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2023 (2) TMI 625 - AT - Income TaxAddition u/s 68 - genuineness of the income earned by the assessee in the form of commodity profit - whether the Assessing Officer was justified in making the addition u/s 68 - HELD THAT:- We notice that the assessee is mainly into the business of manufacturing of TMT bars. During the year it entered into transactions of purchase and sale of commodities and earned a profit - These transactions were carried out through a broker, namely, Sidhsilver Commodities Pvt. Ltd.. AO doubted the transactions of the said profit on account of linkage of the broker with Universal Commodity Exchange of India Ltd.. However, we find that apart from referring to the said investigation, no other concrete evidence have been put forth by the revenue authorities to prove that the commodity profit was an accommodative profit. The complete details including the contract notes, financial ledgers, bank statement showing the relevant transactions and the audited financial statements of the broker, assert this fact that the assessee has earned a genuine commodity profit. Set-off of current year losses against the addition made u/s 68 - We have held above that the assessee has earned genuine commodity profit but even for academic discussion if it is presumed that the action of the Assessing Officer is found to be correct and the alleged commodity profit is treated as unexplained cash credit u/s 68 of the Act, even then the losses for the year which have not been disputed by the revenue authorities deserves to be setoff against the unexplained income u/s 68 of the Act. The restriction for setoff has been brought into the Act by the Finance Act, 2016 w.e.f. 01/04/2017. Now, going through sub-Section (2) of Section 115BBE of the Act, the words “set off of any loss” appearing in second line was inserted from 01/04/2017. Before this insertion, there was no bar on setting off of any losses incurred during the year against the income referred to in Section 68, 69, 69A, 69B, 69C or 69D of the Act. Further to remove the confusion, the CBDT has come out with a Circular being no. 11/2019 dated 19/06/2019. Going through the above Circular, there remains no ambiguity regarding interpretation that prior to 01/04/2017, the assessee is entitled to claim of set-off of losses in the income determined u/s 115BBE of the Act. Delay in depositing the employees’ contribution to PF & ESI before the due date as prescribed under the relevant Acts governing PF & ESI - HELD THAT:- Recently, the Hon’ble Supreme Court in the case of Checkmate Services (P.) Ltd. [2022 (10) TMI 617 - SUPREME COURT] dealing with this issue has settled down the controversy deciding in favour of the revenue holding that strict compliance with Section 36(1)(va) r.w.s. 2(24)(x) is a must to claim deduction and provisions of Section 43B of the Act cannot be applied on employees’ contribution to PF & ESI and further held that the High Court rulings favouring the assessee had not laid down the correct law and further held that the position of law stands well settled and such employees’ contribution towards PF & ESI if not deposited before the due date prescribed under the relevant Act governing PF & ESI, then in view of the provisions u/s 36(1)(va) r.w.s. 2(24)(x) of the Act, all such amounts shall be added to the income of the assessee. Therefore, we uphold the findings of the ld. CIT(A) in this respect and dismiss Ground No. 3 raised by the revenue.
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