ITO, WARD- 40(1), NEW DELHI V. PURSHOTAM ISPAT, NEW DELHI

ITA 5564/DEL/2017

• Counselvise Citation: [2021] 109 COUNSELVISE.COM (IT) 2430 (ITAT-DELHI)
• Duration Of Justice: 3 year(s) 5 month(s) 18 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-02-2021
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: F
• Assessment Year: 2013-2014
• Appeal Filed On: 31-08-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: APOORV BHARDWAJ
• Keywords: Deemed to accrue or arise in india
• Section: 68; 69

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL DELHI BENCH F, NEW DELHI BEFORE SH. AMIT SHUKLA, JUDICIAL MEMBER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER (THROUGH VIDEO CONFERENCING) ITA NO. 5564/DEL/2017 : ASSTT. YEAR : 2013-14 INCOME TAX OFFICER, WARD-40(1), NEW DELHI VS PURSHOTAM ISPAT, ND-4, PITAMPURA, NEW DELHI-110034 (APPELLANT) (RESPONDENT) PAN NO. AAIFP1640H CO NO. 226/DEL/2017 : ASSTT. YEAR : 2013-14 PURSHOTAM ISPAT, ND-4, PITAMPURA, NEW DELHI-110034 VS INCOME TAX OFFICER, WARD-40(1), NEW DELHI (APPELLANT) (RESPONDENT) PAN NO. AAIFP1640H ASSESSEE BY : SH. SATISH AGARWAL, CA REVENUE BY : SH. APOORV BHARDWAJ, SR. DR DATE OF HEARING: 01.02.2021 DATE OF PRONOUNCEMENT: 17.02.2021 ORDER PER DR. B. R. R. KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL BY THE REVENUE AND THE CROSS OB JECTION BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF T HE LD. CIT(A)- 14, NEW DELHI DATED 14.06.2017. 2. FOLLOWING GROUNDS HAVE BEEN RAISED BY THE REVENU E: 1. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALLOWING SET-OFF OF BUSINESS LOSS AGAINST THE COMMO DITY TRADING INCOME ASSESSED U/S 68 OF THE ACT OF RS.3,14,20,610/-. ITA NO. 5564/DEL/2017 & CO NO. 226/DEL/2017 PURSHOTAM ISPAT 2 2. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CAS E, THE LD. CIT(A) HAS ERRED IN LAW AND ON FACTS IN ALL OWING SET-OFF BUSINESS LOSS AGAINST COMMODITY TRADING INC OME OF RS. 3,14,20,610/- ASSESSED U/S 68 BY HOLDING THA T AMENDMENT IN SECTION 115BBE IS PROSPECTIVE IN NATUR E WITHOUT APPRECIATING THAT THE ABOVE AMENDMENT IS CLARIFICATORY IN NATURE AS EVIDENT FROM THE AMENDME NT. 3. ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CA SE, THE LD. CIT(A) HAS ERRED IN LAW AND ON THE FACTS IN ALLOWING SET-OFF BUSINESS LOSS AGAINST COMMODITY TR ADING INCOME OF RS. 3,14,20,610/- WITHOUT APPRECIATING TH E FACT THAT THE HON'BLE COURTS HAVE HELD IN PLETHORA OF JUDGMENTS THAT INCOME ASSESSED U/S 68 DOES NOT FALL UNDER THE NORMAL HEADS OF INCOME AND THUS NO ADJUSTMENTS CAN BE ALLOWED FROM SUCH INCOMES. 4. THAT THE LD. CIT(A) HAS FAILED TO APPRECIATE THA T THE HON'BLE KERALA HIGH COURT IN THE CASE OF M/S KE RALA SPONGE IRON LTD VS CIT (ITA NO. 195/2014 DATED 19.08.2015), HON'BLE GUJARAT HIGH COURT IN THE CASE OF FAKIR MOHMED HASAN VS CIT(2001) [247 ITR 290], HON'BLE ITAT CHANDIGARH IN CASE OF ITO VS DULARI DI GITAL PHOTO SERVICES PVT. LTD. ( ITA NO. 984/CHD/2010) AN D HON'BLE ITAT CHENNAI IN THE CASE OF THE DEPUTY COMMISSIONER OF INCOME TAX, CORPORATE CIRCLE VS M/S SHREE KARTHIK PAPERS LTD (ITA NO. 325/MDS/2015 A.V. 2006-07 DATED 06.04.2016) HAS HELD THAT INCOME ASSESSED U/S 68 DOES NOT FALL UNDER NORMAL HEAD OF INCOME AND THUS NO ADJUSTMENT CAN BE ALLOWED FROM SUCH INCOMES. 