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Mr. A. Srinivas Rama Raju Versus The DCIT, Central Circle-1 (1) , Hyderabad

Assesment of proceedings u/s153A - claim of deduction in response to notice issued under section 153A of the Act even if such claim was not made in the original return - Held that:- Once return of income is filed under section 153A of the Act, it has to be considered as a return of income filed under section 139 of the Act and all other provisions would apply as though it is a return of income filed under section 139 which includes reconsideration of any deduction permissible under the law. It i .....

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t; irrespective of the question as to whether it is for the benefit of the assessee or department, the assessee is entitled to claim deduction of interest expenditure, particularly when the facts are already on record. - Section 147 of the Act, should not be imported into the proceedings under section 153A of the Act, more particularly when the claim of the assessee is not a fresh claim un-connected to the income declared but the claim was linked with the income declared. Having regard to t .....

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. B. Kurmi Naidu ORDER PER D. MANMOHAN, V.P. This appeal filed by the assessee pertains to the A.Y. 2010-2011. The only issue urged before us pertains to the denial of the benefit of deduction of sum of ₹ 24,57,965. 2. Facts necessary for the disposal of the appeal are stated in brief. The assessee was a Director of M/s. NCC Infrastructure Holdings and was also acting as a Director/ Partner in several companies/firms. For the A.Y. 2010-2011, the assessee declared income of ₹ 75,46,30 .....

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ssessee admitted income of ₹ 5,33,46,941 in addition to the agricultural income. On verification, the Assessing Officer observed that in addition to the income already declared, assessee admitted income of ₹ 4,82,58,604 whereas, now he admitted an income of ₹ 4,58,00,641 which results in a short fall of ₹ 24,57,963. According to the Assessing Officer, the income declared is not matching with the income originally admitted during the course of search proceedings and accord .....

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he entire sum of ₹ 4,82,58,604 as additional income in the return furnished pursuant to the notice issued under section 153A of the Act and hence, it is not a case of non-inclusion of the sum of ₹ 24,57,965 but he merely claimed set-off of the interest paid against the interest received and all these facts are already on record. 4. Ld. CIT(A) did not dispute the facts. In this regard, she observed as under : 6.1. The real reason for the shortfall is that the amount of ₹ 24,57,9 .....

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r section 153A of the Act to bring to tax additional income and therefore, it is not for the benefit of the assessee. Reliance was placed upon the decision of the Hon ble Supreme Court in the case of CIT vs. Sun Engineering Works P. Ltd., 198 ITR 297 which concerns the re-assessment proceedings under section 147 of the Act and according to the Learned Commissioner the same logic applies even to the proceedings under section 153A of the Act. She thus concluded as under : 6.3. The addition of S .....

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s in appeal before the Tribunal by raising the following grounds : 1. The order of the Ld. CIT(A) is erroneous both on facts and in law so far as it is prejudicial to the appellant. 2. The Ld. CIT(A) erred in upholding the addition of ₹ 24,57,965. 3. The Ld. CIT(A) erred in concluding that, the interest amount of ₹ 24,57,965 was not claimed as deduction in the original return of income, hence such deduction which had not been claimed in the original return cannot be claimed in the re .....

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claim of set off of interest income earned against interest paid should have been allowed. 6. The Ld. CIT(A) should have allowed the interest paid amount of ₹ 24,57,965 to set off against the interest income earned by the appellant under the head Income from other sources . 7. The appellant craves leave to add/alter/modify grounds which would be necessary for adjudication of the case. 6. It may be noticed that both the assessee as well as the Revenue filed paper books and case law. Learned .....

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essee cannot make any new claim. In this regard, the Learned Counsel for the assessee, adverted our attention to the decisions of ITAT i.e., Chennai Bench in the case of ACIT vs. VN Devadoss (2013) 57 SOT 67 (Chennai) (URO), ITAT, Pune Bench in the case of M/s. Malpani Estates vs. ACIT (2014) 64 SOT 105 (Pune) (URO) to submit that the decision of the Hon ble Supreme Court in the case of Sun Engineering Works P. Ltd., (cited supra) is not applicable to the proceedings under section 153A of the Ac .....

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Mr. Faisal Abbas vs. DCIT, Central Circle-2, Mumbai in ITA.No.3485 & 3487/Mum/2010 dated 25.10.2011 wherein the Bench dealt with an identical issue and in this regard observed as under : 4. The other grounds in this appeal are against the disallowance of set off of brought forward business loss. The facts apropos these grounds are that the assessee in his return u/s.153A claimed set off of business loss of ₹ 1,45,021/- and speculation loss of ₹ 2,50,950 against the current incom .....

