M/S NAVJEEVAN TRADE & COMMODITIES P.LTD, JAIPUR V. INCOME TAX OFFICER, WARD-4-2, JAIPUR

ITA 575/JPR/2018

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 4592 (ITAT-JAIPUR)
• Duration Of Justice: 3 month(s) 2 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 03-08-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2014-2015
• Appeal Filed On: 01-05-2018
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: J C KULHARI
• Assessee Lawyers: S R SHARMA; R K BHATRA
• Keywords: Unexplained cash credit; Depreciation
• Section: 69C; 68; 69; 6; 11

Judgement Text

VK;DJ VIHYH; VF/KDJ.K] T;IQJ U;K;IHB] T;IQJ IN THE INCOME TAX APPELLATE TRIBUNAL, JAIPUR BENCHE S, JAIPUR JH FOT; IKY JKO] U;KF;D LNL; ,OA JH FOE FLAG ;KNO] YS[KK LNL; DS LE{K BEFORE: SHRI VIJAY PAL RAO, JM & SHRI VIKRAM SINGH YADAV, AM VK;DJ VIHY LA-@ ITA. NO. 575/JP/2018 FU/KZKJ.K O'K Z@ ASSESSMENT YEARS : 2014-15 M/S NAVJEEVAN TRADE & COMMODITIES PVT. LTD. B-92, KUKARKHERA ANAJ MANDI, SIKAR ROAD, JAIPUR. CUKE VS. THE ITO, WARD-4(2), JAIPUR. LFKK;H YS[KK LA-@THVKBZVKJ LA-@ PAN/GIR NO.: AACCN 0172 D VIHYKFKHZ@ APPELLANT IZR;FKHZ@ RESPONDENT FU/KZKFJRH DH VKSJ L S@ ASSESSEE BY : SHRI S.R. SHARMA (C.A) & SHRI R.K. BHATRA (C.A.) JKTLO DH VKSJ LS @ REVENUE BY : SHRI J.C. KULHARI (JCIT) LQUOKBZ DH RKJH[ K@ DATE OF HEARING : 02/08/2018 MN?KKS'K.KK DH RKJH[ K@ DATE OF PRONOUNCEMENT : 03/08/2018 VKNS'K@ ORDER PER: VIKRAM SINGH YADAV, A.M. THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF LD. CIT(A)-2, UDAIPUR DATED 12.02.2018 FOR THE ASSE SSMENT YEAR 2014- 15 WHEREIN THE ASSESSEE HAS TAKEN THE FOLLOWING GRO UNDS OF APPEAL AS UNDER:- 1. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF T HE CASE, THE LD. CIT(A), IS WRONG, UNJUST AND HAS ERRED IN LAW I N CONFIRMING FINDING RECORDED BY THE ASSESSING OFFICER THAT COMM ISSION INCOME OF RS.38,09,900/- FROM M/S. PROACTIVE IN AND OUT AD VERTISING LTD IS NOT GENUINE AND THEREBY CONFIRMING THE ADDITION OF SAID ITA NO. 575/JP/2018 M/S NAVJEEVAN TRADE & COMMODITIES PVT. LTD. VS. IT O 2 AMOUNT TO THE INCOME OF THE APPELLANT AS UNEXPLAINE D CASH CREDIT U/S 68 OF THE I.T. ACT, 1961 2. THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF TH E CASE, THE LD. CIT(A), IS WRONG, UNJUST AND HAS ERRED IN LAW IN CO NFIRMING FINDING RECORDED BY THE ASSESSING OFFICER THAT LEAS ING COMMISSION OF RS. 40,62,000/- FROM M/S. PACIFIC DEVELOPMENT CO RPORATION LTD. IS NOT GENUINE AND THEREBY CONFIRMING THE ADDI TION OF SAID AMOUNT TO THE INCOME OF THE APPELLANT AS UNEXPLAINE D CASH CREDIT U/S 68 OF THE I.T. ACT, 1961. 