TaxTMI 
TaxTMI 
2011 (9) TMI 653
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....95 and 1995-96 were not filed without considering the retrospective amendment made to Explanation to Section 158BB by Finance Act with effect from 01.07.1995?" 3. The following substantial questions of law are raised in T.C.No.1308 of 2005:- " 1. Whether, in the facts and circumstances of the case, the Tribunal was right in holding that losses of the assessment year 95-96 claimed in the belated return had to be set off against the undisclosed income for the block assessment years85-86 to 95-96 ? 2. Whether in the facts and circumstances of the case, the losses that are not permitted to be carried forward on account of delayed filing of return, can be treated as undisclosed and set off against undisclosed income under Chapter XIV B of the Income Tax Act?" 4. The appeals relate to the case of block assessment covering the Block period 1985-86 to 1994-95. A search was carried out in the premises of Soora Nagarajan on 09.11.1995, who was the Managing Director of M/s.Soora Thayarammal Shopping Complex (P) Limited as well in the premises of K.M.Basha Group of Companies. The assessees are stated to be the niece of Soora Nagarajan, who was one of the share h....
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.....280 of 2004 dated 07.07.2004 in the case of Commissioner of Income Tax, Coimbatore Vs. Sri Soora Nagarajan, learned counsel for the Revenue submits that the same exercise may be done in the cases before us too to remand the matter back to the Assessing Officer for considering the effect of amendment to Explanation to Section 158 BB, which was made under the Finance Act, 2002 with effect from 01.07.1995. 9. Learned counsel for the assessee also placed before us the decision of the Apex Court in the case of E.K.Lingamurthy and another Vs. Settlement Commissioner (IT and WT) and another reported in (2009) 314 ITR 305 (SC), wherein the scope of Explanation (a) to Section 158 BB (4) was considered by the Apex Court. Hence, the benefit of the said section be applied herein to reject the Tax Case Appeals filed by the Revenue. 10. However, learned Standing Counsel for the Revenue pointed out that the said decision has relevance to the Explanation brought before the amendment by Finance Act 2002 ; there was no consideration as regards the amended provision made retrospectively i.e., with effect from 01.07.1995. Learned Standing Counsel pointed out that in the light of the a....
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.... partners, the method of computation of undisclosed income and its allocation to the partners shall be in accordance with the method adopted for determining the assessed income or returned income for each of the previous years falling within the block period." (c) assessment under Section 143 includes determination of income under sub-section(1) or sub-section (1B) of section 143 ..............." Section 158BB and the Explanation after amendment by the Finance Act, 2002, w.r.e.f. 01.07.1995 :- "158BB (1) The undisclosed income of the block period shall be the aggregate of the total income of the previous years falling within the block period computed, (in accordance with the provisions of this Act, on the basis of evidence found as a result of search or requisition of books of account or other documents and such other materials or information as are available with the Assessing Officer and relatable to such evidence), as reduced by the aggregate of the total income, or as the case may be, as increased by the aggregate of the losses of such previous years, determined.- ............................. Explanation :- For the purposes of determination of u....
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....ten previous years and the period up to the date of the search. Section 158BB provides for aggregation of income/loss of each previous year comprised in the block period. The block period assessment under Chapter XIV-B is in addition to regular assessment. Analysing Section 158BB(4) read with Explanation (a) thereto, one finds that only brought forward losses of the past years under Chapter VI and unabsorbed depreciation under Section 32(2) are to be excluded while aggregating the total income or loss of each previous year in the block period but set off of the loss suffered in any of the previous year in the block period against the income assessed in other previous years in the block period is not prohibited. In our view, the Settlement Commission had erred in disallowing the application of the assessee for set off of inter se losses and depreciation accruing in any of the previous years in the block period against the income returned/assessed in any other previous year in the block period." 12. On a reading of the law declared by the Apex Court to the above amended provision, it is clear that in computing the total income or loss of the Block period, the income o....