AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (7) TMI 577
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....ship firm engaged in the business of civil construction and power generation. It filed its return of income on 10.09.2015 declaring total income of Rs. 3,54,87,490/- after claiming deduction of Rs. 2,84,42,603/- u/s 80IA(4) of the Income Tax Act, 1961 (hereinafter referred to as "the Act"). A survey u/s 133A of the Act was conducted in the case of the assessee on 17.12.2014, during which certain papers were impounded which indicated that the actual work in progress was much higher than the work in progress shown in the books. Accordingly, the assessee had declared additional income of Rs. 3,11,76,525/- for the year under consideration. 3. During the course of assessment proceedings, the Assessing Officer noted that while the assessee has declared the additional income in the hands of the firm, however, the assessee has included the same in the closing stock as on 31.03.2015. The Assessing Officer, therefore, asked the assessee to explain as to why the excess stock of Rs. 3,11,76,525/- disclosed during survey as additional income should not be added u/s 69B of the Act as unexplained investment as the same was unaccounted. The assessee submitted that during the course of survey, nei....
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....acceptable because as already discussed there was difference in stock as per books of account and actual stock statement file impounded during the survey. This discrepancy/difference has been accepted by the Partner in his statement recorded during the survey and it was stated that difference is due to purchase which are not accounted for in books of account. 5.6 In view of the above excess stock of Rs. 3,11,76,525/- is added u/s 69B as unexplained investment. This discrepancy would not have come to notice without survey u/s 133A of the Income Tax Act, 1961 in the case of assessee. Penalty proceedings are initiated separately u/s 271(1)( c) of the IT Act, 1961 for concealment of income. 5.7 In respect of income of assessed u/s 68/69/69A/69B/69C/69D of the I.T Act 1961 it has now been established by law that tax on such income should be charged at rate of 30% over and above regular income of assessee. It has been established that deduction/exemption / set off of losses cannot be claimed / adjusted against income assesses u/s 68/ 69 to 69D of the Act. Will and mandate of legislature is dearly evident from the incorporation of new section 115 BBE of the I.T. Act, 1961 w.e.f. 01.04....
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....hat onus of proving the source of a sum of money found to have been received by the assessee is on him. However, if the taxpayer disputes the levy of tax on the same then it is up to him to show either the receipt is not income, or it is exempt from taxation under the provisions of the Act. In the absence of proof, the tax officer is entitled to treat the same as taxable income. Thus, the onus of explaining the source of undisclosed income found during search or survey is on the assessee and not the other way. In other way, the onus of proving that the income detected is not taxable under sections 68, 69, 69A to 69D read with section 115BBE is on the assessee. 21. To sum up, before assessing the surrendered income under sections 68, 69, 69A to 69D and levy of higher rate of tax u/s 115BBE, following factors are required to be considered- * Whether nature of income is clearly explained during the survey or during assessment proceedings. * Whether income can be classified under a particular head of income based on nature so as to demonstrate that it is flowing from one of the specific sources of income of the assessee. * Whether supporting evidences for the above are availabl....
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....P. I have considered this contention of the appellant If the claim of the appellant is accepted in that situation, the appellant will be claiming deduction of Rs. 3,11,76,525/- in subsequent assessment years which shall be in contradiction to the provisions of section 115BBE(2) of the Act. The provisions of section 115BBE(2) are quite clear that no deduction is allowed against deemed income added u/s 68 and 69 to 69D. Since, I have already upheld that the additional income corresponding to excess stock is taxable u/s 69B of the Act, therefore, as per provisions of section 115BBE(2), no deduction for this amount can be allowed to the appellant in any assessment year. Accordingly, the contention raised by the appellant is rejected. The grounds no. 8 and 9 raised by the appellant are DISMISSED." 6. Aggrieved with such order of CIT(A), the assessee is in appeal before the Tribunal by raising the following grounds: 1] The learned CIT(A) erred in holding that the additional income of Rs. 3,11,76,525/- which was declared in the course of survey u/s 133A is taxable u/s 69B of the Act and in view of provisions of section 115BBE(2), no deduction of the said amount can be allowed to the as....
