M/s. Luxmi Rice Mills, Muktsar V. The Asstt. Commissioner of Income-tax, Bathinda

ITA 438/ASR/2013

• Counselvise Citation: 43820914 RSA 2013
• Duration Of Justice: 9 month(s) 7 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 27-03-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: DB
• Next Hearing Date: 26-03-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 19-06-2013
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Assessee Lawyers: RAKESH BANSAL CA S; SSH ASHWANI KUMAR
• Keywords: Unexplained expenditure; Business income; Question of law; Commercial expediency; Surrender of tenancy right
• Section: 69C; 69; 56

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL AMRITSAR BENCH; AMRITSAR. BEFORE SH. H.S. SIDHU, JUDICIAL MEMBER AND SH. B.P.JAIN, ACCOUNTANT MEMBER I.T.A. NO.438(ASR)/2013 ASSESSMENT YEAR:2008-09 PAN : AACFL0970A M/S. LAXMI RICE MILLS, VS. ASSTT. COMMR. OF INCOM E TAX, BALAMGARH ROAD, CIRCLE-II, BATHINDA, BATHINDA. (APPELLANT) (RESPONDENT) APPELLANT BY:S/SH.ASHWANI KUMAR & RAKESH BANSAL, CA S RESPONDENT BY: SH. MAHAVIR SINGH, DR DATE OF HEARING:26/03/2014 DATE OF PRONOUNCEMENT:27/03/2014 ORDER PER BENCH ; THIS APPEAL OF THE ASSESSEE ARISES FROM THE ORDER OF THE CIT(A), BATHINDA DATED 28.03.2013 FOR THE ASSESSMENT YEAR 2008-09 .THE ASSESSEE HAS RAISED FOLLOWING GROUNDS OF APPEAL: 1. THAT ORDER PASSED U/S 250(6) OF THE INCOME TAX ACT, 1961 BY THE LD. CIT(A) BATHINDA IS AGAINST LAW AND FACTS ON THE FILE IN AS MUCH AS HE WAS NOT JUSTIFIED IN UPHOLDING THE AC TION OF THE AO IN DISALLOWING EXPENDITURE ON ACCOUNT OF BONUS PAYABLE/PAID TO COMMISSION AGENTS ON THE PURCHASE O F PADDY AMOUNTING TO RS.21,97,139/-. ITA NO.438(ASR)/2013 2 2. THAT HE WAS NOT JUSTIFIED TO ARBITRARILY UPHOLD THE ACTION OF THE A.O. IN DISALLOWING: (A) RS.5.00 LAC OUT OF FREIGHT EXPENSES (B) RS.2.00 LACS OUT OF CONSUMPTION OF PADDY HUSK (C) RS.2,08,045/- OUT OF VARIOUS EXPENDITURES ON ADHOC BASIS. 3. THAT HE WAS GRAVELY ERRED IN UPHOLDING THE ACTION O F THE AO IN ASSESSING THE ADDITIONAL INCOME OF RS.55.25 LAC SUR RENDERED AT THE TIME OF SURVEY AS OUT OF PURVIEW OF ALL THE FIV E HEADS OF INCOME AS DEPICTED IN SEC. 14 OF THE INCOME TAX ACT , 1961. 2. AS REGARDS GROUND NO.1, THE BRIEF FACTS ARE THAT DURING THE COURSE OF ASSESSMENT PROCEEDINGS, IT WAS NOTICED THAT THE ASS ESSEE HAD CLAIMED BONUS PAYMENTS OF RS.28,79,274/- AGAINST WHICH BONUS PAYM ENT OF RS.7,84,189/-, INTER ALIA, WAS RECEIVED ONLY FROM GOVERNMENT. WITH REGARD TO THE EXCESS CLAIM OF BONUS, IT WAS EXPLAINED DURING ASSESSMENT PROCEEDINGS BY THE ASSESSEE THAT EVERY MILLER HAS TO PAY BONUS AS DECL ARED BY THE CENTRAL GOVT. DESPITE THE FACT WHETHER THE RICE IS