DELTA MECHCONS INDIA LTD., MUMBAI V. ITO - 6(2)(2), MUMBAI

ITA 5885/MUM/2016

• Counselvise Citation: [2018] 112 COUNSELVISE.COM (IT) 5146 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 25 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 29-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: SMC
• Assessment Year: 2011-2012
• Appeal Filed On: 04-10-2016
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: S K BEPARI
• Keywords: Capital asset; Business income; Depreciation; Opportunity of being heard; Question of law; Capital Gains
• Section: 72(1); 41(2)

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL, MUMBAI BENCH SMC, MUMBAI BEFORE SHRI JOGINDER SINGH, JUDICIAL MEMBER AND SHRI RAJESH KUMAR, ACCOUNTANT MEMBER ITA NO.5885/M/2016 ASSESSMENT YEAR: 2011-12 M/S. DELTA MECHCONS INDIA LTD., C/O P.D. SARAF & CO., CHARTERED ACCOUNTANTS, 1103, ARCADIA,195, NARIMAN POINT, MUMBAI 400 021 PAN: AAACD 1687P VS. INCOME TAX OFFICER 6(2)(2), AAYAKAR BHAVAN, M.K. ROAD, MUMBAI 400 020 (APPELLANT) (RE SPONDENT) PRESENT FOR: ASSESSEE BY : SHRI RAJIV KHANDELWAL, A.R. REVENUE BY : SHRI S.K. BEPARI, D.R. DATE OF HEARING : 06.09.2018 DATE OF PRONOUNCEMENT : .09.2018 O R D E R PER RAJESH KUMAR, ACCOUNTANT MEMBER: THE PRESENT APPEAL HAS BEEN PREFERRED BY THE ASSES SEE AGAINST THE ORDER DATED 10.06.2016 OF THE COMMISSIO NER OF INCOME TAX (APPEALS) [HEREINAFTER REFERRED TO AS TH E CIT(A)] RELEVANT TO ASSESSMENT YEAR 2011-12. 2. THE ASSESSEE HAS RAISED THE FOLLOWING GROUNDS OF APPEAL: THE COMMISSIONER OF INCOME-TAX (APPEALS) - 12, MUMB AI (HEREINAFTER REFERRED TO AS THE CIT(A)) ERRED IN UPHOLDING THE ACTION OF THE IN COME-TAX OFFICER - 6 (2)(2), MUMBAI (HEREINAFTER REFERRED TO AS THE ASSESSING OF FICER) IN TREATING PROFIT ARISING ON SALE OF BUSINESS ASSETS AS SHORT-TERM CAPITAL GA INS IN VIEW OF SECTION 50(2) OF THE ACT IN LIEU OF BUSINESS INCOME CONSIDERED BY THE AP PELLANTS. THE APPELLANTS CONTEND THAT ON THE FACTS AND IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE ASSESSING OFFICER OUGHT TO HAVE CON SIDERED THE PROFIT ARISING ON SALE OF BUSINESS ASSETS AS BUSINESS INCOME. ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 2 THE APPELLANTS FURTHER CONTEND THAT ON THE FACTS AN D IN THE CIRCUMSTANCES OF THE CASE AND IN LAW, THE CIT(A) OUGHT TO HAVE ALLOWED S ET-OFF OF BROUGHT FORWARD BUSINESS LOSS OF EARLIER YEAR(S) AGAINST THE CAPITA L GAINS COMPUTED BY ASSESSING OFFICER INASMUCH AS THE CHARACTER OF THE GAINS IS B USINESS INCOME. THE APPELLANTS CRAVE LEAVE TO ADD, TO, ALTER OR AME ND THE AFORESTATED GROUND OF APPEAL. 3. THE ONLY ISSUE RAISED BY THE ASSESSEE IN VARIOUS GROUNDS OF APPEAL IS AGAINST THE UPHOLDING THE ORDER OF AO TRE ATING THE PROFIT ARISING ON SALE OF BUSINESS ASSETS AS SHORT TERM CAPITAL GAIN UNDER SECTION 50(2) OF THE ACT INSTEAD OF BUSI NESS INCOME FOR THE PURPOSE OF SETTING OFF OF THE BROUGHT FORWA RD LOSSES FROM THE EARLIER YEARS AGAINST THE SAID INCOME. 