The Tax Publishers2019 TaxPub(DT) 7943 (Ker-HC) : (2019) 419 ITR 0322 : (2020) 315 CTR 0412 : (2020) 269 TAXMAN 0513

INCOME TAX ACT, 1961

Section 115BBE

Since, as on relevant date of the assessment, i.e. 30-3-2016 there existed no bar with respect to allowing set-off aginst of carried forward loss with respect of income under section 68 amendment declining set-off was inroduced only with effect from 1-4-2017, AO was not justified in denying assessee's claim of set-off.

Deemed income under sections 68 to 69D - Denial of set-off of brought forward losses - Assessment order passed on 30-3-2016 -

CIT exercised power vested under section 263 on the ground that deemed income under sections 68 to 69D could not be classified under any heads of income under section 14 and therefore, set off of brought forward loss against deemed income under section 68 as allowed by AO in assessment order passed on 30-3-2016 was erroneous and prejudicial to the interest of the revenue. Held: Undisclosed income assessed under section 68 need not be treated as an income falling totally outside the ambit of the classifications contained in section 14. Even assuming for the sake of argument that, it would not fall within the classifications contained in section 14, it is evident that, as on the date of assessment , i.e., 30-3-2016 such income was included under a special classification by virtue of section 115BBE. It is pertinent to note that, section 115BBE had prohibited allowance of deductions alone, as it stood unamended as on the relevant date of assessment. The amendment declining set-off was introduced only with effect from 1-4-2017. Intention of the legislature in introducing the amendment, as stated in explanatory note, was to avoid unnecessary litigation and to expressly provide that no set off of any loss shall be allowable in respect of income under section 68. Therefore, as on relevant date of the assessment, there existed no bar with respect to allowing set off of carried forward loss against deemed income, particularly with respect to income under section 68 and original order of assessment passed by AO would stand sustained.

Relied:CIT v. D.P. Sandu Bros. Chembur (P) Ltd. (2005) 193 CTR SC 578 (SC) : 2005 TaxPub(DT) 1286 (SC), Lakhmichand Baijnath v. CIT (1959) 35 ITR 416 (SC) : 1959 TaxPub(DT) 117 (SC), A. Govindarajulu Mudaliar v. CIT (1958) 34 ITR 307 (SC) : 1958 TaxPub(DT) 195 (SC), United Commercial Bank v. CIT (1957) 32 ITR 688 (SC) : 1957 TaxPub(DT) 151 (SC) and CIT v. Kerala Sponge Iron Ltd. (2015) 379 ITR 0330 (Ker) : 2015 TaxPub(DT) 3551 (Ker-HC). CIT v. PD. Abraham Alias Appachan [ITA. No. 147 of 2012, dt. 28-3-2014] CIT v. Shilpa Dyeing & Printing Mills Pvt. Ltd. (2013) 219 Taxman 279 (Guj) : 2014 TaxPub(DT) 0164 (Guj-HC) CIT v. Spel Semi Conductor Ltd. (2013) 212 Taxman 506 (Mad) : 2013 TaxPub(DT) 0196 (Mad-HC) Dy. CIT v. Radhe Developers India Ltd. (2010) 329 ITR 1 (Guj) : 2010 TaxPub(DT) 0448 (Guj-HC) CIT v. Chensing Ventures (2007) 291 ITR 258 (Chen) : 2007 TaxPub(DT) 1146 (Mad-HC) Fakir Mohmed Haji Hasan v. CIT (2001) 247 ITR 290 (Guj) : 2001 TaxPub(DT) 0551 (Guj-HC) Annamalai Reddiar v. CIT (1964) 53 ITR 601 (Ker) : 1964 TaxPub(DT) 0175 (Ker-HC) Bhima Jewellers v. Pr. CIT [ITA No.208/COCH/2018, dt. 20-8-2018] : 2018 TaxPub(DT) 5375 (Coch-Trib)

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