TaxTMI 
TaxTMI 
2015 (11) TMI 631
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....hat the surrendered income of Rs. 70 lakhs had been reflected in the profit and loss account and at the time of survey even, there was loss to the assessee on the basis of trading account submitted as on the date of survey and, as such, the set off surrendered income against the business loss is clearly allow able. b). That notwithstanding the above, it is submitted that during the course of survey, the Department had not been able to find any other source of income except the business of manufacturing of steel items and also, there had not been any adverse findings/note given by the survey team. 3. That notwithstanding the above, the worthy Commissioner of Income-tax (Appeals) has erred in not considering that as per section 14 of the Income-tax Act, the income can be taxed only under 5 heads as provided in that section and income cannot be taxed under any other head which is not given in the Income-tax Act. 4 a). That the decision of the hon'ble Income-tax Appellate Tribunal in the case of Kim Pharma P. Ltd. v. CIT [2013] 1 ITR-OL 137 (P&H), Ambala Cantt, is not applicable in the case of the asses see. 4 b). Notwithstanding the abovesaid ground of appea....
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....income under any of the heads of income provided in the Income-tax Act. The contention of the assessee before the Assessing Officer was that the surrendered income should be treated as business income. However, the Assessing Officer rejected the contention of the assessee and treated the surrendered income as deemed income and not as business income. The effect of the said finding was that the Assessing Officer did not allow the benefit of the set off of business losses incurred by the assessee during the year amounting to Rs. 58,19,120 against the income surrendered at the time of survey. 6. The assessee went in appeal before the learned Commissioner of Income-tax (Appeals). It was submitted that the source of cash and stock found during the course of survey was from the regular business carried on by the assessee and this fact was disclosed at the time of survey only. The assessee had accordingly, added the said surrendered amount of Rs. 70 lakhs in the regular books of account. It was also contended that as per section 14 of the Act, the income can be taxed only under five heads provided in that section and any income cannot be taxed under any other head which is not given in....
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....e Rs. 30 lakhs 9. He further submitted that all the reasons for the purposes of business loss suffered during the year were duly explained to the Assessing Officer and all the purchases and sales were fully vouched. The Assessing Officer has not doubted this aspect, nor the learned Commissioner of Income-tax (Appeals) has raised any objection to this. It was also submitted that the objection of the Assessing Officer precisely is that Rs. 70 lakhs surrendered at the time of survey is not business income of the assessee and also the income was outside the books of account and the surrender so made has been made in some different head not relatable to the business of the assessee. Learned counsel for the assessee also invited our attention to section 71 of the Act, whereby business loss of current year can be set off against the income under any of the other heads. As per him, even if the surrendered income is taxed under the head "Income from other sources", the business losses suffered during the year are allowable to be set off against the same. As regards the judgment of the Punjab and Haryana High Court in the case of Kim Pharma Pvt. Ltd. (supra) relied upon by th....
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....of the Act as held by the Assessing Officer. A number of judicial pronouncements have been cited during the course of hearing, however, we have to bow down to the proposition laid down by the jurisdictional Punjab and Haryana High Court in the case of Kim Pharma Pvt. Ltd. (supra) since this is the only judgment of the jurisdictional High Court which were brought to our notice. 13. On perusal of the said judgment, we find ourselves in agreement with the submission of learned counsel for the assessee, that the only issue in that case was the taxability of cash surrendered during the course of survey, as the assessee had also surrendered income of Rs. 10 lakhs in the assessment year 2005-06 on account of sundry credits, repairs to building and advances to staff, which being relatable to business carried on by the assessee was already included as income from business. 14. In the present case, we see that the Assessing Officer has nowhere disputed the business losses incurred by the assessee. The books have not been rejected. It was stated at the Bar that even at the time of survey, in the trading account prepared by the survey team, there were losses incurred by the assessee. All....