3. IN CO NO.226/DEL/2017, THE ASSESSEE HAS RAISED T HE FOLLOWING GROUNDS: 1. THAT THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN NOT ALLOWING GROUND OF THE APPELLANT THAT A COMMODITY P ROFIT OF RS.3,14,20,610/- COULD NOT BE TAXED UNDER SECTIO N 68 OF THE ACT. 2. THAT THE LD. CIT(APPEALS) HAS GROSSLY ERRED IN CONFIRMING THE ACTION OF THE ASSESSING OFFICER IN T REATING THE COMMODITY PROFIT OF RS.3,14,20,610/- AS TAXABLE UNDER SECTION 68 OF THE ACT BY HOLDING IT TO BE UNEXPLAINED. ITA NO. 5564/DEL/2017 & CO NO. 226/DEL/2017 PURSHOTAM ISPAT 3 4. THE REVENUE CAME INTO APPEAL AGAINST THE ORDER O F THE LD. CIT (A) ALLOWING THE BENEFIT OF PROVISIONS SECTION 115BBE OF THE INCOME TAX ACT, 1961 TO THE INCOME ASSESSED U/S 68 FOR THE ASSESSMENT YEAR 2013-14. 5. WE HAVE GONE THROUGH THE PROVISIONS OF THE FINAN CE BILL 2016 AND THE MEMORANDUM THEREOF WITH REGARD TO THE PROVISIONS OF SECTION 115BBE AND THE INCOME DETERMI NED U/S 69 TO 69D WHICH HAVE COME INTO FORCE W.E.F. 01.04.2017 . WE HAVE ALSO GONE THROUGH THE CLARIFICATION ISSUED BY THE C BDT WHICH ALLOWS THE SET OFF INCOME ASSESSED U/S 68 WITH REFE RENCE TO APPLICABILITY OF PROVISIONS OF SECTION 115BBE. FOR THE SAKE OF READY REFERENCE AND CLARITY, THE CIRCULAR OF THE CB DT IS REPRODUCED BELOW: 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, 2019 SUBJECT: CLARIFICATION REGARDING NON-ALLOWABILITY O F SET-OFF OF LOSSES AGAINST THE DEEMED INCOME UNDER SECTION 11SBBE OF T HE 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 SECT 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 SHA LL BE ALLOWED TO THE ASSESSEE UNDER ANY PROVISIONS OF THE ACT IN COM PUTING 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 ITA NO. 5564/DEL/2017 & CO NO. 226/DEL/2017 PURSHOTAM ISPAT 4 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 115 BBE(1) OF THE ACT HAVE NOT BEEN ALLOWED. AS THE AMENDMENT INSERTI NG THE WORDS 'OR SET OFF OF ANY LOSS' IS APPLICABLE WITH EFFECT FROM P T OF APRIL, 2017 AND APPLIES FROM ASSESSMENT YEAR 2017-18 ONWAR DS, CONFLICTING VIEWS HAVE BEEN TAKEN BY THE ASSESSING OFFICERS IN 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 20TH JANUARY, 2017 WHICH CONTAINS E XPLANATORY 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 115 BBE. 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 REFERRED TO IN SECTION 115BBE OF THE ACT AND HENCE, THE AMENDMENT WAS MADE VIDE T HE FINANCE ACT, 2016. 4. THUS KEEPING THE LEGISLATIVE INTENT BEHIND AMEND MENT 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 'OR SET OFF OF ANY LOSS' WAS SPECIFICALLY INSERTED ONLY VID E THE 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 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. SD/- (RAJARAJESWARI R.) UNDER SECRETARY (ITA.II), CBDT (F.NO.22S/4S/2019-ITA.II) ITA NO. 5564/DEL/2017 & CO NO. 226/DEL/2017 PURSHOTAM ISPAT 5 6. THUS, WE FIND THAT SINCE THE CASE OF THE ASSESSE E BELONGS TO THE ASSESSMENT YEAR 2013-14, THE ASSESSEE IS ELI GIBLE FOR THE SAID BENEFIT. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. 8. AS REGARDS TO THE CROSS OBJECTION FILED BY THE A SSESSEE IS CONCERNED, SINCE WE HAVE ALREADY DISMISSED THE APPE AL OF THE REVENUE. THEREFORE, THE CROSS OBJECTION FILED BY TH E ASSESSEE HAS BECOME INFRUCTUOUS AND DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 17/02/2021. SD/- SD/- (AMIT SHUKLA) (DR. B. R. R. KUMAR) JUDICIAL MEMBER ACCOUN TANT MEMBER DATED: 17/02/2021 *SUBODH* COPY FORWARDED TO: 1. APPELLANT 2. RESPONDENT 3. CIT 4. CIT(APPEALS) 5. DR: ITAT ASSISTANT REGISTRAR