3. THAT WITHOUT PREJUDICE TO THE GROUND NO. (1) & ( 2) ABOVE, THE LD. CIT(A) IS ALSO WRONG AND HAS ERRED IN LAW IN CO NFIRMING THE ACTION OF THE ASSESSING OFFICER IN ASSESSING ABOVE SAID INCOME OF RS.78,71,000/- U/S 115BBE OF THE I.T. ACT, 1961 AND IN FURTHER UPHOLDING FINDING RECORDED BY THE ASSESSING OFFICER THAT CURRENT YEAR LOSS WILL NOT BE SET OFF AGAINST INCOME ASSESS ED U/S 115BBE EVEN THOUGH RELEVANT PROVISIONS DISALLOWING SET OFF HAS COME INTO FORCE W.E.F. 1-4-2017. 2. BRIEFLY, THE FACTS OF THE CASE ARE THAT DURING T HE YEAR UNDER CONSIDERATION, THE ASSESSEE HAS DECLARED INCOME FRO M COMMISSION AND BROKERAGE AT RS. 78,71,900/- IN ITS PROFIT AND LOSS ACCOUNT AND OFFERED THE SAME TO TAX UNDER THE HEAD PROFIT AND GAIN OF BUSINESS/PROFESSION. THE ASSESSING OFFICER, HOWEVE R, OBSERVED THAT THE COMMISSION RECEIPT OF RS. 78,71,000/- IS IN THE NAT URE OF UNEXPLAINED CASH CREDIT AND BROUGHT THE SAME TO TAX U/S 68 R.W .S. 115BBE OF THE I.T. ACT. 3. THE LD. AR HAS CONTENDED THAT THE ASSESSING OFFI CER HAS ALSO NOT ALLOWED CURRENT YEAR LOSS INCLUDING THE CURRENT YEA R DEPRECIATION AGAINST THE INCOME ASSESSED U/S 68 OF THE ACT. IT WAS SUBMI TTED THAT THE ITA NO. 575/JP/2018 M/S NAVJEEVAN TRADE & COMMODITIES PVT. LTD. VS. IT O 3 CURRENT YEAR BUSINESS LOSS INCLUDING CURRENT DEPRE CIATION BEING PART OF CURRENT BUSINESS LOSS IS TO BE ALLOWED SET OFF AGA INST INCOME FROM OTHER SOURCES AND ASSESSED U/S 68 OF THE ACT. IT WAS SUBM ITTED THAT SECTION 115BBE(2) DOES NOT BAR SET OFF OF LOSS IN OTHER HEA D OF INCOME ALLOWABLE U/S 71 OF THE IT ACT FROM THE INCOME REFE RRED TO IN SECTION 115BBE OF THE ACT. IT IS SUBMITTED THAT IT IS ONLY FROM ASSESSMENT YEAR 2017-18 BY VIRTUE OF AN AMENDMENT BY WHICH WORDS O R SET OFF OF ANY LOSS WERE INSERTED IN SUB-SECTION 115BBE THAT SUC H SET OFF OF LOSS WILL BE INADMISSIBLE. 4. IN SUPPORT, RELIANCE WAS PLACED BY THE LD AR ON THE CBDT CIRCULAR NO. 3/2017 DATED 20.01.2017 EXPLAINING THE EFFECT OF AMENDMENT BROUGHT IN BY THE FINANCE ACT, 2016 WHICH READS AS UNDER:- 46. CLARIFICATION REGARDING SET OFF OF LOSSES AGAIN ST DEEMED UNDISCLOSED INCOME. 46.1 SECTION 115BBE OF THE INCOME-TAX ACT INTER ALI A PROVIDES THAT THE INCOME RELATING TO SECTION 68 OR SECTION 6 9 OR SECTION 69A OR SECTION 69B OR SECTION 69C OR SECTION 69D IS TAXABLE AT THE RATE OF THIRTY PER CENT AND FURTHER PROVIDES THAT N O DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ALLOWANCES IN RELATIO N TO INCOME REFERRED TO IN THE SAID SECTIONS SHALL BE ALLOWABLE . 