TaxTMI 
TaxTMI 
2023 (2) TMI 625
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....u/s. 68 by relying on the decision of ITAT, Kolkata in the case of DCIT, Circle-3(1), Kolkata vs. M/s. Atibir Hi-tech Pvt. Ltd. where in the said commodity profit was accepted as cash credit u/s. 68 by the Hon'ble ITAT? 3. In the facts and circumstances of the case and in law, the Ld. CIT(A) has erred in deleting the addition of Rs. 7,60,123/- made by the AO on account of the employees contribution to PF/ESI as because it violates the provision of Sec 36(1)(va) read with Sec 2(24)(x) of the IT Act and it contradicts the Board's Circular no. 22/2015 dated 17.12.2015, Para no. 5 where it is clarified that this circular does not apply to claim of deduction relating to employee's contribution to welfare fund which are governed by Sec 36(1)(va) of the Act". 4. The appellant craves leave to make any addition, alteration or modification etc. of the grounds either before the appellate proceedings, or in the course of appellate proceedings." 3. Brief facts of the case are that the assessee is a Private Limited Company engaged in the business of manufacturing of TMT bars. Loss of Rs. 2,26,20,205/- was declared in the return filed for Assessment Year 2014- 15 ....
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....sing Officer. On the other hand, the ld. Counsel for the assessee apart from referring to the written submissions filed before the ld. CIT(A) and detailed findings of the ld. CIT(A) appearing in para 6 to 14 of the impugned order also referred to the CBDT Circular No. 11/2019 dated 19/06/2019 regarding clarification on allowability of set-off of losses against the deemed income u/s 115BBE of the Act, prior to Assessment Year 2017- 18. Reference was made to various decisions which are as under:- • ITO vs. M/s Prism Share Trading Pvt. Ltd. (ITA No. 5650/Mum/2017 dated 30/11/2018) • DCIT vs. M/s. Atbir Hi-Tech Pvt. Ltd. (ITA No. 1747/Kol/2017 dated29/03/2019) • M/s. Skipper Ltd. vs. DCIT (ITA No. 55/Kol/2022 dated 09/09/2022) • DCIT vs. M/s. Atha Mines Pvt. Ltd. (ITA No. 601/Kol/2014 dated 05.04.2017) • Vijaya Hospitality and Resorts Ltd. v. CIT in [2020] 114 taxmann.com 91 (Kerala) dated 07/03/2019 • ACE Infracity Developers (P) Ltd. v. DCIT in [2021]127 taxmann.com 264 (Delhi-Trib.) • Sangeet Resorts vs. DCIT in ITA No. 561/Chd/2019 dated 29/01/2020 • Amirt Hatcheries Pvt. Ltd. vs....
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....ussion if it is presumed that the action of the Assessing Officer is found to be correct and the alleged commodity profit is treated as unexplained cash credit u/s 68 of the Act, even then the losses for the year which have not been disputed by the revenue authorities deserves to be setoff against the unexplained income u/s 68 of the Act. The restriction for setoff has been brought into the Act by the Finance Act, 2016 w.e.f. 01/04/2017. For better understanding of the issue, we will first go through Section 115BBE of the Act, which reads as follows:- "115BBE. 59[(1) Where the total income of an assessee,- (a) includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D and reflected in the return of income furnished under section 139; or (b) determined by the Assessing Officer includes any income referred to in section 68, section 69, section 69A, section 69B, section 69C or section 69D, if such income is not covered under clause (a), the income-tax payable shall be the aggregate of- (i) the amount of income-tax calculated on the income referred to in clause (a) and clause (b), at the rate of si....
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..... 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 of section 115BBE of the Act did not convey the intention that losses shall not be allowed to be set-off against income referred to in section 115BBE of the Act and hence, the amendment was made vide the Finance Act, 2016. 4. Thus keeping the legislative intent behind amendment in section 115BBE(2) vide the Finance Act, 2016 to remove any ambiguity of interpretation, the Board is of the view that since the term 'or set off of any loss' was specifically inserted only vide the Finance Act 2016, w.e.f. 01.04.2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE of the Act till the assessment year 2016- 17. 5. The contents of this Circular may be circulated widely for information o....
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....ether the entries provided were accommodation entries. It is observed that the assessee had also been summoned and statement recorded. At Page Nos. 40 and 42 of the Paper Book filled, it is evident that the broker had been summoned. The note sheet entry on 30.11.2016 states as follows:- "Mr. P.K. Agarwal attends along with Mr. Sanjay Dalmia Director of Shristi Ispat & Alloys Ltd. - Mr. Sankar Lal Agarwal is said to be presently out of stn. Mr. Neera Jain also attends today & filed a letter claiming no relation with Sidhsilver Commodities P. Ltd. The A.R. files a submission dt. 30/11/ 16 in which he states that the assessee co. had no nexus with Neeraj Jain who is alleged to be an entry operator for Sidhsilver Commodities P & L account. Mr. Neeraj Jain and Mr. Sanjay Dalmia who are present here agrees. Universal Commodity Exchange is closed on action of SEBI, as on date." In other words, there was no nexus between the broker and the assessee. 10. No adverse inference can be drawn from the order sheet entry. In fact, the order sheet entry helps the assessee in his case. 11. I have vetted the decision of Calcutta High Court in CIT vs. Bhagwati Prasad Agarwal....
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.....3.3 of his impugned order: "In respect of Ground No. 3 and 4, the assessee has argued that even if the income shown by the assessee is assessed u/s 68, the assessee is eligible for the set off u/s 71 of the I.T. Act. I have carefully examined the legal position standing in respect of this issue before 01.04.2017. Only by amendment in the Finance Act, 2016, Section 115BBE does not allow set off of income assessed as cash credit u/s 68 against the loss under any other head as per the provisions of section 71. The legislature in all its wisdom has decided not to allow set off of loss under any provisions of this Act w.ef. 01.04.2017 in computing the income as per the provisions of Sec. 115BBE. This amendment by itself clarifies the legislative intent that for the year under consideration set off of loss under any other head except under the head "Capital Gain" is allowable from the assessed u/s 69." 10. The ld. DR strongly supported the order passed by the A.O. on this issue and submitted that the decision of the Tribunal rendered in the case of Shri Pradeep Kumar Todi vs ITO vide its order dated 22.09.2017 passed in ITA No. 984/Kol/2017 fully supports the case of t....
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....ch of this Tribunal has decided the similar issue vide paragraph No. 10 which reads as under: "We shall now advert to the observation of the CIT(A) that the loss suffered by the transactions could be 'set off against the income of Rs.5,73, 96,307/- assessed by the A.O. under sec. 68 of the Act. We find that Sec. 115BBE was brought on the statute by the Finance Act, 2012 with effect from 01.04.2013. On a perusal of the said statutory provision, as was then so available on the statute and was applicable to the case of the assessee for the year under consideration i.e. A. Y. 2013-14, no restriction was placed as regards 'set off of losses against the income referred to in Sec. 68, 69, 69A, 69B, 69C and 69D. Rather, the legislature in all its wisdom by amending Sec. 115BBE vide Finance Act, 2016 w.e.f 01.04.2017 had only w.e.f. A. Y. 2017-18 placèd a restriction on 'set off of losses, in addition to raising of any claim of expenditure and allowance against such income The fact that the aforesaid amendment of Sec. 115BBE by the Finance Act, 2016, w.ef. 01.04.2017 is prospective in nature can safely be gathered from a perusal of the CBDT Circular No. 3/2017, dated 20.0....