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2017 (8) TMI 721 - ITAT JAIPURIncome on account excess stock u/s 69B - set off of losses with the surrendered income - tax at normal rate on surrender income on account of undisclosed investment in stock assessed as deemed income u/s 69B OR tax charged at special rate u/s 115BBE - under which head of income the excess stock/investment found in search and offered by the assessee for tax is to be assessed? - No deduction or set off of business loss will be allowable as referred to the provisions of section 115BBE - Held that:- In the present case the excess stock offered in survey is part of the business income. The excess stock is determined by valuing the business stock at current price instead of the purchase price. Nothing was brought to suggest that this was not a regular item of the stock dealt by the assessee. The provisions of section 115BBE says that no deduction in respect of any expenditure or allowance shall be allowed. It nowhere says that set off of the loss with any other income will not be allowed. In the memorandum explaining the provisions of amendment, the amendment to Section 115BBE is explained and has been stated that this amendment will take effect from 1st April, 2017 and will, accordingly, apply in relation to the assessment year 2017-18 and subsequent years. Given the fact that the AO has invoked the provisions of section 11BBE in the instant case, the provisions of sub-section (2) to section 11BBE are equally applicable. The amendment brought in by the Finance Act, 2016 whereby set off of losses against income referred to in section 69B has been denied is stated clearly to be effective from 1 April 2017 and will accordingly, apply to assessment year 2017-18 onwards. Accordingly, for the year under consideration, there is no restriction to set off of business losses against income brought to tax under section 69B of the Act. Further, the provisions relating to set off of losses are contained in Chapter-VI relating to aggregation of income and set off of losses. Whenever legislature desires to restrict set-off of loss or allowance of loss, in a particular manner, usually, the provisions are made in Chapter-VI such as non-allowance of business loss against salary income as provided in section 71(2A), and treatment of short-term or long-term capital losses. There is no specific provision which restrict set off of business losses against income brought to tax under section 69B. Interestingly, both section 69B and section 71 falls under the same chapter VI. In the absence of any provisions in section 71 falling under Chapter-VI which restrict such set off, in the instant case, set off of business losses against income brought to tax under section 69B cannot be denied. Thus the assessee deserve to succeed in the subject appeal and will be eligible for set off business loss of ₹ 86,96,733 against the income of ₹ 2,31,41,217 which has been brought to tax under section 69B read with section 115BBE of the Act. In the result, grounds taken by Revenue are dismissed.
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