46.2 CURRENTLY, THERE IS UNCERTAINTY ON THE ISSUE O F SET-OFF OF LOSSES AGAINST INCOME REFERRED TO IN SECTION 115BBE OF THE INCOME-TAX ACT. THE MATTER HAS BEEN CARRIED TO JUDI CIAL FORUMS AND COURTS IN SOME CASES HAS TAKEN A VIEW THAT LOSS ES SHALL NOT BE ALLOWED TO BE SET - OFF AGAINST INCOME REFERRED TO IN SECTION 115BBE. HOWEVER, THE CURRENT LANGUAGE OF SECTION 11 5BBE OF THE INCOME-TAX ACT DOES NOT CONVEY THE DESIRED INTE NTION AND AS ITA NO. 575/JP/2018 M/S NAVJEEVAN TRADE & COMMODITIES PVT. LTD. VS. IT O 4 A RESULT THE MATTER IS LITIGATED. IN ORDER TO AVOID UNNECESSARY LITIGATION, THE PROVISION OF SUBSECTION (2) OF SECT ION 115BBE OF THE INCOME-TAX ACT HAS BEEN AMENDED AS TO EXPRESSLY PROVIDE THAT NO SET OFF OF ANY LOSS SHALL HE ALLOWABLE IN R ESPECT OF INCOME UNDER THE SECTIONS 68 OR SECTION 69 OR SECTION 69A OR SECTION 69B OR SECTION 69C OR SECTION 69D. 46.3 APPLICABILITY: THIS AMENDMENT TAKES EFFECT FRO M 1 ST OF APRIL, 2017 AND WILL, ACCORDINGLY, APPLY FROM ASSESSMENT Y EAR 2017-18 AND SUBSEQUENT ASSESSMENT YEARS. 5. IT WAS ACCORDINGLY SUBMITTED BY THE LD AR THAT T HE ACTION OF THE ASSESSING OFFICER IS GROSSLY WRONG AND BAD IN LAW I N NOT ALLOWING SET OFF OF THE CURRENT YEAR BUSINESS LOSS INCLUDING CURRENT YEAR DEPRECIATION AGAINST THE INCOME CHARGED TO TAX U/S 115BBE OF THE ACT. IN SUPPORT RELIANCE WAS ALSO PLACED ON THE COORDINATE BENCH DE CISIONS IN CASE OF ACIT VS. GIRDHAR ASSOCIATES (ITA NO. 1043/JP/2016 D ATED 04.08.2017), ACIT VS. SANJAY BAIRATHI GEMS LTD. (2017) 84 TAXMAN N.COM 138 AND M/S PITAMBER COMMODITY FUTURES PVT. LTD. VS. ACIT ( ITA NO. 863/JP/2017 DATED 21.03.2018). 6. THE LD. D/R IS HEARD WHO HAS RELIED ON THE FINDI NG OF THE LOWER AUTHORITIES. ITA NO. 575/JP/2018 M/S NAVJEEVAN TRADE & COMMODITIES PVT. LTD. VS. IT O 5 7. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL AVAILABLE ON RECORD. BY VIRTUE AN AMENDMENT HAS BEE N BROUGHT IN BY THE FINANCE ACT, 2016 IN SECTION 115BBE(2) OF THE I T ACT, THE WORDS OR SET OFF OF ANY LOSS WERE INSERTED W.E.F. 01.04.20 17. THE SAID AMENDMENT HAS BEEN MADE W.E.F. ASSESSMENT YEAR 2017 -18 AS ALSO CLARIFIED BY THE CBDT CIRCULAR NO. 3/2017 DATED 20- 01-2017. FURTHER, IN CASE OF M/S PITAMBER COMMODITY FUTURES PVT. LTD. VS . ACIT (SUPRA), SPEAKING THROUGH ONE OF US WHEREIN WE HAD AN OCCASI ON TO EXAMINE THE SAID ISSUE, WE HAVE HELD THE SAID AMENDMENT IS PROS PECTIVE IN NATURE. THE RELEVANT FINDINGS IN M/S PITAMBER COMMODITY FUT URES PVT. LTD. ARE REPRODUCED AS UNDER:- 8 IN LIGHT OF ABOVE DISCUSSIONS, IT IS CLEAR THAT THE AMENDMENT BROUGHT IN SECTION 115BBE WHEREIN NO SET OFF OF LOS SES AGAINST SURRENDERED INCOME BROUGHT TO TAX IS PROSPECTIVE IN NATURE AND DOES NOT APPLY FOR THE ASSESSMENT YEAR UNDER CONSID ERATION. THE DECISIONS RELIED UPON BY THE REVENUE HAVE ALSO BEEN EXAMINED AND DOES NOT SUPPORT ITS CASE. FOR THE YEAR UNDER C ONSIDERATION, THERE IS NO BAR FOR SET OFF OF CURRENT YEAR BUSINES S LOSS U/S 71 AGAINST INCOME BROUGHT TO TAX UNDER THE HEAD INCOM E FROM OTHER SOURCES. WE ARE THEREFORE OF THE VIEW THAT T HE ASSESSEE WILL BE ELIGIBLE FOR SET OFF OF CURRENT YEAR BUSINE SS LOSS OF RS. 7,67,768/- AGAINST THE UNDISCLOSED INVESTMENT OF RS . 