4. THE FACTS IN BRIEF ARE THAT THE AO OBSERVED FROM THE DEPRECIATION CHART THAT ASSESSEE HAS SOLD SOME ASSE TS ON WHICH IT EARNED SOME SHORT TERM CAPITAL GAIN UNDER SECTIO N 50(2) OF THE ACT BUT THE SAME WAS NOT SHOWN AS SUCH AND ACCORDIN GLY THE ASSESSEE WAS ASKED TO FURNISH THE CALCULATION OF SH ORT TERM CAPITAL GAIN ON THE SALE OF DEPRECIABLE ASSETS. TH EREAFTER, THE ASSESSEE REVISED THE RETURN OF INCOME CORRECTING TH E MISTAKE IN THE ORIGINAL RETURN OF INCOME BY SHOWING THE GAIN O N SALE OF BUSINESS ASSETS AS INCOME FROM BUSINESS AT RS.5,29,41,471/- INSTEAD OF SHORT TERM CAPITAL GAIN AND CLAIMED SET OFF OF THE BROUGHT FORWARD LOSSES FROM A.Y. 2003-04 TO THE EXT ENT OF BUSINESS INCOME AVAILABLE I.E. RS. 5,29,41,471/-. ACCORDING TO THE AO THE GAIN ON SALE OF FIXED ASSETS OF RS.5,63, 86,346/- DEPRECIABLE ASSETS AND BLOCK CEASING TO EXIST DURI NG THE YEAR UNDER SECTION 50(2) OF THE ACT IN TOTO AND AS TO W HY THE SAME SHOULD NOT BE TREATED AS SHORT TERM CAPITAL GAIN UN DER SECTION 50 OF THE ACT. THE ASSESSEE REPLIED VIDE WRITTEN SU BMISSIONS DATED 06.01.2014. FINALLY THE AO REJECTED THE CONT ENTIONS OF THE ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 3 ASSESSEE THAT GAIN FROM SALE OF DEPRECIABLE ASSETS IS A BUSINESS INCOME WHICH IS ALLOWABLE TO BE SET OFF AGAINST THE BROUGHT FORWARD LOSSES AND TREATED THE GAIN AS SHORT TERM C APITAL GAIN THEREBY DENYING THE SETTING OFF OF THE BROUGHT FORW ARD LOSSES FROM A.Y. 2003-04. 5. IN THE APPELLATE PROCEEDINGS, THE LD. CIT(A) ALS O AFFIRMED THE ORDER OF AO BY OBSERVING AND HOLDING AS UNDER: 2.2 I HAVE CAREFULLY CONSIDERED AND PERUSED THE AS SESSMENT ORDER AND THE SUBMISSION OF THE APPELLANT. THE APPELLANT HAS HEAVILY RELIED ON THE DECISION OF JURISDICTIONAL HON'BLE ITAT MUMB AI IN THE CASE OF DIGITAL ELECTRONICS LTD (135 TTJ MUM 419) AND J K C HEMICALS LTD V ACIT 33 BCAJ( APRIL 2001). THE HON'BLE ITAT, MUMBAI IN THE CASE OF DIGITAL ELECTRONICS LTD HAS RELIED ON THE DECISION OF HONBLE SUPREME COURT IN THE CASE OF COCANADA RADHSWAMI BANK LTD AN D ACCORDINGLY DECIDED THE ISSUE IN FAVOR OF THE APPELLANT I.E. DI GITAL ELECTRONICS LTD. 2.3 IT IS SEEN THAT THE ISSUE INVOLVED IN THE PRESE NT CASE, IE, SETTING OFF OF BROUGHT FORWARD BUSINESS LOSS OF EARLIER YEARS U /S 72 AGAINST SHORT TERM CAPITAL GAIN AS COMPUTED U/S 50 OF THE ACT IS A DISPUTABLE ISSUE. THERE ARE OTHER JUDICIAL DECISIONS WHICH IS IN FAVO UR OF REVENUE SUCH AS HON'BLE ITAT RAJKOT BENCH DECISION IN THE CASE OF M ASTER SILK MILLS ( P ) LTD REPORTED IN 77 ITD 530. THE HON'BLE BANGALORE BENCH OF ITAT IN THE CASE OF KAMPLI CO-OPERATIVE SUGAR FACTORY LTD REPOR TED IN 83 ITD 460 HELD THAT UNABSORBED BUSINESS LOSS COULD NOT BE SET OFF AGAINST SHORT TERM CAPITAL GAIN U/S 50 OF THE ACT. THEREAFTER, SPECIAL BENCH, BANGALORE HAS BEEN CONST ITUTED. THIS WAS BECAUSE THE DIVISION BENCH NOTICED THAT BANGALO RE BENCH OF THE TRIBUNAL IN THE CASE OF STEELCOM INDUSTRIES (P)LTD V ITO DATED 27.12.2004 I IT APPEAL NO 571 ( BANG) / 1989 FOR A.Y. 1985-86, H ELD THAT CARRY FORWARD LOSS