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....being claimed as an opening stock of the subsequent assessment year i.e. 2016-17 and therefore, the same would be allowed as deduction while computing the income for the succeeding assessment year. He submitted that there is no prohibition in section 115BBE of the Act that the excess stock offered to tax cannot be part of closing stock. 8. Referring to CBDT Circular No.11/2019 dated 19.06.2019, he submitted that there was an amendment to sub-section (2) of section 115BBE of the Act from assessment year 2017-18 wherein the set off of losses was also prohibited against the deemed income taxed u/s 69 to 69D of the Act. Therefore, the CBDT issued circular holding that the set off of losses is prohibited from assessment year 2017-18 onwards. He submitted that as per the circular, what is prohibited under sub-section (2) is set off of any expenditure or allowance or loss against the deemed income. Since the assessee in the instant case has not claimed any deduction or expenditure or allowance against the income offered u/s 69B of the Act, therefore, the addition made by the Assessing Officer is not correct. He submitted that since the assessee has paid the taxes on the deemed income and....
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....the tune of Rs. 3,11,76,525/- which was offered for taxation and the same was included in the closing stock as on 31.03.2015 which has been claimed as opening stock as on 01.04.2015 i.e. for assessment year 2016-17. The assessee has not claimed any deduction, expenditure or allowance out of such additional income declared during the course of search which was declared on the basis of survey. 12. We find provisions of sections 69B and 69C read as under: "69B. Where in any financial year the assessee has made investments or is found to be the owner of any bullion, jewellery or other valuable article, and the Assessing Officer finds that the amount expended on making such investments or in acquiring such bullion, jewellery or other valuable article exceeds the amount recorded in this behalf in the books of account maintained by the assessee for any source of income, and the assessee offers no explanation about such excess amount or the explanation offered by him is not, in the opinion of the Assessing Officer, satisfactory, the excess amount may be deemed to be the income of the assessee for such financial year. Unexplained expenditure, etc. 69C. Where in any financial year an as....
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....y 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 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. 1-4-2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE of the Act till ....
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....closing WIP for A.Y. 2015 - 16 and as a natural consequence would be also part of opening WIP for A.Y. 2016 - 17 and accordingly, the assessee was justified in claiming the same as a deduction while computing the income for A.Y. 2016-17. 17. The only grievance of the assessee in the grounds raised is regarding the order of the Assessing Officer in not considering the closing work in progress of Rs. 3,11,76,525/- as on 31.03.2015 as the opening work in progress as on 01.04.2015 i.e. assessment year 2016-17. Since while deciding the appeal of the assessee for assessment year 2015-16 vide ITA No.417/PUN/2024, we have already held that the additional income so declared during the course of survey shall form part of the closing stock, therefore, such closing stock as on 31.03.2015 shall be the opening stock of assessment year 2016-17. Therefore, the assessee is justified in claiming the same as deduction while computing the income for the assessment year 2016-17. We hold and direct accordingly. The grounds raised by the assessee on this issue are accordingly allowed. ITA No.1046/PUN/2024 (by Revenue for A.Y. 2015-16) 18. Facts of the case in brief, are that the assessee firm is engag....
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....iness in earlier years, there was an overall loss in Power Generation Business, and he therefore, rejected the claim of the Assessee for deduction u/s. 80IA(4)of the I.T.Act. 8. On the other hand, the appellant has claimed that all the undertakings have been set up at different locations and they function independently from each other. Regarding the issue of notionally carry forwarding the losses of earlier years, the assessee has claimed that the initial asst. year is the year in which the deduction is first claimed by the assessee, as clarified by CBDT vide Circular No. 1 of 2016 dated 15/02/2016. Thus, the unabsorbed losses and depreciation of each windmill which has already been set off against other business income of the assessee, cannot be notionally brought forward, as done by the assessing officer. The appellant has claimed that similar disallowance was made by the learned A.O. in the earlier years but the said action of the assessing officer has not been upheld at the level of CIT(A) or ITAT. It is also been submitted that in identical facts, the National Faceless Appeal Centre (NFAC) has also allowed the appellant's claim of 80IA for AY 2020-21 vide order dated 21.....
