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2017 (4) TMI 450 - AT - Income TaxNature of loss - forex loss or busniss loss - carry forward of the business loss - whether loss in question ought to have been allowed by the AO in the light of the admitted position that the loss and finance costs were genuine business losses? - Held that:- The only basis on which the AO could have successfully denied the claim of the Assessee was to show that the forex loss and finance cost were incurred post search with a view to reduce the income surrendered in the course of search. The finding of fact by the CIT(A) in this regard is that forex loss incurred by the Assessee was not post search event to reduce the taxability of additional income as alleged by him as forex transactions were carried out by the Assessee throughout the relevant financial year and not post search period. - This finding of fact was not challenged before us as these facts were not disputed even by the AO in the order of Assessment. Therefore forex loss and financial costs were not incurred by the Assessee in the year under consideration for the first time to reduce the taxability of the additional income offered for taxation. It is not disputed that the sum of ₹ 30 crores offered to tax in the course of search was duly credited in the profit and loss account. Thus the Assessee has complied with the surrender made at the time of surrender. There is nothing brought on record by the revenue to show that the sum of ₹ 30 crores offered in the course of search as undisclosed income was net of any other loss of the Assessee. In the circumstances, as per the provisions of section 70(1) of the Act, which provides that where the net result for any assessment year in respect of any source falling under any head of income, other than "Capital gains", is a loss, the assessee shall be entitled to have the amount of such loss set off against his income from any other source under the same head, will apply. In the case of Assessee there is no dispute that the loss of ₹ 14,90,97,080/- computed by the AO as per the assessment order is business loss and the additional income of ₹ 30 crores admitted by the Assessee in the course of search operation is the business income. Thus they are income and loss under the same head from different sources. Both the loss and income are assessable under the head "Profit and gains from Business or Profession". Thus, as per the provisions of section 70(1) of the Act, loss incurred by the Assessee from one source is allowable as set off from the income of another source under the same head. Therefore, there is no reason to assess the business income of ₹ 30 crores separately and allow the carry forward of the business loss of ₹ 14,90,97,080/-. The action of the AO in doing so was contrary to the provisions of the Act. We therefore find no grounds to interfere with the order of the CIT(A) - Decided against revenue
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