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TMI Blog2018 (12) TMI 212X X X X Extracts X X X X X X X X Extracts X X X X ..... he set of f of losses against the addi tions made by the AO towards unexplained cash credit u/s. 68 of the I.T Act by applying the newly amended section 115BBE of the I.T Act. 3. On the facts and circumstances of the case and in law, the CIT(A) erred in ig n o r in g th e d e c is io n of th e Ho n 'ble Gujarat High Court in the case of Fakir Mohammed Haji Hasan vs. CIT (2001) 247 ITR 290 and the decision in the case of M/s. Kerala Sponge Iron Ltd. vs. CIT ( ITA No. 195/2014) by the Kerala High Court. 4. The appellant prays that the order of the CIT(A) on the grounds be set aside and confirm the order of the AO. 5. The appel lant craves leave to add, amend or al ter al l or any of the grounds of appeal." 2. Briefly stated, the assessee company which is engaged in share trading activities in various stock exchanges including F&O, commodities share trading and currency trading had filed its return of income for A.Y. 2013-14 on 25.09.2013, declaring total income of Rs. 6,28,890/-. Subsequently, the case of the assessee was selected for scrutiny assessment under Sec. 143(2). 3. In the course of the assessment proceedings, it was observed by the A.O that the assessee had claimed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssee with the purpose to 'set off' the same against the 'loss' incurred in F&O transactions. In order to support his aforesaid conviction, it was observed by the A.O that all the purchase and sale transactions were merely carried out by the assessee on a plain piece of paper. Further, it was noticed by him that there was no movement of actual funds and only a journal entry was passed on 28.12.2012 and 05.01.2013 amounting to Rs. 1,00,00,000/- and Rs. 1,42,00,000/-, respectively, in the ledger of M/s Kaynet Commodities Pvt. Ltd. On the basis of the aforesaid deliberations, the A.O being of the view that the assessee had in the garb of the aforesaid commodity transactions created a fictitious arrangement with its associate concerns, thus characterised the amount of Rs. 5,73,96,307/- as an unexplained cash credit under Sec.68 of the Act. 4. Further, the A.O being of view that as the addition made under Sec.68 could not be taken as income under any specific head of income, therefore, concluded that the aforesaid claim of the assessee for 'set off' of the F&O loss against the said deemed income could not be allowed. On the basis of his aforesaid observations the A.O characterized the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as an unexplained cash credit under Sec.68 of the Act. Apart therefrom, the CIT(A) vacated the observation of the A.O that the 'set off' of loss of Rs. 5,56,42,339/- suffered by the assessee in F&O transactions was not permissible against the income of Rs. 5,73,96,307/- that was assessed by him as an unexplained cash credit under Sec.68 in the hands of the assessee. On the basis of his aforesaid observations the CIT(A) partly allowed the appeal of the assessee. 6. The revenue being aggrieved with the order of the CIT(A) has carried the matter in appeal before us. The ld. Departmental Representative (for short 'D.R') relied on the order of the A.O. It was submitted by the ld. D.R that as the assessee had entered into commodity transaction activities to avail the artificially engineered gain created by the aforesaid transactions with a purpose to 'set off' the loss incurred in F&O transactions, therefore, the A.O rightly appreciating the facts of the case had held the alleged gain of Rs. 5,73,96,307/- as an unexplained cash credit under Sec.68 of the Act. Further, it was submitted by the ld. D.R that the A.O rightly taking support of the judgment of the Hon'ble High Court of Gujarat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ether the CIT(A) has rightly concluded that the loss suffered by the assessee from F&O transactions could validly be 'set off' against the income assessed in the hands of the assessee under Sec. 68 of the Act. 9. We shall first advert to the observations of the CIT(A) that the profit from commodities trading business of Rs. 5,73,96,307/- could not have been held as an unexplained cash credit under Sec.68 of the Act. Insofar the application of Sec.68 is concerned, the same comes into play where the assessee fails to explain the 'nature' and 'source' of any sum found credited in his 'books', or explanation offered by him is not, in the opinion of the A.O satisfactory. In the present case as the assessee had offered the amount of Rs. 5,73,96,307/- as income from commodities trading business along with complete details supporting the same, therefore, in our considered view the same cannot be termed as an unexplained cash credit. Rather, the assessee had placed on record the complete details i.e. name and address of the counter party viz. M/s Sneha Metal Pvt. Ltd. with the A.O, but the latter had not deemed it fit to make any enquiry with the said party. We have deliberated at length ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t. We find that Sec.115BBE was brought on the statute by the Finance Act, 2012 with effect from 01.04.2013. On a perusal of the said statutory provision, as was then so available on the statute and was applicable to the case of the assessee for the year under consideration i.e A.Y. 2013-14, no restriction was placed as regards 'set off' of losses against the income referred to in Sec.68, 69, 69A, 69B, 69C and 69D. Rather, the legislature in all its wisdom by amending Sec. 115BBE vide Finance Act, 2016 w.e.f 01.04.2017 had only w.e.f A.Y. 2017-18 placed a restriction on 'set off' of losses, in addition to raising of any claim of expenditure and allowance against such income. The fact that the aforesaid amendment of Sec. 115BBE by the Finance Act, 2016, w.e.f 01.04.2017 is prospective in nature can safely be gathered from a perusal of the CBDT Circular No. 3/2017, dated 20.01.2017. In the backdrop of our aforesaid observations, it can safely be gathered that there was no embargo to claim 'set off' of losses in the year under consideration i.e A.Y. 2013-14. We thus in terms of our aforesaid observations are persuaded to subscribe to the view taken by the CIT(A) that the loss suffered ..... X X X X Extracts X X X X X X X X Extracts X X X X
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