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of <h1>Tribunal allows set off of business losses against surrendered income for 2012-13</h1> The Tribunal ruled in favor of the assessee, allowing the set off of business losses against surrendered income for the assessment year 2012-13. The ... Disallowance of the set off of the business loss surrendered income - Entitlement to claim set off of loss against income determined under section 115 BV - HELD THAT:- In view of the fact that the assessee had already introduced the transactions in their books of accounts in the name of property income from property dealing, it would not be reasonable to say that such income does not fall under any of the head of income or that such deemed income does not allow any set off of business losses. We are inclined to accept the contention of the assessee that the surrendered income, in respect of which the entries had already been made in the books of accounts of the assessee in relation to the property income from property dealing, amount to business income and it allows the set off of the business loss - We, therefore, direct the assessing officer to delete the disallowance of the set off of the business loss. Disallowance of salary paid to partners under section 40 (b) of the Act has to be worked out keeping in view the consequences of the deleting the disallowance of the set off of the business loss - HELD THAT:- We set aside the impugned order on this aspect, and remand issue to the file of the learned Assessing Officer to work out the maximum allowable salary to partners. Issues:1. Disallowance of set off of business losses against surrendered income.2. Disallowance of salary to partners.Analysis:Issue 1: Disallowance of set off of business losses against surrendered incomeThe appeal arose from a decision by the Commissioner of Income Tax (Appeals) disallowing the set off of business losses against the surrendered income for the assessment year 2012-13. The assessing officer disallowed the losses set off by the assessee, leading to a dispute. The assessee argued that the surrendered amount was already recorded in the books of accounts as business income, citing legal precedents such as the decision in Lukhmich and Baijnath vs. CIT. The appellant contended that the surrendered income should be considered business income, allowing for the set off of business losses. The Tribunal reviewed the facts and legal arguments, including the CBDT circular and relevant case law, and concluded that the surrendered income, being recorded in the books as property income, should be treated as business income. Therefore, the Tribunal directed the assessing officer to delete the disallowance of the set off of business loss.Issue 2: Disallowance of salary to partnersThe Tribunal noted that the disallowance of salary to partners under section 40(b) of the Act needed to be re-evaluated in light of the decision regarding the disallowance of the set off of business loss. As a result, the Tribunal set aside the order on this aspect and remanded the issue to the assessing officer to determine the maximum allowable salary to partners. The Tribunal allowed the appeal in part on this issue for statistical purposes.In conclusion, the Tribunal ruled in favor of the assessee regarding the disallowance of set off of business losses against surrendered income, considering the surrendered amount as business income. The issue of disallowance of salary to partners was remanded for further assessment. The appeal was allowed in part for statistical purposes.
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