TMI Blog2015 (11) TMI 631X X X X Extracts X X X X X X X X Extracts X X X X ..... out of the business of the assessee. Also nowhere he has objected to the heads under which the assessee had surrendered these amounts, i.e., cash, construction of building, discrepancy in stock and discrepancy in advances and receivable. Further, even the survey team has not found any source of income except the business income. Now, following the judgment of jurisdictional High Court, in the background of the facts of the present case, we can safely infer that apart from cash all other income surrendered may be brought to tax under the head "business income" while the cash has to be taxed under the head deemed income under section 69A of the Act. Now, as regards the business losses incurred by the assessee during the year, these can be set off against the income surrendered during the course of survey except for the amount of cash surrendered, as per the mandate of section 71 of the Act. No loss can be set off against the cash surrendered as the same has already been held to be taxed under a different head. The Assessing Officer is hereby directed to set off business losses suffered by the assessee out of the surrendered income except the element of cash surrendered. - Decided ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cing the said surrendered amount of ₹ 70 lakhs shown in the profit and loss account as business income, as such, surrendered an amount of ₹ 70 lakhs has been assessed twice once as business income and other as deemed income. 5. That as regards the addition of ₹ 11,80,880 made by the Assessing Officer under section 36(1)(iii), the worthy Commissioner of Income-tax (Appeals) has erred in directing the Assessing Officer to limit the disallowance to the proportionate interest in the ratio of debt funds, i.e., in the debt, equity ratio as per findings given by him in para 5 of the order. 6. That submissions filed during the course of hearing has not been considered properly. 3. Learned counsel for the assessee during the course of hearing preferred not to press ground No. 4(b) and ground No. 5. In view of the same, ground Nos. 4(b) and 5 are dismissed as being not pressed. 4. All the other grounds, i.e., ground Nos. 1, 2, 3 and 4(a) relate to common issue of treatment of surrendered income of ₹ 70 lakhs. Therefore, we will adjudicate the same together. 5. Briefly, the facts of the case are that the assessee is engaged in the business of manufactur ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... evalchand Nemchand Mehta v. CIT [1968] 67 ITR 804 (Bom). The assessee also referred to a recent decision of the hon'ble Gujarat High Court in the case of CIT v. Shilpa Dyeing and Printing Mills P. Ltd. [2014] 100 DTR 381 (Guj). It was also submitted that the judgment of the hon'ble Punjab and Haryana High Court in the case of Kim Pharma P. Ltd. v. CIT [2013] 1 ITR-OL 137 (P H) which the Assessing Officer had relied upon has been distinguished in this judgment of the Gujarat High Court. However, the learned Commissioner of Income-tax (Appeals) rejected the said contentions of the assessee and held that the income has to be taxed only under any one of the heads provided in section 14 of the Act, is not a legally tenable position. Further, he relied again on the judgment of the Punjab and Haryana High Court in the case of Kim Pharma P. Ltd. v. CIT [2013] 1 ITR-OL 137 (P H) which he also supported by the order of the Income-tax Appellate Tribunal, Chandigarh Bench in the case of Smt. Promila Jain v. Deputy CIT in I. T. A. No. 1449/ Chd/2010. As per the learned Commissioner of Income-tax (Appeals), in this decision, the Income-tax Appellate Tribunal had held that the surrendered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Officer and the learned Commissioner of Income-tax (Appeals), it was submitted that the Income-tax Appellate Tribunal and the hon'ble High Court had relied upon the judgment in the case of Fakir Mohmed Haji Hasan v. CIT as reported in [2001] 247 ITR 290 (Guj), which has been distinguished by the hon'ble Gujarat High Court in the case of CIT v. Shilpa Dyeing and Printing Mills P. Ltd. [2014] 100 DTR 381 (Guj). Further, in the case of Shilpa Dyeing and Printing Mills (supra), the hon'ble Gujarat High Court has relied on the case of CIT v. Chensing Ventures [2007] 291 ITR 258 (Mad) of the hon'ble Madras High Court. In this way, it was submitted that the judgment of Kim Pharma Pvt. Ltd. (supra) stands distinguished by the latest judgment of the hon'ble Gujarat, Madras and Rajasthan High Courts. In the alternative, it was submitted that in the case of Kim Pharma Pvt. Ltd. (supra), the issue was of the surrender of cash only, as surrender on account of sundry credits, repairs to building and advances to staff were already held to be relatable to business income. In this way, it was stated that all the components of surrendered income except the cash so surrendered ma ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sessee. The books have not been rejected. It was stated at the Bar that even at the time of survey, in the trading account prepared by the survey team, there were losses incurred by the assessee. All these facts have not been disputed by the Assessing Officer. Further, the surrender made by the assessee was on account of cash found during the course of survey, discrepancy in the cost of construction of building, discrepancy in stock and discrepancy in advances and receivables. By no stretch of imagination, any of these incomes apart from cash can be considered as income under any head other than the business income . 15. Nowhere in his order the Assessing Officer has been able to bring on record the fact that the income surrendered during the course of survey was not out of the business of the assessee. Also nowhere he has objected to the heads under which the assessee had surrendered these amounts, i.e., cash, construction of building, discrepancy in stock and discrepancy in advances and receivable. Further, even the survey team has not found any source of income except the business income. Now, following the judgment of jurisdictional High Court, in the background of the fact ..... X X X X Extracts X X X X X X X X Extracts X X X X
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