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2020 (10) TMI 748 - AT - Income TaxSet off of unabsorbed business loss - Addition on the ground that carry forward of losses was denied by the AO in A.Y.2006-07 invoking the provisions of section 79 - whether the provisions of section 79 of the Act can be invoked and examined in the assessment year in which the assessee claimed for carry forward of losses or in the assessment year in which the assessee actually claimed set off of carry forward losses against the profits of that year? - Assessee contended since the assessee claimed set off of loss only during the A.Y.2012-13 and subsequent years the applicability of provisions of section 79 is to be examined only during the A.Y. 2012-13 - HELD THAT:- Respectfully following the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das [1965 (11) TMI 33 - SUPREME COURT]we hold that the claim for set off of carry forward of losses prior to assessment years 2006-07 against the profits of the current assessment year i.e. A.Y.2012-13 vis-à-vis the provisions of section 79 of the Act has to be examined by the Assessing Officer only in the assessment year in which the assessee claimed such set off of losses in the return of income. In the present case since the assessee has claimed set off of carry forward of losses against the income of the current assessment year i.e. A.Y. 2012-13 and also in the subsequent assessment years this claim of the assessee has to be examined only during the assessment year 2012-13 and subsequent assessment years. Thus, the grounds raised in this regard are restored to the file of the Assessing Officer who shall decide the implication of section 79 of the Act in the light of our above said findings and observations. The grounds raised are disposed off accordingly. Addition on account of discrepancies in stocks - discrepancies found during the course of search - HELD THAT:- Considering the volume of gold jewellery and diamonds handled by the assessee in the instant case during the year under consideration, the unreconciled stock contributed a very meagre percentage of the total material handled by the assessee, we hold that assessee had given plausible explanation in the facts of the instant case on which no addition is required to be made. We also find that the explanation given by the assessee was not found to be false or in-genuine before the revenue authorities. Hence we have no hesitation in directing AO to delete the addition made on account of discrepancies in stocks - grounds raised in this regard are allowed.
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