SUPPLIED BY FC I OR IS SOLD IN THE OPEN MARKET. THE AO ALSO FOUND THAT THE ASSESSEE HAD SOL D RICE WEIGHING 4570.56 QTLS. TO THE GOVERNMENT ON WHICH THE AMOUNT OF BON US WORKED OUT AT RS.6,82,135/- @ RS.149.25 PER QTL. . AFTER CONSIDER ING THE EXPLANATION OF THE ASSESSEE AND THE CONTENTS OF LETTER OF DISTRICT MAN AGER, FCI WHEREIN CLASSIFICATION REGARDING PAYMENT OF BONUS HAD BEEN SOUGHT BY THE ASSESSEE AS TO WHO WILL BEAR THE BONUS ON THE QUANTUM OF RIC E WHICH HAS NOT BEEN SUPPLIED BY THE RICE-MILLER TO THE FCI AND IS SOLD IN THE MARKET, THE AO HELD ITA NO.438(ASR)/2013 3 THAT BONUS IS DECLARED BY THE GOVERNMENT WHERE THE RICE IS PURCHASED BY FCI AND THAT IS TO BE PAID TO THE AGRICULTURISTS BY THE PURCHASER OF PADDY WHO SUPPLIED RICE TO THE FCI. IN THIS WIEW OF THE MATTE R, THE EXCESS CLAIM MADE BY THE ASSESSEE AT RS.21,97,139/- (RS.28,79,274/- M INUS RS.6,82,135/-) WAS DISALLOWED AND ADDED TO THE INCOME RETURNED. 3. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSES SING OFFICER. 4. BEFORE, THE LD. COUNSEL FOR THE ASSESSEE, MR. AS HWANI KUMAR, CA ARGUED THAT THE PAYMENTS OF BONUS HAVE BEEN MADE AN D DETAIL OF BONUS PAID IS AT PB 20 TO 74 AND ANNOUNCEMENT MADE BY THE GOVT . REGARDING BONUS PAYABLE IS AVAILABLE AT PB 75-79. THE AO HAS NOT RE JECTED BOOKS OF ACCOUNT AND NO DEFECT HAS BEEN POINTED OUT IN THE BOOKS OF ACCOUNT. NOTHING HAS BEEN BROUGHT ON RECORD BY THE AO THAT THE PAYMENT O F BONUS HAS NOT BEEN MADE, WHICH HAS BEEN MADE THROUGH CHEQUES. THE LD. CIT(A) HAS NOT GIVEN ANY REASONING FOR CONFIRMING THE ORDER OF THE A.O. 5. THE LD. DR, ON THE OTHER HAND, SUBMITTED THAT TH E BONUS IS DECLARED BY THE GOVT. ON THE PURCHASES MADE BY THE FCI. THE BONUS HAS TO BE PAID TO THE FARMERS AND NOTHING HAS BEEN BROUGHT ON RECORD WHETHER THE PAYMENT MADE TO COMMISSION AGENT HAS ACTUALLY BEEN MADE TO THE FARMERS OR NOT AND ANY PAYMENT MADE OVER AND ABOVE AS SANCTIONED AND A NNOUNCED BY THE GOVT. IS ILLEGAL PAYMENT AND NOT IN THE COMMERCIAL EXPEDIENCY AND ITA NO.438(ASR)/2013 4 THEREFORE, THE LD. CITA) HAS RIGHTLY CONFIRMED THE ACTION OF THE A.O. THE LD. DR PRAYED TO CONFIRMED THE ORDER OF THE LD. CIT(A). 6. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. WE ARE CONVINCED WITH THE ARGUMENTS MADE BY THE LD. DR AND CONCUR WITH THE VIEWS OF THE LD. CIT(A) WHO HAS PASSED A REASON ED ORDER. WHILE MAKING THE SPECIFIC ADDITION, THERE IS NO REQUIREMENT OF R EJECTING THE BOOKS OF ACCOUNT. THE PAYMENT MADE TO COMMISSION AGENTS IS OVER AND ABOVE AS ANNOUNCED BY THE GOVT. AND NOT AS PER COMMERCIAL EX PEDIENCY. NOTHING HAS BEEN PLACED BY THE ASSESSEE BEFORE ANY OF THE AUTHO RITIES BELOW OR EVEN BEFORE US THAT SUCH PAYMENTS WERE MADE DURING THE C OURSE OF BUSINESS AS PER COMMERCIAL EXPEDIENCY AND AS PER PRACTICE FOLLOWED IN THE MARKET. ALSO, THE DETAILS SUBMITTED DOES NOT CONTAIN DESCRIPTION OF QUANTITY OF PADDY EXCEPT IN FOUR PLACES. ACCORDINGLY, WE FIND NO INFIRMITY I N THE ORDER OF THE LD. CIT(A) AND THE SAME IS UPHELD. THUS, GROUND NO.1 OF THE ASSESSEE IS DISMISSED. 