Subscription   Feedback   New User   Login      
Tax Management India .com
TMI - Tax Management India. Com
Articles Highlights TMI Notes SMS News Newsletters Calendar Imp. Links Database Experts Contact us More....
Extracts
Home List
← Previous Next →

Asstt. Commissioner of Income Tax, Circle, Haridwar Versus M/s. Sant Steel & Alloys (P) Ltd.

2016 (6) TMI 1006 - ITAT DELHI

Inclusion of income under the deeming provisions of section 68 under the head “income from other sources” - Set off of business loss against the income under the head “income from other sources” - Held that:- Respectfully following the judgment of Fakir Mohammed Haji Hassan (2000 (8) TMI 44 - GUJARAT High Court ), Kim Pharma Private Limited Vs. CIT (2013 (1) TMI 495 - PUNJAB AND HARYANA HIGH COURT) and Gujarat Infra Pipes Private Limited (2009 (12) TMI 976 - ITAT AHMEDABAD) held that deemed inco .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

were not discussed in the body of the assessment order. We find that whether those two additions are made by the assessee itself in the computation of income, is a matter of verification and, therefore, in the interest of justice, we restore the matter to the file of the Assessing Officer with the direction to verify whether the same was already added by the assessee in the computation of income, and if so, then the additions made by the AO are justified. - ITA Nos. 2808 & 2809/Del/2013 - Dated: .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

er and disposed of by this consolidated order. ITA No. 2808/Del/2013 for AY : 2003-04 2. Now we take up the appeal in ITA No. 2808/Del/2013. The grounds raised in the appeal are reproduced as under: 1. The learned Commissioner of Income Tax(Appeals) has erred in law and on facts in allowing the business loss amounting to ₹ 1,62,35,194/- to be set off against the income amounting to ₹ 1,68,29,316/- determined under the deemed provisions of section 68. 2. The learned Commissioner of In .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Act ) of the Act on 19/12/2003. Thereafter, on receipt of information from the Additional DIT (Investigation), New Delhi that the assessee company received accommodation entries of ₹ 94 lacs from M/s S.J. Capital Private Limited during the year under consideration, proceedings under section 147 of the Act were initiated and notice under section 148 of the Act was issued on 25/03/2010. In profit and loss account, the assessee had shown total receipt of ₹ 9,60,41,837/- which includ .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

cer based on the comment of the experts and thus it was held that the assessee did not have any share trading business. As the assessee could not prove the genuineness of the receipt from sale trading business of ₹ 1,68,29,316/- , the reassessment proceedings under section 147 of the Income-tax Act, 1961 (in short the Act ), were completed in the case of the assessee on 31/12/2010 making additions of ₹ 1,68,29,316/- under section 68 of the Act and simultaneously not allowed to set of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

other sources as per the provisions of the Act. Aggrieved, with the action of the learned Commissioner of Incometax( Appeals) in allowing set off of the business loss against the undisclosed income added by the Assessing Officer under section 68 of the Act, the Revenue is in appeal before the Tribunal. 4. In all the three grounds raised, the Revenue has challenged including the income under the deeming provisions of section 68 under the head income from other sources and consequent allowing of .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

gains of business could be set off against income under any other had subject to the provisions of section 71 of the Act, however, the sum of ₹ 1,68,29,316/-was assessed under deeming provisions of the Act falling under the chapter aggregation of income and set off for carry forward of loss , which being not falling under any of the head A to F of heads of income and, therefore, the business loss was not allowed to set off against the such headless income. The learned Commissioner of Incom .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

y, income from house property, capital gains and profit and gains of business and profession and income from other sources. He further submitted that when sources of the income are known and if it cannot be classified under the first four heads of salary, income from house property, capital gains and profit and gains of business and profession, then the income is classified/assessed under the head income from other sources being a residuary head. The incomes in the nature, of which sources are n .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