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) 293 ITR 76 (Mad.). 5. We have heard the rival submissions and perused the relevant material on record. It is observed from the copy of return filed by the assessee for assessment year 2001-02 on 31-10-2001 that loss of ₹ 27,26,360/- under the head Profits & gains of business or profession was declared. The said return for the year was duly filed within the time allowed u/s.139(1). We are currently dealing with assessment year 2002-03 in which the assessee has claimed set off of the b .....

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he returns of such later years are filed u/s.139(1) or not. Sec. 80 read with sec. 139(3) requires the submission of return for loss before the due date. There is no such requirement that the subsequent years, in which the set off is claimed, must also fulfil the requirement of furnishing the returns within the time required u/s.139(1). 6. It is further important to note that sec. 153A dealing with assessment in case of search provides for the issuance of notice to the assessee in respect of eac .....

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position, we are unable to appreciate as to how the loss determined for the immediately preceding year will not be available to the assessee for the set off against the current year s income declared in the return filed u/s.153A. 7. The Pune Bench of this Tribunal in the case of M/s. Malpani Estates (cited supra) was concerned with declaring of additional income consequent to search proceedings and thereupon claiming deduction under section 80IB(10) of the Act. The Assessing Officer has not allo .....

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issible in an assessment under section 153A of the Act. Before the Tribunal, reliance was placed upon the judgment of the Hon ble Supreme Court in the case of Sun Engineering Works P. Ltd., 198 ITR 297 to point out that even in the case of re-assessment under section 147/148 fresh claims cannot be raised by the assessee. Under these circumstances, the Pune Bench of the Tribunal observed that according to the Hon ble Supreme Court the claim is not entertainable if the same is not connected to the .....

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if a claim which is connected to the escaped income is set-up before the Assessing Officer in the course of re-assessment proceedings, the same is liable to be considered and the judgment of the Hon ble Supreme Court in the case of Sun Engineering Works Pvt. Ltd. (supra) only precludes such new claims by the assessee which are unconnected with the assessment of escaped income. In the present case, we are dealing with an assessment u/s 153A of the Act and the scope of such an assessment has alre .....

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do not find that it would debar the assessee from claiming deduction u/s 80IB(10) of the Act on the impugned additional income declared in the return filed in response to notice u/s 153A(1)(a) of the Act. In the present case, the claim of deduction u/s 80IB(10) of the Act was made in the return of income originally filed and in the return filed in pursuance to the notice u/s 153A(1)(a) of the Act, the claim u/s 80IB(10) of the Act is only enhanced and therefore, it is not a fresh claim. 8. The .....

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n of the Commissioner of Income-tax(Appeals) rendered on the alternate ground raised by the assessees before him. The alternate ground was whether the returns filed in response to notices issued under section 153A can be taken as returns filed within the time limit stipulated under section 139(1). The Commissioner of Income-tax (Appeals) has decided in favour of the assessees holding that the returns filed under section 153A are to be treated as returns filed under section 139(1) within the time .....

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the case of CIT vs. Anil Kumar Bhatia reported in (2012) 211 Taxman 453 (Del.) (HC) wherein the Court observed that assessments contemplated by section 153A is not a denovo assessment and the additions made thereunder have to be necessarily restricted to the undisclosed income un-earthed during the search. The facts therein were that during the course of search, the loan was not reflected in the return of income filed by the assessee and there was no document or corroborative material concernin .....

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d. In this regard, the Court observed that the time limit within which a notice under section 148 can be issued is not applicable here and in fact, such time limit was prescribed under section 153 has been done away with in cases covered by section 153A of the Act. Section 153A has been entrusted with the date of bringing to tax the total income of the assessee whose case is covered by section 153A, by even making re-assessment without any fetters. 10.1. The Ld. D.R. placed reliance upon this ju .....

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he order of the CIT(A) and contended that the provisions of section 153A are not meant for assessee to make a fresh claim and therefore, the CIT(A) was justified in applying the ratio of the decision of the Hon ble Supreme Court in the case of Sun Engineering Works P. Ltd., (cited supra). 11. We have carefully considered the rival submissions and perused the record. As could be noticed from the grounds of appeal and the arguments advanced by the Learned Counsel for the assessee, the main content .....

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ed out in the preceding paragraphs, the ITAT Chennai Bench, Pune Bench and the Bombay Bench have considered identical issue in detail and observed that once return of income is filed under section 153A of the Act, it has to be considered as a return of income filed under section 139 of the Act and all other provisions would apply as though it is a return of income filed under section 139 which includes reconsideration of any deduction permissible under the law. It is also not in dispute that the .....

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