7. AS REGARDS GROUND NO.2(A), THE BRIEF FACTS ARE T HAT THE ASSESSEE HAD CLAIMED FREIGHT EXPENSES AT RS.14,97,893/- WHILE SU CH EXPENSES IN THE IMMEDIATELY ASSESSMENT YEAR WERE CLAIMED AT RS.4,74 ,395/-. WITH REGARD TO THE INCREASE IN FREIGHT EXPENSES, IT WAS EXPLAINED THAT IN THE IMMEDIATELY PRECEDING ASSESSMENT YEAR, PADDY WAS PURCHASED FR OM THE LOCAL MARKET AND ITA NO.438(ASR)/2013 5 RICE IN DELHI WAS DELIVERED ON FOR AND FURTHER RICE WAS DELIVERED TO FCI AT KOTKAPURA WHILE IN THE YEAR UNDER CONSIDERATION, IT WAS SUPPLIED IN THE LOCAL DEPOT AT MUKTSAR. AFTER TAKING INTO CONSIDERATION T HE EXPLANATION OF THE ASSESSEE AND THE FACT THAT THE ASSESSEE DID NOT PRO DUCE GRS OR PAYMENTS RECEIVED BY THE TRANSPORTERS AND FURTHER THE PAYMEN TS WERE MADE TO THE TRUCK OPERATORS IN CASH, IT WAS OBSERVED BY THE AO THAT VERIFICATION OF SUCH EXPENSES WAS NOT POSSIBLE. IN SUCH CIRCUMSTANCES, T HE AO DISALLOWED RS.5,00,000/- UNDER THIS HEAD. 8. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. 9. THE LD. COUNSEL FOR THE ASSESSEE, SH. ASHWANI KU MAR, CA ARGUED THAT THE REASONS FOR RISE IN EXPENSES DURING THE YEAR HA D BEEN FILED AND ARE AVAILABLE AT PB-11 AND MENTIONED IN THE ORDER OF TH E AO AT PAGE 6. THE EXPENSES UPTO RS.5 LACS WERE DEBITED TO THE ACCOUNT ON THE DATE OF SURVEY, THEREFORE, NO ALLEGATION CAN BE MADE THAT IT IS AN AFTER-THOUGHT STORY, WHICH IS EVIDENCED FROM THE TRADING ACCOUNT UPTO THE DATE OF SURVEY AND AVAILABLE AT PB 12 & 13. 10. THE LD. DR, ON THE OTHER HAND, ARGUED THAT THE ASSESSEE DID NOT PRODUCE GRS OR PAYMENTS RECEIVED BY THE TRANSPORTER S AND FURTHER PAYMENTS MADE TO THE TRUCK OPERATORS IN CASH WHICH WERE NOT VERIFIABLE AND SUCH DISALLOWANCE HAS RIGHTLY BEEN MADE AND CONFIRMED B Y THE LD. CIT(A). ITA NO.438(ASR)/2013 6 11. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAS NOT PRODUCED GRS OR PAYMENTS RECEI VED BY THE TRANSPORTERS AND PAYMENTS MADE IN CASH ARE NOT VERIFIABLE AND TH EREFORE, IN THE FACTS AND CIRCUMSTANCES IT IS NOT POSSIBLE FOR THE AO TO DED UCE ACCURATE INCOME. WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), W HO IS JUSTIFIED IN DISALLOWING RS.5 LACS WHICH IS QUITE REASONABLE. T HUS, GROUND NO.2(A) OF THE ASSESSEE IS DISMISSED. 