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2018 (12) TMI 212 - AT - Income TaxAddition u/s 68 - identity and creditworthiness of creditors - Held that:- As the transactions in the commodities were carried out by the assessee off market, thus the same did not inspire any confidence as regards the veracity of such transactions, in our considered view is also an observation arrived at by the A.O on the basis of a half hearted approach and premature observations. In case the A.O had any serious doubts as regards the identity and creditworthiness in respect of the counter party which was identified in the course of the assessment proceedings, then it was open for him to have made further enquiries, which we find has not been done by him. On the basis of our aforesaid observations, we are of the considered view that as the assessee has duly substantiated that it had earned a profit of ₹ 5,73,96,307/- from commodities transactions, therefore, the same in our understanding cannot be held as an unexplained cash credit under Sec.68. The Ground of appeal No. 1 raised by the revenue is dismissed. Loss suffered by the assessee from F&O transactions could be ‘set off’ against the income assessed by the A.O under Sec. 68 - Adjustment as per Sec.115BBE - Held that:- Sec.115BBE was brought on the statute by the Finance Act, 2012 with effect from 01.04.2013. On a perusal of the said statutory provision, as was then so available on the statute and was applicable to the case of the assessee for the year under consideration i.e A.Y. 2013-14, no restriction was placed as regards ‘set off’ of losses against the income referred to in Sec.68, 69, 69A, 69B, 69C and 69D. Rather, the legislature in all its wisdom by amending Sec. 115BBE vide Finance Act, 2016 w.e.f 01.04.2017 had only w.e.f A.Y. 2017-18 placed a restriction on ‘set off’ of losses, in addition to raising of any claim of expenditure and allowance against such income. The fact that the aforesaid amendment of Sec. 115BBE by the Finance Act, 2016, w.e.f 01.04.2017 is prospective in nature can safely be gathered from a perusal of the CBDT Circular No. 3/2017, dated 20.01.2017. In the backdrop of our aforesaid observations, it can safely be gathered that there was no embargo to claim ‘set off’ of losses in the year under consideration i.e A.Y. 2013-14. We thus in terms of our aforesaid observations are persuaded to subscribe to the view taken by the CIT(A) that the loss suffered by the assessee from F&O transactions could be ‘set off’ against the income of ₹ 5,73,96,307/- that was allegedly assessed by the A.O under Sec.68. The fact that the restriction as regards the ‘set off’ of the losses against the income assessed under Sec.68 had been made available on the statute on the basis of an amendment of Sec. 115BBE that was made available on the statute by the Finance Act, 2016 w.e.f 01.04.2017, therefore, the same could not be read into the statute for a period prior to the said amendment. In terms of our aforesaid observations the Ground of appeal no. 3 raised by the revenue is dismissed. We thus in terms of our aforesaid deliberations are in agreement with the view taken by the CIT(A), that the profit shown by the assessee from commodities trading business of ₹ 5,73,96,307/- could not have been treated as an unexplained cash credit under Sec.68 of the Act. Alternatively, we are also persuaded to subscribe to the view taken by the CIT(A) that the loss suffered by the assessee from F&O transactions, could validly be adjusted as per Sec.115BBE as was applicable during the year under consideration i.e A.Y.2013-14 against the income of ₹ 5,73,96,307/- that had allegedly been treated by the A.O as unexplained cash credit under Sec.68. We thus not finding any infirmity in the view take by the CIT(A), uphold his order. - Decided against revenue
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