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2019 (5) TMI 8 - AT - Income TaxCategorization/characterization of income surrendered during survey proceedings - deemed income from undisclosed sources u/s 69, 69A, 69B and 69C or income from business - whether from disclosed or undisclosed sources, and the allowability of claim of set off of losses ,both current and brought forward ,against the same? - tax rate u/s 115BBE HELD THAT:- To put it simply, the unrecorded investments/assets/expenditures made out of unexplained sources are treated as deemed incomes of the assessee. The onus is on the assessee to establish the source of the surrendered income failing which it is to be categorized as deemed income u/s 69/69A/B/C. And establishing the source of income is a factual matter. Surrender was on account of debtors/receivables relating to the business of the assessee only. The Revenue has accepted the surrender as such, as being on account of receivables. It follows that the debtors were generated from the sales made by the assessee during the course of carrying on the business of the assessee, which was not recorded in the books of the assessee. Though the said income was not recorded in the books of the assessee but the source of the same stood duly explained by the assessee as being from the business of the assessee. Even otherwise no other source of income of the assessee is there on record either disclosed by the assessee or unearthed by the Revenue. The preponderance of probability therefore is that the debtors were sourced from the business of the assessee. Therefore, there is no question of treating it as deemed income from undisclosed sources u/s 69, 69A, 69B and 69C and the same is held to be in the nature of Business Income of the assessee. Having held so, the same was assessable under the head ‘business and profession’ and as stated above, the benefit of set off of losses both current and brought forward was allowable to the assessee in accordance with law. Contention of the Revenue therefore that the income be treated as deemed income u/s 69,69A/B/C is accordingly rejected and as a consequence thereto the plea that no set off of losses be allowed against the same u/s 115BBE of the Act also is rejected. Therefore, as per the facts of the case and as per the provisions of law relating to the issue, the surrendered income, we hold, was assessable as business income of the assessee and set off of losses was to be allowed against the same as rightly claimed by the assessee. Whether the set off of losses is to be allowed against the same - whether amendment denying the set off of losses by the Finance Act, 2016 w.e.f. 1.4.2017 was clarificatory in nature and retrospective? - HELD THAT:- The assessee, on the other hand, has drawn our attention to several decisions of the I.T.A.T. ;[2017 (8) TMI 721 - ITAT JAIPUR]; [2018 (4) TMI 19 - ITAT JAIPUR], which have held the amendment to be prospective in nature. No contrary decision either of the I.T.A.T. or of any higher judicial authority has been brought to our notice by the Revenue. The decisions rendered by the I.T.A.T. will, therefore, apply, following which, we hold that in the impugned year the assessee was entitled to claim set off of losses against the income assessed as deemed income u/ss 68, 69, 69A, 69B and 69C of the Act as per the provisions of section 115BBE of the Act as it stood prior to amendment by Finance Act, 2016.
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