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TMI Blog2017 (4) TMI 450X X X X Extracts X X X X X X X X Extracts X X X X ..... ot appreciating that the assessee has offered the additional income u/s. 132(4) for taxation and the same cannot be adjusted with the loss of regular business. 4. That the Department craves leaves to add, modify or alter any of the grounds of appeal and/or adduce additional evidence at the time of hearing of the case." 3. The Assessee is a company. It is engaged in the business of iron ore, coal and coke. There was a search and seizure operation carried on u/s 132 of the Income Tax Act, 1961 (Act) in the Atha group of cases on 17.11.2011. The assessee was also subjected to a search of his business premises as he was part of the Atha Group. 4. It is not in dispute that in the course of search so carried out, the key person of the group Shri Dilip Kumar Atha in his statement recorded u/s.132(4) of the Act at the time of search, offered a sum of Rs. 30 crores in F.Y. 2011-2012 in the hands of M/s. Atha Mines Pvt. Ltd., the Assessee herein as profits earned in the relevant FY out of steel trading. In the return of income filed for assessment year 2012-13 the total income returned was Rs. 15,08,95,420/- which was contrary to the income disclosed u/s.132(4) of the Act. On being ask ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x loss and finance costs with the intention of reducing income offered u/s 132(4) of the Act. 6. The AO therefore refused to adjust the loss arising- out of the post search transactions viz., Forex loss or Finance costs against the additional income of- Rs. 30 crores offered for taxation u/s.132(4) of the I.T Act. The AO however accepted that the forex loss and finance costs were genuine and that loss on account of the above viz., a sum of Rs. 14,90,97,080/- was loss from Business and Profession of the current year and he allowed the said loss to be carried forward and set-off against the incomes of the subsequent years. Subject to the observations made above, the total income of of the Assessee for the Assessment Year-20I2-13 was computed here as under:- Computation of Total Income Profit & Gains of Business or. Profession Net profit / Loss as per P&L A/c. Rs.15,04,24,431/- Less: Other Income {Disclosure u/s 132(4)} - considered separately Rs.30,00,00,000/- (-) Rs.14,95,75,569/- Add: Depreciation taken separately Rs.75,880/- Add: Penalty for delay in T.D.S. Rs. 3,000/- Add: Penalty for Sales Tax Rs.4,01,895/- Add;Donation considered u/s 80G Rs.15 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e to the profit and loss account and that the AO did not find any discrepancy or fault in the details submitted by the Assessee and therefore forex loss cannot be said to be an item of loss which was after thought of the Assessee to reduce the income of Rs. 30 Crores surrendered at the time of search. The CIT(A) also found that the Assessee had taken loan from the banks and the financial institutions for the purpose of its business and incurred the financial costs and that they were for the purpose of business of the Assessee was not disputed by the AO. He therefore concluded that once an assessee has taken loan from the bank for the purpose of its business, the financial cost has to be allowed as deduction u/s 36 (l)(iii) of the Act. He also found that forex loss and financial costs were also incurred by the Assessee in the immediately preceding year and allowed by the AO as deduction. The CIT(A) therefore held that the forex loss and financial costs were not incurred by the Assessee in the year under consideration for the first time to reduce the taxability of the additional income offered for taxation. The CIT(A) held that there was no provision in the Act by the application of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n loan from the banks and the financial institutions for the purpose of its business and incurred the financial costs and that they were for the purpose of business of the Assessee was not disputed by the AO. These costs were also not post search event. The CIT(A) also found that similar costs were incurred in the earlier financial years and allowed by the Revenue as deduction in the earlier assessments of the Assessee for those Assessment years. This finding of fact was not challenged before us as these facts were not disputed even by the AO in the order of Assessment. Therefore forex loss and financial costs were not incurred by the Assessee in the year under consideration for the first time to reduce the taxability of the additional income offered for taxation. 10. Once the above conclusions are not disputed than the provisions of section 70 of the Act which provide for the set off of loss from one source against income from another source under the same head of income will automatically come into operation. It is not disputed that the sum of Rs. 30 crores offered to tax in the course of search was duly credited in the profit and loss account. Thus the Assessee has complied wit ..... X X X X Extracts X X X X X X X X Extracts X X X X
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