M/s Arora Alloys Ltd., Ludhiana v. DCIT, C-1, Ludhiana

ITA 1481/CHANDI/2017 | 2012-2013
Pronouncement Date: 06-11-2019 | Result: Partly Allowed

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Appeal Details

RSA Number 148121514 RSA 2017
Assessee PAN AABCA5309C
Bench Chandigarh
Appeal Number ITA 1481/CHANDI/2017
Duration Of Justice 2 year(s) 19 day(s)
Appellant M/s Arora Alloys Ltd., Ludhiana
Respondent DCIT, C-1, Ludhiana
Appeal Type Income Tax Appeal
Pronouncement Date 06-11-2019
Appeal Filed By Assessee
Order Result Partly Allowed
Bench Allotted SMC
Tribunal Order Date 06-11-2019
Date Of Final Hearing 04-11-2019
Next Hearing Date 04-11-2019
Last Hearing Date 18-07-2019
First Hearing Date 17-09-2019
Assessment Year 2012-2013
Appeal Filed On 17-10-2017
Judgment Text
IN THE INCOME TAX APPELLATE TRIBUNAL CHANDIGARH BENCH A CHANDIGARH . . ! ' # '$ BEFORE: SHRI N.K.SAINI VP & SHRI RAJPAL YADAV JM ./ ITA NO. 1481/CHD/2017 # % &% / ASSESSMENT YEAR : 2012-13 M/S.ARORA ALLOYS LTD NR.PHASE-VII DHANDARI KHURD FOCAL POINT LUDHIANA. PAN : AABCA 5309 C '( VS. DCIT CIR.1 LUDHIANA. ( )* / APPELLANT) ( + )* / RESPONDENT) # %-. / 0 / ASSESSEE BY : SHRI SUDHIR SEHGAL ADV. !$ / 0 / REVENUE BY : : SHRI M.P. DIWEDI SR.DR 1 2 / .3 / DATE OF HEARING : 04/11/2019 '45& / .3 / DATE OF PRONOUNCEMENT : 06 /11/2019 / ORDER PER RAJPAL YADAV JUDICIAL MEMBER : ASSESSEE IS IN APPEAL BEFORE THE TRIBUNAL AGAINST ORDER OF THE LD.CIT(A)-1 LUDHIANA PASSED FOR THE ASSTT.YEAR 2012-13. 2. THOUGH THE ASSESSEE HAS TAKEN FIVE GROUNDS OF APPEAL BU T AT THE TIME OF HEARING THE LD.COUNSEL FOR THE ASSESSEE CONFINED HIS SUBMISSIONS TO THE ISSUE WHETHER A SUM OF RS.40 LAKHS DISCLOSED DURING THE COURSE OF SURVEY DESERVES TO BE TREATED AS INCOME FROM OTHER SO URCES AGAINST ITA NO NO.1481/CHD/2017 2 WHICH NO SET OFF ON ACCOUNT OF BUSINESS EXPENDITURE/LOSS DES ERVES TO BE GRANTED TO THE ASSESSEE. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE HAS FILED ITS RETURN OF INCOME ON 27.9.2012 DECLARING TOTAL INCOME AT RS.18 67 485/ -. A SURVEY UNDER SECTION 133A WAS CARRIED OUT AT THE BUSINESS PREMISE S OF THE ASSESSEE. RETURN OF INCOME WAS REVISED ON 1. 