI