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2019 (6) TMI 1513 - HC - Income TaxApplicability of Section 115BBE - statute book to clarify the ambiguity prevailed in respect of unexplained expenditure - addition of expenditure made u/s 69C based on a perverse finding of fact - HELD THAT - What weighed in the mind of the Tribunal was with regard to the expenditure, which according to the assessee, was recorded in the books of accounts maintained in the course of regular business. The assessment was reopened solely on the ground that under Section 115BBE of the Act having been brought into the statute book, the expenditure under Section 11BBE., etc. should be assessed separately. Assessee referred to a decision rendered by Division Bench of this Court in Commissioner of Income Tax Vs. Chensing Ventures 2007 (4) TMI 204 - MADRAS HIGH COURT wherein, the loss sustained by the assessee, in any year under, the heads of income was permitted as set off against income under any other head. Learned counsel for assesssee also referred to a decision of Division Bench in High Court of Gujarat in Commissioner of Income Tax -II Vs. Shilpa Dyeing Printing Mills (P) Limited 2015 (7) TMI 691 - GUJARAT HIGH COURT Matter requires reconsideration by the Tribunal for the reasons, which we have indicated in this judgment. Furthermore, the CBDT has issued Circular No.11 of 2019 dated 19.06.2019 also needs to be looked into as regards the effect of the introduction of Section 115BBE of the Act. - Decided in favour of revenue.
Issues:
1. Applicability of Section 115BBE of the Income Tax Act, 1961. 2. Deletion of addition of expenditure under Section 69C. 3. Interpretation of legislative amendments. 4. Consideration of circular issued by the CBDT. Analysis: 1. Applicability of Section 115BBE: The appeal was filed by the Revenue challenging the order of the Income Tax Appellate Tribunal regarding the applicability of Section 115BBE of the Act in the assessment year 2008-2009. The Tribunal considered the expenditure claimed by the assessee, which was recorded in the books of accounts, and held that the source of income for such expenditure was explained. However, the Tribunal failed to address the introduction date of Section 115BBE and its retrospective applicability, as contended by the Revenue. 2. Deletion of Addition of Expenditure under Section 69C: The substantial questions of law raised by the assessee pertained to the deletion of addition of expenditure made under Section 69C. The Tribunal's decision was based on the assertion that the expenditure was recorded in the regular books of account maintained by the assessee. The Revenue argued that Section 115BBE was introduced to clarify ambiguity regarding unexplained expenditure and should be applied retrospectively. The Tribunal's focus on the recorded expenditure led to the reopening of assessment under Section 115BBE. 3. Interpretation of Legislative Amendments: The Tribunal's decision was influenced by the belief that the expenditure recorded in the books of accounts justified the assessee's position. However, the Revenue emphasized the retrospective nature of Section 115BBE to address unexplained expenditure. The Tribunal's failure to consider the legislative intent behind the amendment and the applicability of the provision to the assessment year in question necessitated a reconsideration of the matter. 4. Consideration of CBDT Circular: The judgment highlighted a circular issued by the CBDT clarifying the interpretation of Section 115BBE and the set-off of losses against income determined under this section. The circular emphasized the legislative intent behind the amendment and provided guidance on the set-off of losses till a specific assessment year. The Court directed the Tribunal to reconsider the matter in light of the circular and the issues raised in the judgment. In conclusion, the High Court allowed the appeal filed by the Revenue, set aside the Tribunal's order, and remanded the matter back for fresh consideration. The judgment emphasized the need for a reassessment considering the legislative amendments, the CBDT circular, and the interpretation of Section 115BBE in the context of the assessment year under review.
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