8.2013 AT RS.21 34 700/-. THE CASE OF THE ASSESSEE WAS SELECTED FOR SCRUTINY ASSES SMENT AND NOTICE UNDER SECTION 143(2) WAS ISSUED AND SERVED UPON THE ASSES SEE. ACCORDING TO THE ASSESSING OFFICER DURING THE COURSE OF SU RVEY PROCEEDINGS CERTAIN DISCREPANCIES WERE FOUND. TO COVER-U P THESE DISCREPANCIES THE ASSESSEE VOLUNTARILY DISCLOSED ADDITIONAL INCOME OF RS.40.00 LAKHS (RS.8.00 LAKHS ON ACCOUNT OF EXCESS CASH AND RS.32 LAKHS ON ACCOUNT OF UNEXPLAINED EXPENDITURE IN BUILDING ACCOUNT) FOR THE FINANCIAL YEAR 2011-12 RELATING TO THE ASSTT.YEAR 2012-13. IN THE REVISED RETURN THE ASSESSEE HAS SHOWN INCOME AT RS.21 34 700/- INCLUDING SURRENDERED INCOME AT RS.40.00 LAKHS. THE LD.AO HAS PASSED ASSESSMENT ORDER ON 19.2.2015. HE MADE ADDITION OF RS.40 LAKHS AFTER GIVING CREDIT OF BROUGHT FORWARD LOSS. HE DETERMINED INCOME OF THE ASSESS EE AS UNDER: RETURNED INCOME RS.21 34 700 LESS: INCOME DISCLOSED DURING SURVEY TO BE ASSESSED SEPARATELY AS PER PARANO.4.0 RS.40 00 000 ADD: ADDITION AS PER PARA NO.5.0 RS.368 BALANCE LOSS ALLOWED TO BE C/F (-)RS.18 64 932/- ITA NO NO.1481/CHD/2017 3 DEEMED INCOME U/S.69 69A 69B &69C AS DISCUSSED ABOVE RS.40 00 000/- TOTAL TAXABLE INCOME RS.40 00 000/- 4. APPEAL TO THE CIT(A) DID NOT BRING ANY RELIEF TO THE ASSE SSEE. 5. SHORT QUESTION FOR OUR ADJUDICATION IS WHETHER THIS TOTAL AMOUNT OF RS.40 LAKHS IS TO BE ASSESSED AS DEEMED INCOME AGAINST WHICH NO DEDUCTION/SET OFF IS AVAILABLE TO THE ASSESSEE. ACCORDING TO THE LD.COUNSEL FOR THE ASSESSEE THIS ISSUE IS COVERED BY THE DECISION OF ITAT CHANDIGARH BENCHES. HE RELIED UPON JUDGMENT OF THE ITAT IN THE CA SE OF FAMINA KNIT FAB VS.ACIT REPORTED IN 104 TAXMANN.COM 306 (C HANDI- TRIB). HE FURTHER CONTENDED THAT THEREAFTER RECENTLY T HE TRIBUNAL HAS AGAIN DECIDED THIS ISSUE IN THE CASE OF DCIT VS.KHURANA ROLLING M ILLS P.LTD. ITA NO NO.745 AND 1134/CHD/2016. COPIES OF THE SE DECISIONS HAVE BEEN PLACED ON RECORD. ON THE STRENGTH OF THESE DECISIONS HE CONTENDED THAT AS FAR AS CASH FOUND DURING THE COURSE OF SU RVEY IS CONCERNED IT IS TO BE CONSTRUED AS DEEMED INCOME UNDER SE CTIONS 69 69A ETC. AS FAR AS ALLEGED UNEXPLAINED INVESTMENT IN THE BUILDING MAT ERIAL IS CONCERNED THIS INCOME DERIVED BY THE ASSESSEE FROM THE BUS INESS ACTIVITY AND IT IS TO BE TREATED AS BUSINESS INCOME UNDER NO RMAL PROVISION. THEREFORE HE CONTENDED THAT OUT OF RS.40 LAKHS RS.8 LAKHS IS TO BE TREATED AS DEEMED INCOME AND RS.32 LAKHS BE TREATE D AS INCOME FROM BUSINESS. THE LD.DR ON THE OTHER HAND RELIED UPON THE ORD ERS OF THE REVENUE AUTHORITIES. ITA NO NO.1481/CHD/2017 4 6. WE HAVE DULY CONSIDERED RIVAL SUBMISSIONS AND GONE THROUGH T HE RECORD CAREFULLY. IN THE CASE OF FAMINA KNIT FABS (SUPRA) THE TRIBUNAL HAS EXAMINED THIS ISSUE ELABORATELY AND PROPOUNDED