CAN BE SET OFF AGAINST THE INCOME FROM CAPITAL GAIN. FOR CORNING TO THE CONCLUSION, THE BANGALORE TRIBUNAL FOLLOWED THE DEC ISION OF HON'BLE SUPREME COURT IN THE CASE OF CIT V COCANADA RADHASW AMI BANK BANK LTD (57 ITR 306) AND CHUGANDAS & CO (55 ITR 17). BU T, THERE IS ANOTHER JUDGMENT OF HON'BLE 5UPREME COURT IN THE CASE OF CI T VS EXPRESS NEWSPAPER LTD (53 ITR 250) WHEREIN IT IS HELD THAT CAPITAL GAINS ARE CONNECTED WITH THE CAPITAL ASSETS OF THE BUSINESS A ND THEREFORE, IT CANNOT MAKE THEM THE PROFIT OF THE BUSINESS AND SO CANNOT BE SET OFF AGAINST THE CARRY FORWARD BUSINESS LOSS. IN THE SAID DECISION OF HON'BLE BANGALORE SPECIAL B ENCH THE HON. MEMBERS DISTINGUISHED THE DECISION OF HON'BLE SUPRE ME COURT IN THE CASE OF COCANADA RADHSWAMI BANK LTD. AND UNITED COM MERCIAL BANK ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 4 LTD WHICH IS REFERRED BY THE APPELLANT IN THE WRITT EN SUBMISSIONS FILED ON 15.2.2016 IN THE PRESENT CASE. THE SPECIAL BENCH OF HON. BANGALORE ITAT IN THE CASE OF NANDI STEEL LTD HELD AS UNDER: THE ONLY QUESTION FOR CONSIDERATION IN THE INSTANT CASE IS WHETHER THE BROUGHT FORWARD LOSS FROM THE EARLIER Y EARS CAN BE SET-OFF AGAINST THE INCOME FROM 'CAPITAL GAINS' UND ER SECTION 72. MUCH STRESS HAS BEEN LAID BY BOTH THE PARTIES ON TH E TERM 'PROFITS AND GAINS IF ANY, OF ANY BUSINESS OR PROFE SSION' MENTIONED IN SUB CLAUSE-(I) OF SUB-SECTION (1) OF S ECTION 72. WHAT ARE THE PROFITS AND GAINS OF BUSINESS OR PROFE SSION? WHETHER IT SHOULD BE THE INCOME EARNED OUT OF THE B USINESS CARRIED ON BY THE ASSESSEE OR IT MAY BE THE INCOME IN ANYWAY CONNECTED TO THE BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE? THE ANSWER TO THIS QUESTION ENTIRELY DEPE NDS ON THE INTERPRETATION TO BE GIVEN TO THE TERM OF ANY BUSIN ESS OR PROFESSION CARRIED ON BY THE ASSESSEE AND ASSESSABL E FOR THAT ASSESSMENT YEAR' FOR DETERMINATION OF THE ISSUE. IT IS NOT IN DISPUTE THAT THE LAND, BUILDING AND BORE WELL SOLD BY THE ASSESSEE WERE USED BY THE ASSESSEE FOR ITS BUSINESS PURPOSES. IT IS ALSO NOT DISPUTED THAT THESE ASSETS WERE FIXED A SSETS OF THE ASSESSEE. THE ONLY ARGUMENT OF THE ASSESSEE HAS BEE N THAT THEY HAVE DIRECT NEXUS WITH THE BUSINESS CARRIED ON BY T HE ASSESSEE AND, THEREFORE, ARE BUSINESS ASSETS AND ANY GAINS F ROM THE SOLE OF SUCH ASSETS WOULD ALSO HAVE THE CHARACTER OF BUS INESS INCOME. THE CONTENTION OF THE ASSESSEE THAT THE ASS ETS SOLD BY THE ASSESSEE WERE BUSINESS ASSETS CANNOT BE ACCEPTE D. UNDISPUTEDLY, THEY WERE CAPITAL ASSETS AND THE CAPI TAL RECEIPTS ARE NOT TAXABLE NOR ARE THE CAPITAL PAYMENTS DEDUCT IBLE FROM THE INCOME OF THE ASSESSEE. THE CAPITAL IS TO BE US ED FOR THE PURPOSE OF CARRYING ON THE BUSINESS OF THE ASSESSEE AND IT SHALL REMAIN IN THE BUSINESS OF THE ASSESSEE TILL IT IS E ITHER CONVERTED INTO STOCK-IN-TRADE OR IS DISPOSED OF. THE INCOME E ARNED BY THE ASSESSEE BY CARRYING ON THE BUSINESS BY USE OF THE STOCK-IN- TRADE ONLY IS THE BUSINESS INCOME OF THE ASSESSEE. LIKEWISE, ANY