2020 (12) TMI 662

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ellant and that it did not have knowledge about the current account and the fixed deposit account allegedly standing in its name with Oriental Bank of Commerce, or as to who have even opened that account in its name. 1.3 The Appellant, prays that the addition of Rs. 4,54,551 made by the AO under section 69A of the Act be deleted. Without prejudice to Ground I Ground II: Total income referred to in section 115BBE(1) of the Act is the positive amount if any, arrived at after setting of income of the nature referred to in Section 69A against business loss of the current year 2.1 On the facts and circumstances of the case and in law, and without prejudice to the foregoing ground, the CIT(A) erred in holding that income-tax is to be calculated @ 30% on addition made under section 69A of the Act, though the said addition has been fully set off against the business loss of the current year. 2.2 He failed to appreciate and ought to have held that since the amount of addition under section 69A has been fully set off against the business loss of the current year the total income does not include any income of the nature referred to in section 69A of the Ac....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....e some of the Assessing Officers have allowed set off of losses against the additions made by them under section(s) 68 69/69A/69B/69C/69D, in some cases, set off of losses against the additions made under section 115BBE(1) of the Act have not been allowed. As the amendment inserting the words 'or set off of any loss' is applicable with effect from 1st of April, 2017 and applies from assessment year 2017-18 onwards, conflicting views have been taken by the Assessing Officers in assessments for years prior to assessment year 2017-18. The matter has been referred to the Board so that a consistent approach is adopted by the Assessing Officers while applying provision of section 115BBE in assessments for period prior to the assessment year 2017-18. 3. The Board has examined the matter. The Circular No. 3/2017 of the Board dated 20th January, 2017 which contains Explanatory notes to the provisions of the Finance Act, 2016, at para 46.2, regarding amendment made in section 115BBE(2) of the Act mentions that currently there is uncertainty on the issue of set-off of losses against income referred to in section 115BBE. It also further mentions that the pre-amended provision ....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....Resorts Ltd., v. CIT [419 ITR 322] the Hon'ble Kerala High Court considered a situation where the assessee had set off the deemed income i.e. unexplained cash credits addition made u/s. 68 of the Act against carryforward losses being unabsorbed depreciation for the A.Y. 2013-14 and the Hon'ble High Court considering various decisions held as under: - "14. Based on the rival contentions, on analyzing the factual situation, it is evident that the assessment pertains to the period from 1st April 2013 to 31st March 2014. It is not in dispute that the addition of Rs. 56,24,264/- made in the assessment is undisclosed income coming within the purview of Section 68, it being a sum found credited in the books of the assessee with respect to which the explanation offered was not found to be satisfactory by the Assessing Officer. Since Section 115BBE was introduced with effect from 01.04.2013, it cannot be disputed that no deduction in respect of any expenditure or allowance can be allowed with respect to the said amount. But question is whether set off of any loss shall be allowed against the said undisclosed income. In order to decide the question it is crucial to decide th....

X X   X X   Extracts   X X   X X

Full Text of the Document

X X   X X   Extracts   X X   X X

....ncome from other sources. Therefore, we are of the opinion that the 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 of the Act. Even assuming for the sake of argument that, it will not fall within the classifications contained in Section 14, it is evident that, as on the date of the assessment such income was included under a special classification by virtue of Section 115BBE. It is pertinent to note that, 115BBE had prohibited allowance of deductions alone, as it stood unamended as on the relevant date of the assessment. The explanatory notes to the provisions of the Finance Act, 2016 enumerates the reasons for introduction of the further amendment barring the set off, with effect from 1.4.2017. It is stated that, "Currently, there is uncertainty on the issue of setoff of losses against income referred to in Section 115BBE of the Income Tax Act. The matter has been carried to judicial forums and courts in some cases has taken a view that losses shall not be allowed to be set-off against income referred to in Section 115BBE. However, the current language ....