12. AS REGARDS GROUND NO.2(B), THE BRIEF FACTS ARE THAT THE AO NOTED THAT THE ASSESSEE HAD NOT KEPT ANY RECORD ON DAY TO DAY BASIS REGARDING CONSUMPTION OF PADDY HUSK AND EVEN THE CLOSING STOC K OF THIS BYE-PRODUCT HAS BEEN SHOWN ON ESTIMATE BASIS. THE AO ACCORDINGL Y HELD THAT THE QUANTITY OF THIS PRODUCT WAS NOT VERIFIABLE. THE ASSESSEE DU RING ASSESSMENT PROCEEDINGS FURNISHED A CHART SHOWING COMPARATIVE FIGURES OF CONSUMPTION OF PADDY HUSK IN THE PAR-BOILING UNIT WITH THE IMM EDIATELY PRECEDING YEAR WHICH REVEALED THAT THE CONSUMPTION PER UNIT OF PAD DY WAS 0.23 QTLS. AS AGAINST THE CONSUMPTION OF 0.20 QTLS IN THE IMMEDI ATELY PRECEDING ASSESSMENT YEAR. THUS, THERE WAS SLIGHT EXCESSIVE C ONSUMPTION OF PADDY HUSK. KEEPING IN VIEW THE ENTIRETY OF FACTS THE AO DISALLOWED RS.2,00,000/- OUT OF THE CONSUMPTION OF PADDY HUSK. 13. THE LD. CIT(A) CONFIRMED THE ACTION OF THE A.O. ITA NO.438(ASR)/2013 7 14. THE LD. COUNSEL FOR THE ASSESSEE, SH. ASHWANI K UMAR, CA ARGUED THAT THE AO HAS REJECTED THE BOOKS OF ACCOUNT AND NO ADD ITION CAN BE MADE ON ESTIMATION BASIS. 15. THE LD. DR, ON THE OTHER HAND, ARGUED THAT IN T HE ABSENCE OF PROPER VOUCHERS, IT WAS NOT POSSIBLE FOR THE AO TO DEDUCE ACCURATE INCOME AND THEREFORE, DISALLOWANCE HAS RIGHTLY BEEN CONFIRMED BY THE LD. CIT(A). 16. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSE D THE FACTS OF THE CASE. THOUGH BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED BUT AT THE SAME TIME THERE ARE FININGS THAT RECORD OF CONSUMPTION OF PADDY AN D HUSK ON DAY TO DAY TO BASIS HAS NOT BEEN MAINTAINED AND CLOSING STOCK HA S BEEN SHOWN ON ESTIMATION BASIS AND THEREFORE, THE CONSUMPTION OF PADDY & HUSK CLAIMED BY THE ASSESSEE IS NOT VERIFIABLE. THEREFORE, IN TH E FACTS AND CIRCUMSTANCES, THOUGH THE BOOKS OF ACCOUNT HAVE NOT BEEN REJECTED AND DISALLOWANCE OF RS.2 LACS IS QUITE REASONABLE AND RIGHTLY CONFIRMED BY T HE LD. CIT(A). 17. AS REGARDS GROUND NO.2(C), THE BRIEF FACTS OF T HE CASE ARE THAT THE AO NOTICED THAT THE ASSESSEE HAD CLAIMED EXPENSES UNDE R THE HEADS CAR PETROL AND REPAIR, SCOOTER EXPENSES MACHINERY REPAIR, KITC HEN EXPENSES, LABOUR PAYMENTS/DAILY WAGES FOOD AND BEVERAGE TO STAFF, TR AVELING EXPENSES, PRINTING AND STATIONERY AND TELEPHONE/MOBILE EXPEN SES TOTALING RS.10,42,027/-. IT WAS FOUND BY THE AO THAT THE E XPENDITURE VOUCHERS ITA NO.438(ASR)/2013 8 UNDER THESE HEADS WERE SELF MADE AND THE EXPENSES W ERE ALSO PARTLY VOUCHED. FURTHER, USE OF TELEPHONE/MOBILE AND CAR ETC. FOR PURPOSES OTHER THAN BUSINESS COULD NOT BE RULED OUT. HE ACCORDINGL Y DISALLOWED 20% OF SUCH EXPENSES BEING UNVERIFIABLE AND FOR PERSONAL PURPOS ES. 18. THE LD. CIT(A), CONFIRMED THE ACTION OF THE A.O . 19. THE LD. COUNSEL FOR THE ASSESSEE AND LD. DR MAD E IDENTICAL ARGUMENTS AS MADE IN GROUND NO.2(B) HEREINABOVE. 20. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE ASSESSEE HAS NOT MAINTAINED THE PROPER VOUCHERS FOR THE EXPENSES INCURRED WHEREAS THEY ARE FOR NON-BUSINESS AND SUC H POSSIBILITY CANNOT BE RULED OUT IN SUCH CASES. IN THE FACTS AND CIRCUMSTA NCES, OF THE CASE, WE FIND NO INFIRMITY IN THE ORDER OF THE LD. CIT(A), WHO HA S RIGHTLY CONFIRMED THE ACTION OF THE AO. 21. AS REGARDS GROUND NO.3, THE BRIEF FACTS OF THE CASE ARE THAT THE AO NOTICED THAT THE ASSESSEE HAD CREDITED RS.55,25,000 /- TO P & L ACCOUNT ON ACCOUNT OF INCOME SURRENDERED DURING THE SURVEY OPE RATION AND SEVERAL EXPENSES HAVE BEEN ADJUSTED/SET OFF AGAINST THE SUR RENDERED AMOUNT AND RESULTANTLY THE ASSESSEE HAS SHOWN LESSER NET PROFI T THAN THE FIGURE OF INCOME SURRENDERED. IN SUCH A SITUATION, THE AO AFTER CON SIDERING THE EXPLANATION OF THE A/R HELD THAT DURING SURVEY OPERATION THE ASSES SEE HAD SURRENDERED ITA NO.438(ASR)/2013 9 INCOME OF RS.55.25 LACS AS ADDITIONAL INCOME WHICH WAS NOT TO BE AGAINST ANY OF THE LOSSES INCURRED DURING THE YEAR. 22. THE LD. CIT(A) CONFIRMED THE ACTION OF THE ASSE SSING OFFICER. 23. THE LD. COUNSEL FOR THE ASSESSEE, ARGUED THAT THE AMOUNT OF RS.55,25,000/- SURRENDERED BY THE ASSESSEE HAS BEEN DISALLOWED, WHICH HAS BEEN DECLARED AS BUSINESS INCOME IN THE BOOKS OF ACCOUNT AND HAS BEEN ACCEPTED. THE LD. CIT(A) CANNOT CONFIRM THE ACTION OF THE A.O. THE LD. COUNSEL FOR THE ASSESSEE HAS RELIED UPON THE DECISI ON OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT VS. SHILPA DYEING & P RINTING MILLS PVT. LTD. REPORTED IN (2013) 39 TAXMAN 3 24. THE LD. DR, ON THE OTHER HAND RELIED UPON THE ORDER OF THE LD. CIT(A). 25. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE FACTS OF THE CASE. THE LD. CIT(A) HAS PLACED RELIANCE ON THE JUDGMENT OF HONBLE GUJRAT HIGH COURT IN THE CASE OF FAQIR MOHAMMED HAJI HASAN VS. CIT REPORTED IN (2001) 247 ITR 290, WHICH IS REPRODUCED HEREUNDER: THE SCHEME OF SECTIONS 69, 69A, 69B AND 69C WOULD S HOW THAT IN CASES WHERE THE NATURE AND SOURCE OF INVESTMENT MAD E BY THE ASSESSEE OF NATURE AND SOURCE OF ACQUISITION OF MONEY, BULLI ON ETC. OWNED BY THE ASSESSEE OR THE SOURCE OF EXPENDITURE INCURRED BY THE ASSESSEE ARE NOT EXPLAINED AT ALL OR NOT SATISFACTORILY EXPLAINE D THEN THE VALUE OF SUCH INVESTMENTS AND MONEY OR VALUE OF ARTICLES NOT RECORDED IN THE BOOKS OF ACCOUNTS OF THE UNEXPLAINED EXPENDITURE MA Y BE DEEMED TO BE THE INCOME OF SUCH ASSESSEE. HOWEVER, WHEN THESE PROVISIONS APPLY ITA NO.438(ASR)/2013 10 BECAUSE NO SOURCE IS DISCLOSED AT ALL ON THE BASIS OF WHICH THE INCOME CAN BE CLASSIFIED UNDER ONE OF THE HEAD OF INCOME U /S 14 OF THE ACT, IT WOULD NOT BE POSSIBLE TO CLASSIFY SUCH