36,00,000/- TOWARDS PURCHASE OF PLOT OF LAND WHICH HAS BEEN SUR RENDERED DURING THE COURSE OF SEARCH, AND SUBSEQUENTLY OFFER ED AND BROUGHT TO TAX UNDER SECTION 69 READ WITH SECTION 1 15BBE OF THE ACT. IN THE RESULT, SOLE GROUND TAKEN BY THE ASSESS EE IS ALLOWED. ITA NO. 575/JP/2018 M/S NAVJEEVAN TRADE & COMMODITIES PVT. LTD. VS. IT O 6 8. IN THE INSTANT CASE, IT IS NOT DISPUTED BY THE R EVENUE THAT THE ASSESSEE HAS CURRENT YEAR BUSINESS LOSSES INCLUDING CURRENT YEAR DEPRECIATION EXCLUDING A PART OF THE BUSINESS INCOM E DECLARED AS COMMISSION INCOME WHICH HAS BEEN RECLASSIFIED BY TH E ASSESSING OFFICER AND BROUGHT TO TAX UNDER THE HEAD INCOME FROM OTHE R SOURCES. IN OUR VIEW, THE ASSESSEE IS ELIGIBLE TO CLAIM SET OFF OF CURRENT YEAR BUSINESS LOSS INCLUDING CURRENT YEAR DEPRECIATION AGAINST CU RRENT YEAR INCOME ASSESSED UNDER THE HEAD INCOME FROM OTHER SOURCES UNDER SECTION 71 OF THE ACT. THE AMENDMENT BROUGHT BY THE FINANCE AC T, 2016 IN SECTION 115BBE(2) IS EFFECTIVE FROM ASSESSMENT YEAR 2017-18 AND IS NOT APPLICABLE FOR THE IMPUGNED ASSESSMENT YEAR. 9. IN LIGHT OF ABOVE DISCUSSIONS AND FOLLOWING THE DECISION REFERRED (SUPRA), GROUND NO. 3 OF THE ASSESSEES APPEAL IS P ARTLY ALLOWED TO THE EXTENT OF SETTING OFF OF CURRENT YEAR BUSINESS LOSS INCLUDING CURRENT YEAR DEPRECIATION AGAINST INCOME ASSESSED UNDER SECTION 115BBE. 10. GROUND NOS. 1 AND 2 AND REMAINING GROUND NO. 3 HAVE THUS BECOME ACADEMIC IN NATURE AND WE DO NOT DEEM IT APP ROPRIATE TO ADJUDICATE THE SAME. IN THE RESULT THE SAME ARE TRE ATED AS INFRUCTUOUS. ITA NO. 575/JP/2018 M/S NAVJEEVAN TRADE & COMMODITIES PVT. LTD. VS. IT O 7 IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 03/08/2018. SD/- SD/- FOT; IKY JKO FOE FLAG ;KNO (VIJAY PAL RAO) (VIKRAM SINGH YADAV) U;KF;D LNL;@ JUDICIAL MEMBER YS[KK LNL;@ ACCOUNTANT MEMBER TK;IQJ@ JAIPUR FNUKAD@ DATED:- 03/08/2018. *SANTOSH VKNS'K DH IZFRFYFI VXZSFKR@ COPY OF THE ORDER FORWARDED TO: 1. VIHYKFKHZ@ THE APPELLANT- M/S NAVJEEVAN TRADE & COMMODITIES PV T. LTD., JAIPUR. 2. IZR;FKHZ@ THE RESPONDENT- ITO, WARD- 4(2), JAIPUR. 3. VK;DJ VK;QDR@ CIT 4. VK;DJ VK;QDR@ CIT(A) 5. FOHKKXH; IZFRFUF/K] VK;DJ VIHYH; VF/KDJ.K] T;IQJ@ DR, ITAT, JAIPUR. 6. XKMZ QKBZY@ GUARD FILE { ITA NO. 575/JP/2018} VKNS'KKUQLKJ@ BY ORDER, LGK;D IATHDKJ@ ASST. REGISTRAR