adjusted against the loss under the head profit and gains of business as per section 71 of the Act. In support thereof, she relied on the judgment of the Hon ble Gujarat High Court in the case of the Fakir Mohamad Haji Hasan reported in 247 ITR 290 (Guj). 7. On the other hand, the learned Authorized Representative (AR) of the assessee relying on the order of the learned Commissioner of Incometax( Appeals) submitted that even the income from undisclosed sources would fall within the scope of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ed , judgement of the Hon ble Gujarat High Court in the case of DCIT versus Radhe developers India Ltd (2010) 329 ITR 01 (Guj) and judgment of the Hon ble Gujarat High Court in the case of CIT Vs. Shilpa dying and printing mills private limited reported in (2013) taxmann.com 3 (Gujarat). 8. We have heard the rival submissions and perused the material on record. The issue involved is whether the receipt of ₹ 1,68,29,316/- assessed by the AO as unexplained cash credit under section 68 of the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

accordance to section 71 of the Act , whereas, according to the assessee the unexplained income under section 68/69 are to be classified under the head income from other sources and the business losses are to be allowed to be set off against such income. 9. We find that for the purpose of charge of income tax and computation of total income, under chapter IV of the Act, the section 14 has classified all the income under six heads of income out of which one head of interest on securities has bee .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ncome of other persons which are to be clubbed with the total income of the assessee. 9.2 Then chapter VI has specified certain deemed incomes under section 68, 69, 69A , 69B, 69C and 69D of the Act , which are to be aggregated with the income computed under the chapter IV and chapter V of the Act . These deemed incomes are where the source of income is not explained by the assessee or the explanations offered is in the opinion of Assessing Officer is not satisfactory as against the source of in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

paid by the assessee to the lessor. During the relevant assessment year, the assessee surrendered the tenancy rights premeasured and in consideration for such premature termination of lease, the assessee was paid ₹ 35 Lacs. In the return of income filed, the assessee credited the sum of ₹ 35 lakh under the reserve and surplus account of the Balance sheet. The Assessing Officer held this amount was taxable under the head income from other sources under section 10(3)/ r.w.s 56 as casu .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

tal gain could not be computed as envisaged in section 48 of the Act, the capital gain earned by the assessee if any was not exigible to tax. The Hon ble High Court affirmed the view of the Tribunal and the matter was challenged by the Revenue before the Hon ble Supreme Court. Thus in this context, whether the income from sale of tenancy rights, falls under the head capital gain or under the head income from other sources, the Hon ble Supreme Court referred to Section 14 of the Act and held as u .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ty of income of every kind which has not to be excluded from the total income under the Act, only if it is not chargeable to income-tax under any of the heads specified in s. 14 items A to E. Therefore, if the income is included under any one of the heads, it cannot be brought to tax under the residuary provisions of s. 56. 13. There is no dispute that a tenancy right is a capital asset the surrender of which would attract s. 45 so that the value received would be a capital receipt and assessabl .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

on (P) Ltd. vs. CIT 1972 CTR (SC) 8 : (1972) 83 ITR 700 (SC)]. 10.1 We find that in the above judgment, the source of income received was not in dispute and, therefore, mention of section 14 of the Act and the heads of income was with reference to known sources of the income and there was no reference of the incomes in the nature of section 68/69 of the Act. 11. Further, the ld AR also relied on the decision of Tribunal, Ahmedabad Bench on 12/09/2014 in the case of M/s Shree Raghupati Fibres Pri .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ender of tenancy right was liable to be taxed as capital gain or income from other sources. In that contexts the Hon ble Supreme Court held that section 56 prescribed for chargeability of income of every kind which is not to be excluded from the total income under the Act, only if it is not chargeable to income tax under any of the heads specified in section 14, items A to E. Thus, in the said decision the source of income was known as surrender of tenancy rights whereas in the case under consid .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ther heads has been decided as under: 6. Under s. 4 of the IT Act, income-tax is to be charged in accordance with the provisions of the Act in respect of the total income of the previous year of every person. As provided by s. 5, total income of any previous year of a person would, inter alia, include all income from whatever source derived which is received or is deemed to be received by such person, subject to the provisions of the Act. It will be seen from s. 69A of the Act that where the bul .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

stments made by the assessee or the nature and source of acquisition of money, bullion, etc. owned by the assessee or the source of expenditure incurred by the assessee are not explained at all, or not satisfactorily explained, then, the value of such investments and money, or value of articles not recorded in the books of accounts or the unexplained expenditure may be deemed to be the income of such assessee. It follows that the moment a satisfactory explanation is given about such nature and s .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