DEEMED INCOM E UNDER ANY OF THESE HEADS INCLUDING INCOME FROM OTHER SOURCES WHI CH HAVE TO BE SOURCES KNOWN OR EXPLAINED. WHEN THE INCOME CANNOT BE SO CLASSIFIED UNDER ANY ONE OF THE HEADS OF INCOME U/S 14, IT FOL LOWS THAT THE QUESTION OF GIVING ANY DEDUCTION UNDER THE PROVISIO NS WHICH CORRESPOND TO SUCH HEADS OF INCOME WILL NOT ARISE. THE SAID DECISION OF HONBLE GUJRAT HIGH COURT HAS BEEN DISTINGUISHED BY THE SAME HIGH COURT IN THE CASE OF CIT-II VS. SHILP A DYEING & PRINTING MILLS (P) LTD. REPORTED IN (2013) 39 TAXMAN. COM 3 AND RELEVANT PARAS OF THE ORDER OF HONBLE COURT ARE REPRODUCED AS UNDER: 8.WE, HOWEVER, FIND THAT SECTION 71 OF THE ACT PE RMITS TO SET OFF LOSS OTHER THAN THAT OF CAPITAL GAINS AGAINST INCOME FRO M OTHER HEAD. THIS VERY ISSUE CAME UP FOR CONSIDERATION BEFORE THE MAD RAS HIGH COURT IN THE CASE OF CHENSING VENTURES (SUPRA). THE DIVISION BENCH OF THE COURT CONSIDERED THE ISSUE IN FOLLOWING MANNER: 6. HEARD COUNSEL. THE AO HAS NOT GIVEN ANY REASON WHATSOEVER TO DENY THE SET OFF OF THE BUSINESS LOSS AGAINST THE INCOME DECLARED UNDER THE HEAD & OTHER SOURCES. S ECTION 71 DEALS WITH SET OFF OF LOSS AGAINST INCOME UNDER ANY OTHER HEAD. AFTER SETTING OFF LOSSES AGAINST THE INCOME UNDER T HE SAME HEAD, IF THE NET RESULT IS STILL A LOSS, THE ASSESSEE CAN SET OFF THE SAID LOSS UNDER SECTION 71 OF THE ACT AGAINST INCOME OF THE SAME YEAR UNDER ANY OTHER HEAD, EXCEPT FOR LOSSES WHICH ARISE UNDER THE HEAD CAPITAL GAINS. THE INCOME TAX IS ONLY ON E TAX AND LEVIED ON THE SUM TOTAL OF THE INCOME AND INCOME UN DER EACH HEAD IS SEPARATELY COMPUTED. INCOME WHICH IS COMPUT ED IN ACCORDANCE WITH LAW IS ONE INCOME AND IT IS NOT A C OLLECTION OF DISTINCT TAX LEVIED SEPARATELY ON EACH OF THE DIFFE RENT SOURCES SEPARATELY. THERE IS ONLY ONE ASSESSMENT AND THE SA ME IS REFERENCE TO EACH OF THE DIFFERENT SOURCES SEPARATE LY. THERE IS ONLY THE ASSESSMENT AND THE SAME IS MADE AFTER THE TOTAL INCOME HAS BEEN ASCERTAINED. THE ASSESSEE IS SUBJECT TO I NCOME TAX ON ITA NO.438(ASR)/2013 11 HIS TOTAL INCOME THOUGH HIS INCOME UNDER EACH HEAD MAY BE WELL BELOW THE TAXABLE LIMIT. HENCE, THE LOSS SUSTA INED IN ANY YEAR UNDER ANY HEADS OF INCOME WILL HAVE TO BE SET OFF AGAINST INCOME UNDER ANY OTHER HEAD. IN THIS CASE, THE AO M ADE AN ADDITION OF RS.28,50,000/- AS UNDISCLOSED INCOME U/ S 69 OF THE ACT. ONCE THE LOSS IS DETERMINED, THE SAME SHOULD B E SET OFF AGAINST THE INCOME DETERMINED UNDER ANY OTHER HEAD OF INCOME. IN THE ASSESSMENT, NO REASONS WERE GIVEN BY THE AO TO DENY THE BENEFIT OF SECTION 71 OF THE ACT. THE BENEFIT PROVI DED UNDER SECTION 71 OF THE ACT CANNOT BE DENIED AND THE LEAR NED STANDING COUNSEL APPEARING FOR THE REVENUE IS ALSO UNABLE T O EXPLAIN OR GIVE REASONS WHY THE ASSESSEE IS NOT ENTITLED TO TH E BENEFIT OF SECTION 71 OF THE ACT. THE REASONS GIVEN BY THE TRI BUNAL ARE BASED ON VALID MATERIALS AND EVIDENCE AND THE SAME IS IN ACCORDANCE WITH THE PROVISIONS OF SECTION 71 OF THE ACT. WE FIND NO ERROR OR LEGAL INFIRMITY IN THE IMPUGNED ORDER. 