TMI Blog2018 (1) TMI 1539X X X X Extracts X X X X X X X X Extracts X X X X ..... - ITA No. 954/Ind/2016 - - - Dated:- 31-1-2018 - SHRI KUL BHARAT, JUDICIAL MEMBER AND SHRI MANISH BORAD, ACCOUNTANT MEMBER For the Appellant : Shri Sumit Nema Sr. Adv. Gagan Tiwari Adv. For the Respondent : Shri Lal Chand, CIT- DR ORDER PER KUL BHARAT, J.M: This appeal by the Assessee is directed against the order of Ld. Commissioner of Income Tax(Appeals)-III, Indore, (in short CIT(A) ), dated 18.07.2016 pertaining to A.Y. 2013-14. The assessee has raised following grounds of appeal: 1. That the Ld. CIT has erred in not allowing the set off of business against the additional income offered of ₹ 1,80,00,000/- without appreciating the facts and circumstances of the case. 2. That the Ld. CIT has erred in invoking provisions of section 115BBE on the additional income offered amounting to ₹ 1,80,00,000/- without considering the facts and circumstances of the case. 3. That the order so passed is bad in law wrong. 2. Briefly stated facts are that search and seizure operation u/s 132 has carried out on the business as well as reside ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... matter is litigated. In order to avoid unnecessary litigation, the provision of the sub-section (2) of section 115BBE of the Income Tax Act has been amended as to expressly provide that no set off of any loss shall be allowable in respect of income under the sections 68 or section 69 or section 69A or section 69B or section 69C or section 69D. 46.3 Applicability: This amendment takes effect from 1st of April, 2017 and will, accordingly, apply from assessment year 2017- 18 and subsequent assessment years. He drew our attention to clause 46.3 which is related to applicability of the amendment. On the contrary Ld. DR vehemently opposed the submissions and supported the orders of the authorities below, he also filed a short synopsis. The contents of the same are reproduced as under: It is a settled rule of construction that every statue is prima facie prospective unless it is expressly or by necessary implication made to have retrospective operation. Ordinarily the court are required to gather the intention of the legislature from the overt language of the provision as to whether it has been made prospective or retrospective, and if retrospec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3.3 I have gone through the assessment order and the appellant s contentions. The Finance Act, 2012 introduced a new section 115BBE which states that where any income of the nature referred to in section 68,69,69A,69B,69C or 69D forms part of the total income, then such income shall be chargeable to tax at the flat rate of 30%. The cash credits, unexplained investments, either in part or in full, income from undisclosed source and unexplained expenditures are not chargeable to tax at the flat rate of 30%, similar to income from lottery, crossword puzzle, gambling, betting, etc. 3.4 The appellant has submitted that the amendment in section 114BBE(2) by insertion of words set off of any loss is not retrospective in nature and will be applicable w.e.f. 01.04.2017. The appellant has also relied on the Memorandum explaining the budget provisions considered to be part of Finance Bill, 2016 where in it is stated that the current language of section 115BBE of the Act does not convey the desired intention and as a result the matter is litigated. In order to avoid unnecessary litigation, it is proposed to amend the provision of sub-section (2) of section 115BBE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clarificatory in nature. We are unable to affirm this view of the authorities below. In view of the judgment of the Hon'ble Supreme Court rendered in the case of CIT, Mumbai vs. M/s. Walfort Share Stock Brokers P. Ltd.(supra). The Hon'ble Apex Court while examining the amendment made in section 94 of the Act, after considering the law in detail held as under: In the lead case, we are concerned with the assessment years prior to insertion of Section 94(7)vide Finance Act, 2001 w.e.f. 1.4.2002. We are of the view that the AO had erred in disallowing the loss. In the case of Vijaya Bank v. Additional Commissioner of Income Tax [1991] 187 ITR 541, it was held by this Court that where the assessee buys securities at a price determined with reference to their actual value as well as interest accrued thereon till the date of purchase the entire price paid would be in the nature of capital outlay and no part of it can be set off as expenditure against income accruing on those securities. The real objection of the Department appears to be that the assessee is getting tax-free dividend; that at the same time it is claiming loss on the sale of the units; ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nder Section 94(7). If the argument of the Department is to be accepted, it would mean that before 1.4.2002 the entire loss would be disallowed as not genuine but, after 1.4.2002, a part of it would be allowable under Section 94(7) which cannot be the object of Section 94(7) which is inserted to curb tax avoidance by certain types of transactions in securities. There is one more way of answering this point. Sections 14A and 94(7) were simultaneously inserted by the same Finance Act, 2001. As stated above, Section 14A was inserted w.e.f. 1.4.1962 whereas Section 94(7) was inserted w.e.f. 1.4.2002. The reason is obvious. Parliament realized that several public sector undertakings and public sector enterprises had invested huge amounts over last couple of years in the impugned dividend stripping transactions so also declaration of dividends by mutual fund are being vetted and regulated by SEBI for last couple of years. If Section 94(7) would have been brought into effect from 1.4.1962, as in the case of Section 14A, it would have resulted in reversal of large number of transactions. This could be one reason why the Parliament intended to give effect to Section 94(7) only w.e.f. 1.4.20 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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