;other sources" which have to be sources known or explained. When the income cannot be so classified under any one of the heads of income under s. 14, it follows that the question of giving any deductions under the provisions which correspond to such heads of income will not arise. If it is possible to peg the income under any one of those heads by virtue of a satisfactory explanation being given, then these provisions of s. 69, 69A, 69B and 69C will not apply, in which event, the provision .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

it income from "other sources" because the provisions of ss. 69, 69A, 69B and 69C treat unexplained investments, unexplained money, bullion, etc. and unexplained expenditure as deemed income where the nature and source of investment, acquisition or expenditure, as the case may be, have not been explained or satisfactorily explained. Therefore, in these cases, the source not being known, such deemed income will not fall even under the head "income from other sources". Therefor .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

et-off under section 71 of the Act. 15. In a subsequent judgment in the case of DCIT versus Radhey developers India Ltd, 329 ITR 1, the Hon ble Gujarat High Court held that the income tax Act envisages every income under any of the heads specified in section 14 of the Act. The observation of the Hon ble High Court are as under: 15. The decisions of this Court in the case of Fakir Mohmed Haji Hasan (supra) and Krishna Textiles (supra) are neither relevant nor germane to the issue considering the .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

x Court and, hence, it is not necessary to repeat the same. Suffice it to state that the Act does not envisage taxing any income under any head not specified in s. 14 of the Act. In the circumstances, there is no question of trying to read any conflict in the two judgments of this Court as submitted by the learned counsel for the Revenue. 16. The Hon ble High Court has found that the judgment in the case of Fakir Mohmed Haji Hasan (supra) was not applicable to the case before them. In our opinio .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

Mills Ltd (supra) the assessee disclosed the unaccounted stock under the head other income as miscellaneous income and Tribunal, thus, allowed that adjustment of the income declared on unaccounted stock for set-off against the business loss as evident from questions of law raised by the revenue as under: 1. ……………. 2. Whether on facts and circumstances of the case and in law the Hon ble ITA T in justified in not treating the income of ₹ 1, 00, 98, 672/-as .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

be business income of the assessee, whereas in the case in hand the source of cash credit is unknown and the addition confirmed under the section 68 of the Act by the CIT(A) has not been challenged by the assessee even before the Tribunal. 19. The issue has also been decided by the Hon ble Punjab and Haryana High Court in the case of Kim Parma private limited versus CIT 258 CTR for 454 and held that deemed income under 69,, 69A, 69B, & 69C of the Act are not assessable under the head income .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

ccounted stock of 31,751 kgs found during the survey can be assessed u/s 69B /69C of the Act or under the head business income. Undisputedly, the assessee admitted during the course of survey that they did not maintain any stock register on day-to-day basis for production nor it was possible to do so. In reply to question no. 6 of his statement , the assessee accepted the difference of 31751 kgs and voluntarily offered the amount of ₹ 14,35,000 for tax as additional income over & above .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

d stock represents unexplained expenditure in these purchases. In this context, the ld. CIT(A) referred to the observations of the Hon'ble Gujarat High Court in the case Fakir Mohammed (supra). As observed by the Hon'ble jurisdictional High Court in the aforesaid decision the scheme ofsections 69, 69A, 69B and 69C would show that in cases where the nature and source of investments made by the assessee or the nature and source of acquisition of money, bullion etc. owned by the assessee or .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

under the appropriate head of income for assessment as per the provisions of the Act. However, when these provisions apply because no source is disclosed at all on the basis of which the income can be classified under one of the heads of income under section 14, it would not be possible to classify such deemed income under any of these heads including 'Income from other sources' which have to be sources known or explained. When the income cannot be so classified under any one of the head .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

attracted. In the facts of the case income has been brought to tax u/s 69C of the Act on fulfilling the requirements by virtue of the deeming provisions.The scope of a charging section cannot be enlarged by importing further fiction by deeming the sum received as income from business or other sources. If the words of a statute are precise and unambiguous, they must be accepted as declaring the express intention of the Legislature. It was trite proposition in law that a legal fiction has to be st .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

fits and Gains of Business or Profession'.Consequently, the assessee's claim of set off of current and brought forward depreciation agisnst such income is not tenable.. 10.2 Now adverting to the decisions relied upon on behalf of the assessee .First such decision is in the case of Krishna Textiles(supra), wherein facts were that during the course of assessment proceedings for the assessment year 1987-88, the Assessing Officer called for the copy of account of the assessee as appearing in .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