9. WE MAY FURTHER NOTICE THAT THE DECISION IN THE C ASE OF FAKIR MOHMED HAJI HASAN (SUPRA) CAME UP FOR CONSIDERATION IN CASE OF RADHE DEVELOPERS INCIA LTD. (SUPRA), IT WAS OBSERVE D AS UNDER. THE DECISIONS OF THIS COURT IN THE CASE OF FAKIR MO HMED HAJI HASAN (SUPRA) AND KRISHNA TEXTILES (SUPRA) ARE NEI THER RELEVANT NOR GERMANE TO THE ISSUE CONSIDERING THE F ACT THAT IN NONE OF THE DECISIONS THE LEGISLATIVE SCHEME EMANAT ING FROM CONJOINT READING OF PROVISIONS OF SECTIONS 14 & 56 OF THE ACT HAVE BEEN CONSIDERED. THE APEX COURT IN THE CASE OF D.P. SANDHU BROS. CHEMBUR P. LTD. (SUPRA) HAS DEALT WIT H THIS VERY ISSUE WHILE DECIDING THE TREATMENT TO BE GIVEN TO A TRANSACTION OF SURRENDER OF TENANCY RIGHT. THE EARLIER DECISION S OF THE APEX COURT COMMENCING FROM CASE OF UNITED COMMERCIAL BAN K LTD. V. CIT [1957] 32 ITR 688 (SC) HAVE BEEN CONSIDERED BY THE APEX COURT AND HENCE, IT IS NOT NECESSARY TO REPEAT THE SAME. SUFFICE IT TO STATE THAT THE ACT DOES NOT ENVISAGE TAXING ANY INCOME UNDER ANY HEAD NOT SPECIFIED IN SECTION 14 O F THE ACT. IN THE CIRCUMSTANCES, THERE IS NO QUESTION OF TRYING T O READ ANY CONFLICT IN THE TWO JUDGMENTS OF THIS COURT AS SUBM ITTED BY THE LD. COUNSEL FOR THE REVENUE. ITA NO.438(ASR)/2013 12 10. IN OUR OPINION, THE STATUTORY PROVISIONS CONTAI NED IN SECTION 71 WAS APPLICABLE IN THE PRESENT CASE. BY APPLYING THE DECISION IN CASE OF FAKIR MOHMED HAJI HASAN (SUPRA) AS EXPLAINED IN CAS E OF RADHE DEVELOPERS INCIA LTD. (SUPRA), THE SAME CANNOT BE D ECLINED. IN THE RESULT, NO QUESTION OF LAW ARISES. TAX APPEAL IS, T HEREFORE, DISMISSED. ACCORDINGLY FOLLOWING THE ABOVE DECISION OF HONBLE GUJARAT HIGH COURT IN THE CASE OF CIT-II VS. SHILPA DYEING & PRINTING MIL LS (P) LTD., THE ORDER OF THE LD. CIT(A) IS REVERSED AND GROUND OF ASSESSEE I S ALLOWED. 26. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IN ITA NO.438(ASR)/2013 IS PARTLY ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 27TH MARCH, 2014. SD/- SD/- (H.S. SIDHU) (B.P. JAIN) JUDICIAL MEMBER ACCOUNTANT MEMBER DATED: 27TH MARCH, 2014 /SKR/ COPY OF THE ORDER FORWARDED TO: 1. THE ASSESSEE:M/S. LAXMI RICE MILLS, MUKTSAR. 2. THE ACIT, CIR.II, BATHINDA,. 3. THE CIT(A), BATHINDA 4. THE CIT, BATHINDA. 5. THE SR DR, ITAT, AMRITSAR. TRUE COPY BY ORDER (ASSISTANT REGISTRAR) INCOME TAX APPELLATE TRIBUNAL, AMRITSAR BENCH: AMRITSAR.