EXPENDITURE INCURRED BY THE ASSESSEE FOR CARRYING O N OF BUSINESS AND FOR EARNING THE INCOME FROM SUCH BUSIN ESS OR PROFESSION IS ONLY ALLOWABLE AS DEDUCTION. AFTER TA KING INTO ACCOUNT THE RECEIPTS AND PAYMENTS FOR CARRYING ON T HE BUSINESS OF THE ASSESSEE ONLY THE PROFIT OR GAIN OR LOSS FRO M THE BUSINESS IS COMPUTED. IF THE PROFIT OR LOSS RELATE TO THE SO ME ASSESSMENT YEAR FROM ONE SOURCE THEN IT CAN BE SET-OFF FROM AN OTHER SOURCE UNDER THE SOME HEAD OF INCOME UNDER SECTION 70, AND IT CAN BE SET-OFF AGAINST THE INCOME FROM ANY OTHER HEAD OF I NCOME UNDER SECTION 71. SECTION 72, HOWEVER, PERMITS THE CARRY FORWARD BUSINESS LOSS TO SUBSEQUENT ASSESSMENT YEARS AND AL LOWS IT TO BE SET-OFF AGAINST PROFITS AND GAINS, IF ANY, OF AN Y BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE AND ASSESSABL E FOR THE ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 5 RELEVANT ASSESSMENT YEAR. THUS, IT IS CLEAR THAT IT IS ONLY THE BUSINESS LOSS THAT CAN BE CARRIED FORWARD UNDER SEC TION 72 AND IT CAN ALSO BE SET-OFF ONLY AGAINST THE BUSINESS IN COME OF THE ASSESSEE, BE IT FROM THE SOME BUSINESS OR FROM ANY OTHER BUSINESS. CAPITAL GAINS ON SALE OF CAPITAL ASSETS I S NOT TO BE SET- OFF AGAINST THE BROUGHT FORWARD LOSS OF EARLIER YEA RS. IN VIEW OF THE SAME, IT IS TO BE HELD THAT THE ASSESSEE WOULD NOT BE ENTITLED TO SET-OFF CARRY FORWARD BUSINESS LOSS AGA INST THE LONG TERM CAPITAL GAIN ARISING ON SALE OF LAND USED FOR THE PURPOSE OF BUSINESS. [PARA 10] 2.4 THE ISSUE INVOLVED IN THE PRESENT CASE IS SIMIL AR AND IDENTICAL TO THE CASE OF SPECIAL BENCH OF BANGALORE IN THE CASE OF NANDI STEELS LTD (17 TAXRNANN.COM 93). IN THE PRESENT CASE ALSO THE ASSETS SOLD WERE CAPITAL ASSETS AND NOT THE BUSINESS ASSETS (TRADING ASSETS). HENCE THE RECTIFICATION APPEAL OF THE APPELLANT IS DISMISSED BY GOING INTO THE MERITS OF THE CASE AND ALSO AFTER AFFORDING REASONA BLE OPPORTUNITY OF BEING HEARD TO THE APPELLANT. 3. IN THE RESULT, THE RECTIFICATION APPEAL OF THE A PPELLANT IS REJECTED. 6. THE LD. COUNSEL OF THE ASSESSEE VOLUNTARILY SUBM ITTED BEFORE THE BENCH THAT THE GAIN ACCRUING FROM SALE O F DEPRECIABLE ASSETS WHICH WERE HELD FOR A PERIOD OF MORE THAN 36 MONTHS IS A BUSINESS GAIN FOR THE PURPOSE OF SETTING OFF OF BRO UGHT FORWARD LOSSES AND THEREFORE THE ORDERS OF LD. CIT(A) AND A O ARE FACTUALLY AND LEGALLY INCORRECT. THE LD. A.R. SUBM ITTED THAT THE ISSUE IN THE PRESENT CASE IS THAT THE ASSESSEE HAS EARNED A SHORT TERM CAPITAL GAIN OF RS.5,63,86,346/- ON SALE OF BU ILDING WHICH WAS ADJUSTED AGAINST THE BROUGHT FORWARD LOSSES FRO M A.Y. 2003- 04 ON THE GROUND THAT THE INCOME ACCRUING BY WAY OF SHORT TERM CAPITAL GAIN IS A BUSINESS INCOME FOR THE PURPOSE O F SETTING OFF OF THE BROUGHT FORWARD LOSSES. IN DEFENCE OF HIS ARGU MENT, THE LD. A.R. RELIED ON A SERIES OF DECISIONS NAMELY; (1) DIGITAL ELECTRONICS LTD. VS. ADDITIONAL CIT (20 11) 135 TTJ(MUMBAI) 419. ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 6 (2) ITO VS. M/S. EMINENT TRAVELS PVT. LTD. IN ITA NO.5782/M/2016 A.Y. 2010-11 ORDER DATED 26.04.2017 THE LD. A.R. FINALLY SUBMITTED THAT SINCE THE ISSU E IS SQUARELY COVERED IN FAVOUR OF THE ASSESSEE BY THE A FORESAID DECISIONS OF THE CO-ORDINATE BENCH OF THE TRIBUNAL AND THEREFORE THE ORDER OF LD. CIT(A) MAY KINDLY BE REVERSED AND THE AO BE DIRECTED TO ALLOW THE SET OFF OF THE BROUGHT FORWAR D LOSSES AS CLAIMED AGAINST BUSINESS INCOME ARISING FROM FROM SALE OF BUSINESS ASSETS OF RS.5,63,86,346/-. 7. THE LD. D.R., ON THE OTHER HAND, RELIED HEAVILY ON THE ORDERS OF AO AND THE LD. CIT(A) AND VEHEMENTLY OPPO SED THE SUBMISSIONS AND ARGUMENTS OF THE LD. A.R. THE LD. D.R. CONTENDED THAT IT HAS BEEN EXPLICITLY PROVIDED IN T HE ACT THAT ANY GAIN RESULTING FROM SALE OF DEPRECIABLE ASSETS HAS TO BE TREATED AS SHORT TERM CAPITAL GAIN AND THEREFORE NO SET OFF IS ADMISSIBLE OF THE BROUGHT FORWARD LOSSES AGAINST THE SAID GAIN AS THE PROVISION OF SECTIONS ARE VERY CLEAR AND CONSPICUOU S AS THE BROUGHT FORWARD LOSSES COULD ONLY BE SET OFF AGAINS T THE BUSINESS INCOME AND NOT AGAINST THE SHORT TERM CAPITAL GAIN WHICH CAN NOT PARTAKE THE CHARACTER OF A BUSINESS INCOME FOR THE PURPOSE OF SETTING OFF OF THE BROUGHT FORWARD LOSSES THOUGH THE SAME HAS RESULTED FROM THE SALE OF ASSETS USED IN THE BUSINE SS OF THE ASSESSEE AND HAS TO BE TREATED AS SHORT TERM CAPITA L GAIN UNDER SECTION 50 OF THE ACT AND ASSESSED ACCORDINGLY. FI NALLY, THE LD. D.R. PRAYED THAT THE APPEAL OF THE ASSESSEE SHOULD BE DISMISSED AS BEING AGAINST THE PROVISION OF THE ACT. 8. WE HAVE HEARD THE RIVAL SUBMISSIONS OF BOTH THE PARTIES AND PERUSED THE MATERIAL ON RECORD INCLUDING THE DE CISIONS CITED ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 7 BY THE LD. A.R. THE UNDISPUTED FACTS ARE THAT THE ASSESSEE HAS EARNED A GAIN OF RS.5,63,86,346/- ON THE SALE OF BU SINESS PREMISES ON WHICH DEPRECIATION WAS CLAIMED. NOW T HE ONLY ISSUE BEFORE US IS THAT WHETHER THE SAME IS A SHORT TERM CAPITAL GAIN UNDER SECTION 50(2) TO BE ASSESSED AS SUCH OR THE SAME IS A BUSINESS INCOME FOR THE PURPOSE OF CLAIMING SET OFF OF THE BROUGHT FORWARD LOSSES AS HAS BEEN SHOWN BY THE ASS ESSEE. AFTER PERUSING THE FACTS ON RECORD AND THE DECISION S AS CITED BY THE LD. A.R., WE FIND MERIT IN THE CONTENTION OF TH E ASSESSEE THAT FOR THE PURPOSE OF SETTING OFF OF BROUGHT FORWARD LOSSES ANY GAIN, WHICH IS ARISING OUT OF SALE OF DEPRECIABLE BUSINES S ASSETS THOUGH A SHORT TERM CAPITAL GAIN UNDER SECTION 50, HAS TO BE TREATED AS A BUSINESS INCOME FOR THE PURPOSE OF SET OFF OF THE BROUGHT FORWARD LOSSES. IN THE CASE OF DIGITAL ELE CTRONICS LTD. VS. ADDITIONAL CIT (SUPRA) THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS HELD AS UNDER: 9. WE HAVE HEARD THE RIVAL CONTENTIONS AND PERUSED THE MATERIAL ON RECORD. SECTION 72 OF THE INCOME TAX ACT, INTER ALI A, PROVIDES THAT 'WHERE FOR ANY ASSESSMENT YEAR, THE NET RESULT OF THE COMP UTATION UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IS A LOSS TO THE ASSESSEE, NOT BEING A LOSS