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....ined by the Hon'ble High Court and Kerala in the case of CIT Vs. Accel Transmatic Systems Ltd. 230 CTR 206 (Ker) which has been followed by the Ld. CIT(A). The term "business" used in sub-sec. (5) section 80IA in our humble opinion is confined to the independent undertaking and cannot get merged with the other businesses. In Sec. 80IA(2), for claiming deduction "undertaking" or "Enterprise" as such is to be considered. Sec.80IA(2) is charging sections for determining basic eligibility and there is no mention of word "business". Sub-sec.(5) of Sec. 80IA speaks of business but same is to be construed as business of "undertaking" or "Enterprise" as referred to in Sub sec.(2) of Sec. 80IA. It is well settled principle of interpretation of statutory provision that they are to be interpreted harmoniously to make workable to give intended results. Hence, as rightly held by Ld. CIT(A) term "business" used in sec.80IA(5) is to be construed and understood to mean "business" or "undertaking or enterprise". In our opinion, the Ld. CIT(A) in his well-reasoned order has rightly held that every unit constitute a separate undertaking engaged in the eligible business and losses from one unit ca....
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.... CIT Vs. Accel Transmatic Systems Ltd. 230 CTR 206 (Ker) which has been followed by the Ld. CIT(A). The term "business" used In sub-sec.(5) section 80IA in our humble opinion is confined to the independent undertaking and cannot get merged with the other businesses. In Sec. 80IA(2), for claiming deduction "undertaking" or "Enterprise" as such is to be considered. Sec.80IA(2) is charging sections for determining basic eligibility and there is no mention of word "business". Sub-sec.(5) of Sec. 80IA speaks of business but same is to be construed as business of "undertaking" or "Enterprise" as referred to in Sub-sec.(2) of Sec.80IA. It is well settled principle of interpretation of statutory provision that they are to be interpreted harmoniously to make workable to give Intended results. Hence, as rightly held by Ld. CIT(A) term "business" used in sec.80IA(5) is to be construed and understood to mean "business" or "undertaking or enterprise". In our opinion, the Ld.CIT(A) in his well reasoned order has rightly held that every unit constitute a separate undertaking engaged in the eligible business and losses from one unit cannot be set off against the profits. Another unit engaged in th....
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....grounds raised by the assessee on this issue is accordingly allowed." 8. Since, the issue has already been considered by the Tribunal and has held that each unit of windmill has to be considered separately for computing deduction u/s. 80IA(4), we see no reason to deviate from the view already taken. No contrary judgment has been placed on record before us by the Revenue. The Id. DR has pointed that the Department has fifed appeal against the Tribunal's decision in the case of M/s. D.J. Malpani Vs. ACIT (supra), however, no order by the Hon'ble High Court either staying or reversing the aforesaid decision of Tribunal has been furnished by the Id. DR. 9. We do not find any infirmity in the order of Commissioner of Income Tax (Appeals) in allowing assessee's claim of deduction u/s. 80IA(4) considering each windmill as separate unit for allowing deduction u/s. 80IA(4) of the Act. Hence, the impugned order is upheld and the appeal of Revenue is dismissed. 9.5 Thus, the jurisdictional Tribunal has consistently held that the deduction u/s 80IA should be computed independently for each unit and not on consolidated basis. 10.1 The Hon'ble Karnataka High Court in the ....
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.... 160 Taxman 343 (Del), where the Hon'ble Delhi High Court, after considering relevant provisions of the Act, held that for the purpose of deduction u/s 80IA, each unit shall be treated as independent unit and same has to be treated as only source of income of the assessee for the purpose of computing deduction u/s 80IA of the Act. The relevant findings of the Hon'ble Court are as under: - 13. Perusal of the above provision shows that it is a distinct and separate deeming provision which lays down the special method of computing the profits and gains entitled to deduction under section 80-IA of the Act. Moreover, this provision is of overriding nature providing specifically that during each of the assessment years in the tax holiday, period in which the assessee is entitled to deduction under section 80-IA of the Act, this provision will be applied as if the industrial unit is an independent unit and is the one and only source of income possessed by the assessee. 14. It is clear that while computing deduction under section 80-IA of the Income-tax Act, 1961, the profits and gains of Kalamb unit for the purpose of determining the quantum of deduction under section 80-IA(5)....
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.... considered provisions of section 80IA and case laws relied upon by both parties. The facts with regard to eligibility for claiming deduction under section 80IA has not been disputed by the lower authorities. The tower authorities had admitted that the assessee is eligible for claiming deduction under section 80IA in respect of power generation business though setting off of windmills. The only dispute is with regard to computation of quantum of deduction. Whether the profits and gains of the eligible business as per the words of section 80IA(5) have to be considered unit-wise or as a total eligible business comprising of profits of all units. The provisions of section 80IA(5) provided mechanism for determination of quantum of deduction from eligible business and as per which the eligible business shall be considered as if the only source of income of the assessee during the initial year and every subsequent AYs. Therefore, one has to see what eligible business is whether it is the total business as a whole or each unit or undertaking. No doubt the provision of section 80IA speaks about profit and gains from industrial undertakings or enterprises engaged in infrastructure developme....
