INCOME TAX ACT, 1961

Section 69

Income from undisclosed sources - Addition under section 69 - Unexplained investment - Provisions of section 115BBE inserted with effect from 01-4-2013 in Income Tax Statute

Assessee was engaged in the business of real estate development as builder. A search and seizure operation under section 132 was conducted on the premises of the assessee comprising ACE group of cases. The original return of income was filed at a loss as unabsorbed depreciation to be carried forward. During search proceedings an amount was surrendered and thus return was revised and filed showing total income after setting-off unabsorbed depreciation of the current year and that of preceding assessment years. Assessee company commenced business operation and it was an admitted fact, as stated in assessment order, that an amount was incurred on construction of group housing construction was merely 18.25% of the estimated cost of project. AO made addition on account of admission of undisclosed income. Held: From perusal of section 115BBE, it was very clear that any expense or allowance shall not be allowed from the income assessed under section 69 but, this section did not indicate that set-off of brought forward business losses shall not be allowed from income assessed under section 69 for the purpose of calculating tax under section 115BBE. Pre-amended provision of section 115BBE did not convey the intention that losses shall not be allowed to be set-off against income referred to in section 115BBE. Board was of the view that since the term 'or set-off of any loss' was specifically inserted only vide the Finance Act, 2016, with effect from 01-4-2017, an assessee is entitled to claim set-off of loss against income determined under section 115BBE till the assessment year 2016-17. Therefore, assessee was entitled to claim set-off of loss against income determined under section 115BBE.

Relied: CIT v. Rai Bahadur Hardutroy Motilal Chamaria (1967) 66 ITR 443 (SC) : 1967 TaxPub(DT) 347 (SC), Vijaya Hospitality & Resports Ltd. v. CIT (2019) 419 ITR 322 (Kar) : 2019 TaxPub(DT) 7943 (Ker-HC), CIT v. Sardari Lal & Co. (2001) 251 ITR 864 (Del)(FB) : 2001 TaxPub(DT) 1617 (Del-HC), CIT v. Union Tyres (1999) 240 ITR 556 (Del) : 1999 TaxPub(DT) 1435 (Del-HC), Innovative Construction Pvt. Ltd. v. ACIT ITA No. 1084/Mum/2019, assessment year 2013-14 dt. 11-12-2020 : 2020 TaxPub(DT) 5558 (Mum-Trib), Sangeet Resorts v. Dy. CIT 2020-TIOL-468-ITAT-Chd and Star Ply Board Ltd. v. PCIT 2020-TIOL-611-ITAT-Chd.

REFERRED :

FAVOUR : In assessee's favour.

A.Y. : 2014-15

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