SUSTAINED IN A SPECULATI ON BUSINESS, AND SUCH LOSS CANNOT BE OR IS NOT WHOLLY SET OFF AGAINST INC OME UNDER ANY HEAD OF INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 71, SO MUCH OF THE LOSS AS HAS NOT BEEN SO SET OFF OR, WHERE HE HAS NO INCOME UNDER ANY OTHER HEAD, THE WHOLE LOSS SHALL, SUBJECT TO THE OT HER PROVISIONS OF THIS CHAPTER, BE CARRIED FORWARD TO THE FOLLOWING ASSESS MENT YEAR AND, - (I) IT SHALL BE SET BE OFF AGAINST THE PROFITS AND GAINS, IF ANY, OF ANY BUSIN ESS OR PROFESSION CARRIED ON BY HIM AND ASSESSABLE FOR THA T ASSESSMENT YEAR ...........' . IT IS THUS CLEAR THAT SECTION 72 OF THE ACT PROVI DES THAT WHERE FOR ANY ASSESSMENT YEAR, THE NET RESULT OF THE COMP UTATION UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IS A LOSS TO THE ASSESSEE, NOT BEING A LOSS SUSTAINED IN A SPECULATI ON BUSINESS, AND SUCH LOSS CANNOT BE OR IS NOT WHOLLY SET OFF AGAINST INC OME UNDER ANY HEAD OF INCOME IN ACCORDANCE WITH THE PROVISIONS OF SECTION 71, SO MUCH OF THE LOSS AS HAS NOT BEEN SO SET OFF IS TO BE CARRIED FO RWARD TO THE FOLLOWING ASSESSMENT YEAR AND IS ALLOWABLE FOR BEING SET OFF 'AGAINST THE PROFITS, IF ANY, OF THAT BUSINESS OR PROFESSION CARRIED ON BY H IM AND ASSESSABLE FOR THAT ASSESSMENT YEAR'. IT IS THUS FOR SETTING OFF T HE INCOME THAT WHILE THE ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 8 LOSS TO BE CARRIED FORWARD HAS TO BE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION', THE GAINS AGAINST WHICH SU CH LOSS CAN BE SET OFF, HAS TO BE PROFITS OF 'ANY BUSINESS OR PROFESSION CA RRIED ON BY HIM AND ASSESSABLE IN THAT ASSESSMENT YEAR. IN OTHER WORDS, THERE IS NO REQUIREMENTS OF THE GAINS BEING TAXABLE UNDER THE H EAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' AND THUS, AS LONG AS GAI NS ARE 'OF ANY BUSINESS OR PROFESSION CARRIED ON BY THE ASSESSEE AND ASSESS ABLE TO TAX FOR THAT ASSESSMENT YEAR', THE SAME CAN BE SET OFF AGAINST L OSS UNDER THE HEAD PROFITS AND GAINS OF BUSINESS OR PROFESSION CARRIED FORWARD FROM EARLIER YEARS. IN THE CASE OF CIT V. COCANADA RADHASWAMI BA NK LTD(SUPRA), THEIR LORDSHIPS OF THE HON'BLE SUPREME COURT TOOK NOTE OF THIS DISTINCTION AND THE IMPLICATIONS OF THESE PROVISION REGARDING CARRY FOREWARD AND SET OFF OF BUSINESS LOSS. IT WAS NOTED BY THE HON'BLE SUPREME COURT THAT WHILE ONE SET OF PROVISIONS, I.E. THE NATURE OF LOSS INCURRED BY THE ASSESSEE, CLASSIFIES THE SAME ON THE BASIS OF INCOME BEING TA XABLE UNDER A PARTICULAR HEAD FOR THE PURPOSE OF COMPUTATION OF T HE NET INCOME, THE OTHER SET OF PROVISIONS IS CONCERNED, ONLY WITH THE NATURE OF GAINS BEING FROM BUSINESS AND NOT WITH THE HEAD OF TAX. THEIR L ORDSHIPS HELD THAT AS LONG AS THE PROFITS AND GAINS ARE IN THE NATURE OF BUSINESS PROFITS AND GAINS, AND EVEN IF THESE PROFITS ARE LIABLE TO BE T AXED UNDER A HEAD OTHER THAN INCOME FROM BUSINESS AND PROFESSION, THE LOSS CARRIED FORWARD CAN BE SET OFF AGAINST SUCH PROFITS OF THE ASSESSEE. IN THIS VIEW OF THE MATTER, THE OBJECTION RAISED BY