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....2009) 185 Taxman 187 after considering the ratio of Hon'ble Supreme Court in the case of Liberty India (supra) held that there has to be profit in the eligible business and such eligible business can be any of the business as referred to in sub- section 3(ii) to 11 (a) of section 80IA of the Act. 12. In this case, admittedly the assessee is having two segments of business i.e. one is power generation through five windmills which is eligible business and another is construction segment. The assessee has generated profit from two windmills and incurred losses from three windmills. The assessee also derived profit from construction business. The gross total income computed from two segment of business is positive. If you consider each segment of business stand alone, then there is a loss from the power generation segment, if profit or losses of all five windmills are consolidated. The assessee has considered each wind Mill as a separate unit eligible for deduction under section 80IA, without considering profit or loss of other windmills and accordingly claimed deduction towards profit generated from two windmills. If one considered power generation business as one eligible busin....
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....be eligible unit and also one unit may get deduction for different period and another unit may get deduction for different period. This is why the courts and tribunals has consistently held that deduction provided u/s 80IA has to be given unit wise without considering profit or loss of other units. This legal proposition is strengthened by the decision of ITAT, Ahmadabad, special bench in the case of CIT vs. Goldmine Shares and Finance Pvt. Ltd." 9. A similar issue has been considered by Hon'ble Delhi High Court in the case of CIT vs Dewan Kraft System Pvt Ltd (2007) 160 Taxman 343 (Del), where the Hon'ble Delhi High Court, after considering relevant provisions of the Act, held that for the purpose of deduction u/s 80IA, each unit shall be treated as independent unit and same has to be treated as only source of income of the assessee for the purpose of computing deduction u/s 80IA of the Act. The relevant findings of the Hon'ble Court are as under:- "Section 80-IA(7) shows that it is a distinct and separate deeming provision which lays down the special method of computing the profits and gains entitled to deduction under section 80-IA. Moreover, this provision is of....
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....ant. It is incumbent upon me to follow the decision of Hon'ble ITAT in appellant's own case for earlier years. Following the decision of Hon'ble Tribunal in appellant's own case, it is held that each wind-mill should be considered as separate undertaking eligible for deduction u/s 80IA and the deduction should be computed independently for each unit and not on consolidated basis. Accordingly, the addition of Rs. 2,84,42,603/- made by the assessing officer is directed to be deleted. The grounds no. 1 to 7 raised by the appellant are accordingly ALLOWED." 21. Aggrieved with such order of CIT(A), the Revenue is in appeal before the Tribunal. 22. The Ld. DR heavily relied on the order of Assessing Officer. He submitted that although the issue has been decided in favour of the assessee by the decision of the Tribunal, however, the Revenue in certain other cases has challenged the order of the Tribunal under identical situation before the Hon'ble High Court which is still pending. Therefore, to keep the matter alive, the Revenue has filed the appeal. He accordingly, submitted that the order of the Assessing Officer be upheld and the order of CIT(A) be set aside. 23. Th....
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....as installed. Further, similar disallowance was made in assessee's own case in the earlier years and therefore, he rejected the claim of deduction. We find the CIT(A) deleted the disallowance made by the Assessing Officer, the reasons of which are already reproduced in the preceding paragraphs. 25. We do not find any infirmity in the order of CIT(A) on this issue. We find the CBDT vide Circular No.1 of 2016 dated 15.02.2016 has clarified that the initial assessment year would mean the year in which the assessee has claimed the deduction for the first time and not the year in which the windmill is installed. Further, the Tribunal in assessee's own case for assessment years 2012-13 to 2014-15 has held that each windmill is to be considered as a separate undertaking. Since the Tribunal in assessee's own case for the immediately preceding assessment years i.e. 2012-13 to 2014-15 vide ITA No.76/PUN/2019 for assessment year 2012-13, ITA No.2614/PUN/2017 for assessment year 2013-14 and 07/PUN/2018 for assessment year 2014-15 common order dated 27.08.2019 has already decided the issue in favour of the assessee by dismissing the appeals filed by the Revenue and since the CIT(A) while decid....