2020 (12) TMI 662 - AT - Income Tax

Set off of any loss against deemed income u/s 68, 69, 69A to 69D - computing the income referred to in section 115BBE(1) - HELD THAT - As decided in M/S. VIJAYA HOSPITALITY AND RESPORTS LTD 2019 (11) TMI 1106 - KERALA HIGH COURT we hold that the assessee is entitled to set off the addition/disallowance made u/s.69A of the Act against the losses, if any, for the assessment Year under consideration.

Summary

Issues Involved:
1. Addition under section 69A of the Income Tax Act.
2. Applicability of section 115BBE(1) concerning set-off of income against business loss.

Detailed Analysis:

Issue 1: Addition under section 69A of the Income Tax Act
- The assessee contested the addition of ?4,54,551 made by the Assistant Commissioner of Income Tax under section 69A, arguing that the account in question did not belong to them and they had no knowledge of it. However, during the hearing, the assessee's counsel did not press this ground. Consequently, this ground was dismissed as not pressed.

Issue 2: Applicability of section 115BBE(1) concerning set-off of income against business loss
- The assessee argued that income referred to in sections 68/69/69A/69B/69C/69D should reduce the loss as per Circular No. 11/2019 issued by the CBDT. The assessing officer failed to make such an adjustment in the assessment order.
- The CBDT Circular No. 11/2019 clarifies that with effect from 1-4-2017, no set-off of any loss is allowed against income determined under section 115BBE of the Act. However, for assessments prior to the assessment year 2017-18, conflicting views were taken by Assessing Officers. The circular intended to ensure a consistent approach, allowing set-off of losses against additions made under sections 68/69/69A/69B/69C/69D for periods prior to 1-4-2017.
- The tribunal noted that for the assessment year 2013-14, the assessee is entitled to claim set-off of the addition made under section 69A against business losses. This is supported by the Rajasthan High Court's decision in PCIT v. Aacharan Enterprises Pvt. Ltd., which held that the amendment made by the Finance Act, 2016, to section 115BBE could not be applied retrospectively.
- The Kerala High Court in Vijaya Hospitality and Resorts Ltd. v. CIT also supported the view that set-off of losses against deemed income under sections 68/69/69A/69B/69C/69D is permissible for assessment years prior to 1-4-2017. The court emphasized that the legislative intent behind the amendment was to avoid litigation and that, as of the relevant assessment date, there was no bar against allowing set-off of losses.
- Based on these precedents, the tribunal concluded that the assessee is entitled to set off the addition made under section 69A against the losses for the assessment year 2013-14. Thus, Ground No. 2 was allowed.

Conclusion:
- The appeal was partly allowed, with the tribunal affirming the assessee's right to set off the addition under section 69A against business losses for the assessment year 2013-14, in line with the CBDT Circular and judicial precedents. The order was pronounced on 11.12.2020.