THE AUTHORITIES BELOW, IN O UR HUMBLE UNDERSTANDING, ARE DEVOID OF ANY LEGAL SUBSTANCE. C OMING TO THE JUDICIAL PRECEDENTS CITED BY THE CIT (A), WE FIND THAT IN TH E CASE OF MILLIND TRADING CO. P. LTD, 211 ITR 690 (SUPRA), THEIR LORDSHIPS WE RE CONCERNED WITH THE QUESTION WHETHER OR NOT THE ASSESSEE HAD OPTION OF NOT SETTING OFF THE LOSSES INCURRED AGAINST THE INCOME FROM DIFFERENCE SOURCES UNDER THE HEAD 'BUSINESS INCOME'. THE ISSUE WAS THUS CONFINED TO THE QUESTION AS TO HOW THE TOTAL INCOME FOR A PARTICULAR ASSESSMENT YEAR IS TO BE COMPUTED. THIS DECISION HAS NO BEARING ON THE ISSU E IN APPEAL BEFORE US. SO FAR AS THE HON'BLE SUPREME COURT JUDGEMENT IN TH E CASE OF CIT V. URMILA RAMESH (SUPRA) IS CONCERNED, IT WILL HAVE NO BEARING ON THE ISSUE BEFORE US, BECAUSE IT REFERS TO SIMULTANEOUS APPLIC ATION OF SECTION 41(2) AND SECTION 50 ON THE SAME AMOUNT. IN CONTRAST TO T HAT POSITION, THE SHORT REFERENCE TO SECTION 41(2) IN THE PRESENT CAS E IS TO SHOW THE NATURE OF INCOME IN CONTRADISTINCTION WITH THE HEAD UNDER WHICH IT IS TO BE ASSESSED. REVENUE THUS DOES NOT DERIVE ANY ADVANTAG E FROM THIS DECISION. IN VIEW OF THESE DISCUSSIONS AND AS ALSO BEARING IN MIND THE ENTIRETY OF THE CASE, WE ARE OF THE CONSIDERED VIEW THAT THE IN COME EARNED IN THE YEAR BEFORE US, ALTHOUGH NOT TAXABLE AS 'PROFITS AN D GAINS FROM BUSINESS AND PROFESSION' WAS AN INCOME IN THE NATURE OF INCO ME OF BUSINESS NEVERTHELESS. THE ASSESSEE WAS, THEREFORE, INDEED J USTIFIED IN CLAIMING THE SET OFF OF BUSINESS LOSSES AGAINST THE INCOME O F CAPITAL GAINS. WE UPHOLD THE GRIEVANCE OF THE ASSESSEE AND DIRECT THE AO TO GRANT THE SET OFF. THE ASSESSEE GET RELIEF ACCORDINGLY. ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 9 9. IN THE CASE OF ITO VS. M/S. EMINENT TRAVELS PVT. LTD. (SUPRA) THE CO-ORDINATE BENCH OF THE TRIBUNAL HAS H ELD AS UNDER: 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSI ONS. IN SO FAR AS IT IS RELEVANT FOR OUR PURPOSE, IT IS NOTICEABLE THAT SECTION 72 OF THE ACT PRESCRIBES SET-OFF OF UNABSORBED BUSINESS LOSS AGAI NST THE PROFITS AND GAINS OF ANY BUSINESS OR PROFESSION CARRIED ON BY T HE ASSESSEE AND ASSESSABLE FOR THAT ASSESSMENT YEAR. IN THE PRESENT CASE, THE ISSUE IS WITH RESPECT TO THE BUSINESS LOSES OF ASSESSMENT YE ARS 2006-07, 2007-08 AND 2009-10, WHICH HAVE BEEN BROUGHT FORWARD AND AS SESSEE HAD SOUGHT SET OFF OF THE SAME AGAINST THE PROFIT EARNED IN TH IS YEAR ON SALE OF OFFICE PREMISES. THE CLAIM HAS BEEN OPPOSED BY THE REVENUE PRIMARILY ON THE GROUND THAT IN THE INSTANT YEAR NO BUSINESS HAS BEEN CARRIED OUT, AND THUS PROFIT ON SALE OF PREMISES IS NOT ASSESSAB LE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS AND PROFESSION'. QUI TE CLEARLY, SECTION 72(1) OF THE ACT DOES NOT PRESCRIBE THAT IN THE YEAR OF SET- OFF THE INCOME IN QUESTION BE ASSESSABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' AND THUS, CONSIDERING THE PHRASEOLOG Y OF THE SECTION, IT WOULD BE SUFFICIENT IF SUCH INCOME IS OF THE BUSINE SS OR