2014 (2) TMI 1309 - AT - Income Tax

Set off of business loss against the addition u/s.68 disallowed - Held that - The decision of the Hon ble Gujarat High Court in the case of CIT Vs. Shilpa Dyeing & Printing Mills P. Ltd. (2015 (7) TMI 691 - GUJARAT HIGH COURT) is applicable to the facts of the case of the assessee. In this case the decision of the Hon ble Gujarat High Court in the case of Fakir Mohamed Haji Hasan (2000 (8) TMI 44 - GUJARAT High Court ) was also discussed. In this case it was held that once loss is determined the same should be set off against the income determined under any other head of income including undisclosed income. Respectfully following the decision of the Hon ble Gujarat High Court in the case of CIT Vs. Shilpa Dyeing & Printing Mills P. Ltd. (supra) the issue is decided in favour of the assessee

Summary

Issues:
1. Addition under section 68 of the Act
2. Set off of business loss against the addition under section 68 of the Act

Analysis:

Issue 1: Addition under section 68 of the Act
The appeal was against the order of the CIT(A)-II, Baroda regarding the addition of Rs. 3,00,000 under section 68 of the Act. The assessee did not press ground nos. 1 and 2 before the CIT(A), leading to their dismissal by the ITAT. The only remaining ground was the set off of business loss against the addition under section 68.

Issue 2: Set off of business loss against the addition under section 68 of the Act
The assessee contended that the business loss should be allowed as a set off against the addition made under section 68 of the Act. The counsel argued that the CIT(A) wrongly relied on a previous decision, which had different facts. The ITAT found that the decision of the Hon'ble Gujarat High Court in CIT Vs. Shilpa Dyeing & Printing Mills P. Ltd. was applicable to the case. This decision allowed for the set off of losses against income from undisclosed sources. The ITAT held in favor of the assessee based on this precedent, allowing ground no. 3 of the appeal.

In conclusion, the ITAT partially allowed the appeal of the assessee, emphasizing the applicability of legal precedents and the allowance of business losses as a set off against additions under section 68 of the Act.

This detailed analysis of the judgment provides a comprehensive understanding of the issues involved and the ITAT's decision based on legal interpretations and precedents.