TMI Blog2020 (10) TMI 748X X X X Extracts X X X X X X X X Extracts X X X X ..... .2012-13 vis- -vis the provisions of section 79 of the Act has to be examined by the Assessing Officer only in the assessment year in which the assessee claimed such set off of losses in the return of income. In the present case since the assessee has claimed set off of carry forward of losses against the income of the current assessment year i.e. A.Y. 2012-13 and also in the subsequent assessment years this claim of the assessee has to be examined only during the assessment year 2012-13 and subsequent assessment years. Thus, the grounds raised in this regard are restored to the file of the Assessing Officer who shall decide the implication of section 79 of the Act in the light of our above said findings and observations. The grounds raised are disposed off accordingly. Addition on account of discrepancies in stocks - discrepancies found during the course of search - HELD THAT:- Considering the volume of gold jewellery and diamonds handled by the assessee in the instant case during the year under consideration, the unreconciled stock contributed a very meagre percentage of the total material handled by the assessee, we hold that assessee had given plausible explanation in t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to have held that the Appellant's case is covered by the exception to section 79 of the Act? 5. As the things stood thus, during the assessment year under consideration i.e. A.Y. 2012-13 the assessee in the return of income claimed set off of losses relating to the Assessment Years prior to A.Y.2006-07. However, the Assessing Officer while completing the assessment u/s. 143(3) r.w.s. 153(A) of the Act ignored the claim of the assessee for set off of losses against income for A.Y. 2012-13. 6. The assessee carried the matter before the Ld.CIT(A) and contended that during the A.Y. 2006-07 the Assessing Officer denied carry forward of brought forward losses by invoking provisions of section 79 of the Act. It was contended that the share holding pattern of the assessee company up to 31.03.2015 was as under: - Name of the Shareholder No. of Equity Shares Percentage Inter Gold India Pvt. Ltd. 10,99,850 54.99 Soignee Kothari 50 00.00 Rosy Blue (India) Pvt. Ltd. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... India Pvt. Ltd. had retained 4,000 shares of assessee which it continues to be held by it till date. It was contended that this fact was also confirmed by the annual returns filed by the assessee with the Registrar of Companies as well the audited accounts of Inter Gold India Pvt. Ltd. Therefore, it was contended that based on the mistaken information submitted by the assessee during assessment proceedings for A.Y. 2006-07 it was held that in F. Y 2005-06 there was a change in shareholding of the assessee Company and as a result of which shares carrying more than 51% of the voting power are not beneficially held by the persons who beneficially held shares carrying not less than 51% of the voting power in the year in which such loss was incurred. Accordingly, the Assessing Officer by invoking the provisions of Section 79 of the Act, did not allow the loss of ₹.18.96 Crores assessed up to A.Y. 2005-06 to be carried forward to A.Y. 2006-07 and onwards. 10. Assessee contended before the Ld.CIT(A) that the provisions of section 79 of the Act can be attracted only in the year in which the loss is set off and since the assessee claimed set off of loss only during the A.Y.2012-13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ght to be set off. 12. The Ld. Counsel for the assessee submitted that the factual position of shareholding at the end of 31.03.2005 and as on 31.03.2013 are as under: - Name of the Shareholder As on March 31, 2005 No. of % shares As on March 31, 2013 No. of % shares Inter Gold India Pvt. Ltd. 10,99,850 54.99 4,000 00.20 Rosy Blue (India) Pvt. Ltd, 5,99,900 30.00 16,95,850 84.79 Vijay N. Jain 2,00,000 10.00 2,00,000 10.00 Kajal Jain 1,00,000 05.00 1,00,000 05.00 Total 19,99,750 99.99 19,99,850 99.99 13. Learned Counsel for the assessee submitted that assessee s case is covered by exception provided in section 79 of the Act as more than 51% of its shares were held by the same group of sharehold ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation, in view of this fundamental aspect not being urged and, hence not considered by the Tribunal for that year. 16. Ld. Counsel for the assessee also placed reliance on the decision of the Hon'ble Supreme Court in the case of CIT v. Italindia Cotton Co. Pvt. Ltd. [174 ITR 160] and submitted that as per clause (a) of section 79, as it stood for the year under consideration, the said provision would not apply where shares carrying more than 51% of the voting power were beneficially held by the same group of shareholders on the last day of the year in which the loss was incurred and the year in which the loss is sought to be set off. Ld. Counsel for the assessee therefore submits that in the present case more than 99% of the shares of the assessee company was held by Inter Gold India Pvt. Ltd., Soignee Kothari, Rosy Blue (India) Pvt. Ltd., Vijay Jain and Kajal Jain, both at the time when the loss was incurred and also when it was sought to be set off. Therefore, it was submitted by the Ld. Counsel for the assessee that the disabling provision of section 79 of the Act should not apply to the present case. It was submitted that the provisions of section 79 of the Act does not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 51, the Income-tax Officer declared that the loss computed in that year could not be carried forward to the next year under section 24(2) of the Income-tax Act, as it was not a business loss. The Income-tax officer has under section 24(3) to notify to the assessee the amount of loss as computed by him, if it is established in the course of assessment of the total income that the assessee has suffered loss of profits. Section 24(2) confers a statutory right (subject to certain conditions which are not material) upon the assessee who sustains a loss of profits in any year in any business, profession or vocation to carry forward the loss as is not set off under sub-section (1) to the following year, and to set off against his profits and gains, if any, from the same business, profession or vocation for that year. Whether the loss of profits or gains in any year may be carried forward to the following year and set off against the profits and against the same business, profession or vocation under s. 24(2) has to be determined by the Income-tax Officer who deals with, the assessment of the subsequent year. It is for the Income-tax Officer dealing with the assessment in the subseque ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nal, relying on the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra) wherein it has been held that the claim of the assessee has to be examined by the Assessing Officer in the year in which such claim for set off was made by the assessee in the return of income. Following the decision of the Hon'ble Apex Court, the Tribunal in this case decided the appeals against the assessee. 23. The ratio of the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra) applies squarely to the facts of the assessee s case. On a reading of the Tribunal order in ITA.No.5760/Mum/2009 dated 05.06.2013 passed for the A.Y. 2006-07 wherein the claim for carry forward of losses were denied invoking provisions of section 79 of the Act, we observed that the decision of the Hon'ble Supreme Court in CIT v. Manmohan Das (supra) was not brought to the notice of the Tribunal and the Tribunal had no occasion to examine the effect of this decision. Therefore, we are of the considered view that in view of the decision of the Hon'ble Supreme Court in the case of CIT v. Manmohan Das (supra) the decision of the Tribunal for the A.Y.2006-07 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laining the discrepancies and ultimately the search party found that 5.16 carats of diamond and 361.94 grams of gold stood not reconciled. During the course of assessment proceedings, the assessee had explained that assessee engaged in the business of manufacture and trading of Diamonds, Precious and semi-precious stone studded jewellery and also gold jewellery, the assessee had totally handled 14,103.06 carats of diamond, out of which only 5.16 carats of diamond could not be explained. Assessee had submitted that this minor difference which contribute to 0.036% of total material handled had arouse on account of weighing error and incidental normal loss. The Ld. Assessing Officer however did not agree to this explanation of the assessee and made an estimated addition of ₹.50,000/- towards 5.16 carats of diamond which was also upheld by the Ld.CIT(A). 26. During the course of assessment proceedings, the assessee had explained that 3,42,130 grams of gold that were handled by the assessee during the year in the regular course of its business, only 361.94 grams of gold could not be reconciled which contribute to 0.105% of the total material handled. The assessee had also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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