PROFESSION CARRIED ON BY HIM. THEREFORE, THE OBJECTION OF THE ASSESSING OFFICER THAT THE GAIN ON SALE OF OFFICE PREMISES WAS ASSESSABLE AS SHORT TERM CAPITAL GAIN IS OF NO AVAIL TO DENY THE SET-OFF ENVISAGED U NDER SECTION 72 OF THE ACT BECAUSE IN COMMERCIAL SENSE, THE GAIN ON SALE O F OFFICE PREMISES REPRESENTS PROFITS OF BUSINESS. THE SAID PROPOSITIO N WAS APPLIED BY OUR CO- ORDINATE BENCH IN THE CASE OF DIGITAL ELECTRONICS L TD. (SUPRA), WHICH HAS SINCE BEEN FOLLOWED BY THE CIT(A) IN THE PRESENT CA SE. THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF M/S. HICKSON & DAD AJEE PVT. LTD(SUPRA) WAS CONSIDERING THE APPEAL OF THE REVENUE, INTER-AL IA, ON THE FOLLOWING QUESTION OF LAW:- '(I)WHETHER ON THE FACTS AND IN THE CIRCUMSTANCES O F THE CASE AND IN LAW, THE TRIBUNAL WAS JUSTIFIED IN ALLOWING SET OFF OF BROUGHT FORWARD BUSINESS LOSS AGAINST DEEMED SHORT TERM CAPITAL GAI NS ARISING FROM SALE OF BUILDING AND PLANT AND MACHINERY? THE HON'BLE BOMBAY HIGH COURT APPROVED THE STAND OF THE ASSESSEE AND NEGATED THE STAND OF THE REVENUE. THE HON'BLE BOMBA Y HIGH COURT ALSO NOTED THAT THERE WAS NO REQUIREMENT OF SECTION 72 O F THE ACT THAT SUCH GAINS OF BUSINESS SHALL BE TAXABLE UNDER THE HEAD ' PROFITS AND GAINS OF BUSINESS OR PROFESSION' AND, THEREFORE, UPHELD THE DECISION OF THE TRIBUNAL HOLDING THAT THE BROUGHT FORWARD BUSINESS LOSS CAN BE SET OFF AGAINST PROFITS OF ANY BUSINESS OR PROFESSION INCLUDING THE PROFIT ON SALE OF BUILDING AND PLANT & MACHINERY. FOLLOWING THE AFORE SAID PARITY OF REASONING, IN THE PRESENT CASE ALSO, THE BROUGHT FO RWARD LOSSES ARE ELIGIBLE FOR SET-OFF AGAINST SHORT TERM CAPITAL GAI N ON SALE OF OFFICE PREMISES. THEREFORE, THE DECISION OF THE CIT(A) IS JUSTIFIED AND IS HEREBY AFFIRMED. THUS, ON THIS ASPECT THE REVENUE FAILS. ITA NO.5885/M/2016 M/S. DELTA MECHCONS INDIA LTD. 10 CONSIDERING THE RATIO LAID DOWN BY THE CO-ORDINATE BENCHES OF THE TRIBUNAL IN THE ABOVE TWO DECISIONS AND THE FACTS ON RECORD, WE ARE OF THE VIEW THAT THE CASE OF THE ASS ESSEE IS SQUARELY COVERED BY THE SAID DECISIONS AND WE ARE , THEREFORE, INCLINED TO HOLD THAT THE ASSESSEE IS ENTITLED TO C LAIM THE SET OFF OF BROUGHT FORWARD LOSSES FROM A.Y. 2003-04 AGAINST THE SHORT TERM CAPITAL GAIN RESULTING FROM THE SALE OF BUSINE SS PREMISES OF THE ASSESSEE UNDER SECTION 50 OF THE ACT. ACCORDIN GLY, THE DECISION OF LD. CIT(A) IS NOT CORRECT AND CAN NOT B E SUSTAINED. SO WE HEREBY REVERSE THE ORDER OF LD. CIT(A) AND DIR ECT THE AO TO TREAT THE GAIN FROM SALE OF DEPRECIABLE BUSINESS AS SETS AS BUSINESS INCOME AND ALLOW THE SET OFF OF THE BROUGH T LOSSES. 10. IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 17.09.2018. SD/- SD/- (JOGINDER SINGH) (RAJESH KUMAR) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI, DATED: 17.09.2018. * KISHORE, SR. P.S. COPY TO: THE APPELLANT THE RESPONDENT THE CIT, CONCERNED, MUMBAI THE CIT (A) CONCERNED, MUMBAI THE DR CONCERNED BENCH //TRUE COPY// [ BY ORD ER DY /ASSTT. REGISTRAR, ITAT, MUMBAI.