The Assessing Officer was not satisfied with the explanation furnished by the assessee and he made the impugned addition of ₹ 1,92,161. In the light of these facts, Hon'ble High Court observed that since there is an admitted position that the assessee was carrying on the business of coal and lignite and purchases were made from time to time from GMDC, in that case, even if any addition is required to be made under section 69C, the entire expenditure towards it has to be allowed as a d .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

e in relation to a different context ,not relevant to the facts of the case under consideration. In the said decision, the primary question involved was as to whether the amount received by the assessee on surrender of tenancy rights is liable to capital gains tax under section 45 of the Income-tax Act, 1961 or was taxable as "Income from other sources" under section 10(3) read with section 56 of the Act . In that context Hon'ble Apex Court held that section 56 provides for the cha .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

the Hon'ble Apex Court in the said decision can not be straight away applied in the facts of the case under consideration. In this context ,Hon'ble Supreme Court cautioned in their recent decision dated 6.3.2009 in the case of State of AP Vs. M.Radha Krishna Murthy,[Criminal Appeal no. 386 of 2002] " 6. Courts should not place reliance on decisions without discussing as to how the factual situation fits in with the fact situation of the decision on which reliance is placed. Observat .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

do not interpret judgments. They interpret words of statutes; their words are not to be interpreted as statutes ...................... 8. Circumstantial flexibility, one additional or different fact may make a world of difference between conclusions in two cases. Disposal of cases by blindly placing reliance on a decision is not proper. 9. The following words of Lord Denning in the matter of applying precedents have become locus classicus: "Each case depends on its own facts and a close sim .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

but you must cut the dead wood and trim off the side branches else you will find yourself lost in thickets and branches. My plea is to keep the path to justice clear of obstructions which could impede it." 10.5 In the light of aforesaid observations of the Hon'ble Apex Court, we are of the opinion that the reliance by the assessee on the decisions in the case of Krishna Textiles(supra) and of the ITAT, relying upon the decision of the Hon'ble Supreme Court in the case of Sandhu Bro .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

smissed. 21. In the case above also, the Tribunal has distinguished the facts of the case of DP Sandhu Bros Chambur Private Limited (supra) as the question before the Hon ble Supreme Court in the said case was different and held that placing reliance on the decision of the Hon ble High Court & Tribunal, relying upon the decision of the Hon ble Supreme Court in the case of D.P. Sandhu Bros. Chambur Private Ltd. (supra) is totally misplaced. The facts in the case in hand are also similar and h .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

of assessee cannot be set off against the income of ₹ 1,68,29,316/- assessed under the deeming provisions of section 68, which is not falling under any of the five heads of income. Accordingly, the grounds No. 1 and 2 of the appeal are allowed. 22. Ground No. 3 of the appeal being general in nature not required to adjudicate upon by us. 23. In the result, the appeal filed by Revenue is allowed. ITA No. 2809/Del/2013 for AY : 2008-09 24. The grounds raised by the Revenue are as under: 1. Th .....

X X X X X X X

Extract - Part text only
Click here to Access Full Contents

X X X X X X X

 

 

 

 

 

what is new what is new
  ↓     bird's eye view     ↓  


|| Home || Acts and Rules || Notifications || Circulars || Schedules || Tariff || Forms || Case Laws || Manuals ||

|| About us || Contact us || Disclaimer || Terms of Use || Privacy Policy || TMI Database || Members || Site Map ||

© Taxmanagementindia.com [A unit of MS Knowledge Processing Pvt. Ltd.] All rights reserved.

Go to Mobile Version