Mahalaxmi Food Industries, Jagadhri V. ITO, Ward -2, Yamuna Nagar

ITA 711/CHANDI/2022

AI Insights

The case involves M/s Mahaluxmi Food Industries appealing against the order of the Commissioner of Income Tax (Appeals) NFAC, Delhi, which pertained to the assessment year 2013-14. The primary issue was the disallowance of carry forward losses by the Assessing Officer, who invoked Section 115BBE(2) of the Income Tax Act, 1961, against the surrendered business income of the assessee. The assessee contested that the AO's action of treating the surrendered business income as unexplained income and applying Section 115BBE(2) was unjustified, especially since the relevant amendment to the Act came into effect after the assessment year in question. The Tribunal agreed with the assessee, referencing a CBDT Circular that clarified the applicability of the set off of losses against income determined under Section 115BBE for assessment years prior to 2016-17.

• Counselvise Citation: [2023] 140 COUNSELVISE.COM (IT) 127551 (ITAT-CHANDIGARH)
• Duration Of Justice: 6 month(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 31-05-2023
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Next Hearing Date: 30-05-2023
• Assessment Year: 2013-2014
• Appeal Filed On: 30-11-2022
• Laws Referred To: Income Tax Act, 1961
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Business income
• Section: 154; 143(3)

Judgement Text

आयकर अपील य अ धकरण,च डीगढ़ यायपीठ “एकल” च डीगढ़ IN THE INCOME TAX APPELLATE TRIBUNAL, CHANDIGARH BENCH “SMC” CHANDIGARH ी संजय गग , या यक सद य BEFORE: SH. SANJAY GARG, JUDICIAL MEMBER आयकर अपील सं./ ITA Nos.711/CHD/2022 नधा रण वष / Assessment Year : 2013-14 M/s Mahaluxmi Food Industries, Plot No.1, Industrial Estate, Manakpur, Jagadhri. बनाम The ITO, Ward 2, Yamuna Nagar. थायी लेखा सं./PAN NO: AAPFM6823J अपीलाथ /Appellant यथ /Respondent नधा रती क! ओर से/Assessee by : Shri Ajay Jain, CA राज व क! ओर से/ Revenue by : Shri Akashdeep, JCIT, Sr.DR स ु नवाई क! तार&ख/Date of Hearing : 31.05.2023 उदघोषणा क! तार&ख/Date of Pronouncement : 01.06.2023 आदेश/ORDER The present appeal has been preferred by the assessee against the order dated 21.10.2022 of the Commissioner of Income Tax (Appeals) NFAC, Delhi [in short ‘CIT(A)’] pertaining to 2013-14 assessment year. 2. The assessee in this appeal has agitated the action of the Assessing Officer (in short ‘the AO’) in disallowing the carry forward losses by way of invoking the provisions of Section 115BBE(2) of the Income Tax Act,1961 ( in short ‘the Act’) against the surrendered business income of the assessee. ITA-711/CHD/2022 A.Y. 2013-14 Page 2 of 3 3. At the outset, ld. AR has invited my attention to the impugned assessment order to submit that the AO did not make any addition u/s 68/69/69A/69B/69C/69D of the Income Tax Act, therefore, there was no question of disallowance of set off of losses against the surrendered business income and infact the AO did not disallow the loss while completing the assessment u/s 143(3) of the Act. However, in subsequent proceedings carried out u/s 154 of the Act, the AO treated the surrendered business income during the survey action as unexplained income of the assessee and applied the provisions of Section 115BBE(2) to disallow the set off of loss against surrendered income. The ld. counsel has firstly submitted that the AO was not justified in changing the nature of the income and thereby assessing it u/s 68/69/69A of the Income Tax Act in the proceedings carried out u/s 154 of the Act. He has further submitted that even the assessment year involved is A.Y. 2013-14 and that the amendment to the provisions of Section 115BBE have been introduced vide Finance Act, 2016 w.e.f. 01.04.2017, whereby, the set off of loss has been denied in respect of an income assessed u/s 68/69/69A/69b/69C/69D of the Act. He has relied upon CBDT Circular No.11 of 2019 dated 19.06.2019 whereby the CBDT has clarified that since the term ‘set off of any loss’ was inserted only vide Finance Act, 2016 w.e.f. 01.04.2017, therefore, an assessee would be entitled to claim set off of loss ITA-711/CHD/2022 A.Y. 2013-14 Page 3 of 3 against income determined u/s 115BBE of the Act till the assessment year 2016-17. 4. The ld. DR has fairly admitted that case of the assessee is covered by the aforesaid CBDT Circular as the Assessment Year involved is Assessment Year 2013-14. In view of this, the action of the lower authorities in denying the set off of losses to the assessee cannot be held to be justified and accordingly, the AO is directed to allow the assessee set off of losses in respect of income determined u/s 115BBE of the Act. 5. In the result, appeal stands allowed. 6. Order pronounced in the Open Court on 1 st June, 2023. Sd/- ( संजय गग ) (SANJAY GARG ) या यक सद य/ Judicial Member “Poonam” आदेश क! त,ल-प अ.े-षत/ Copy of the order forwarded to : 1. अपीलाथ / The Appellant 2. यथ / The Respondent 3.आयकर आय ु /त/ CIT 4. -वभागीय त न2ध, आयकर अपील&य आ2धकरण , च4डीगढ़/ DR, ITAT, CHANDIGARH 5. गाड फाईल/ Guard File आदेशानुसार/ By order, सहायक पंजीकार/ Assistant Registrar