THAT ONUS IS ON THE ASSESSEE TO ESTABLISH THE SOURCE OF SURRENDERED INCOME. I F IT FAILED TO DEMONSTRATE SUCH SOURCE THEN IT IS TO BE CHARACTERIZED AS DEEMED INCOME UNDER SECTIONS 69 69A/B/C AND IF THAT BE HAPPENED THEN SUCH INCOME TO BE TAXED ON THE GROSS AMOUNT WITHOUT SETTING OFF A NY EXPENDITURE OR ALLOWANCE AGAINST THE SAME UNDER SECTION 115B BE OF THE ACT. THE DISCUSSION MADE BY THE TRIBUNAL IS WORTH TO NOTE AND WE TAKE NOTE OF THIS FINDINGS AS UNDER: 10. THE CONTENTION OF THE REVENUE ON THE OTHER HA ND WAS THAT THE CHARACTER OF THE INCOME SURRENDERED WAS IN THE NATU RE OF DEEMED INCOME AS PROVIDED U/SS. 69 69A 69B AND 69C OF THE ACT HAVING NOT BEEN DISCLOSED FOR TAX EARLIER AND ACCORDINGLY THE SAID INCOMES WERE TO BE CHARGED TO TAX AS PER THE PROVISIONS OF SECTION 115 BBE OF THE ACT AND THE BENEFIT OF SET OFF LOSSES WAS NOT AVAILABLE SINCE T HE AMENDMENT MADE TO SECTION DENYING THE BENEFIT OF SET OFF OF LOSSES W. E.F. 1.4.2017 WAS RETROSPECTIVE IN NATURE BEING CURATIVE IN CHARACTER . ALTERNATIVELY IT WAS CONTENDED THAT THE ISSUE WAS COVERED BY THE DECISIO N OF THE JURISDICTIONAL HIGH COURT IN THE CASE OF KIM PHARMA LTD. (SUPRA) AS PER WHICH THESE INCOMES COULD NOT BE ASSESSED UNDER ANY HEADS AS PR OVIDED UNDER THE ACT AND THEREFORE WERE NOT ELIGIBLE TO SET OFF ANY LOSS ES AGAINST THE SAME. 11. WE HAVE HEARD THE RIVAL CONTENTIONS PERUSED TH E ORDERS OF THE AUTHORITIES BELOW AND HAVE ALSO CONSIDERED VARIOUS CASE LAWS REFERRED TO BY BOTH THE PARTIES BEFORE US. 12. THE ISSUES TO BE ADDRESSED IN THE PRESENT CASE CAN BE SUMMARIZED AS RELATING TO THE CATEGORIZATION/CHARACTERIZATION OF INCOME SURRENDERED BY THE ASSESSEE DURING SURVEY PROCEEDINGS WHETHER FRO M DISCLOSED OR UNDISCLOSED SOURCES AND THE ALLOWABILITY OF CLAIM OF SET OFF OF LOSSES BOTH CURRENT AND BROUGHT FORWARD AGAINST THE SAME. 13. THE CONTROVERSY ARISES ON ACCOUNT OF THE SCHEME OF THE ACT WHICH MANDATES INCOMES TO BE CATEGORIZED UNDER SPECIFIC H EADS DEPENDING ON ITA NO NO.1481/CHD/2017 5 THEIR NATURE/SOURCE FOR COMPUTATION PURPOSES UNDER CHAPTER IV AND THEREAFTER PROVIDES FOR SETTING OFF OF LOSSES IN A SPECIFIC MANNER UNDER CHAPTER VI OF THE ACT. IF IT IS FROM ANY OF THE SOU RCES AS SPECIFIED IN THE HEADS FOR TAXATION UNDER CHAPTER-IV OF THE ACT THE INCOME THEREFROM IT IS TO BE COMPUTED AS PER THE PROVISIONS PROVIDED THERE UNDER. THEREFORE IF THE SOURCE/NATURE OF THE INCOME IS FROM BUSINESS AN D PROFESSION THE INCOME TO BE SUBJECTED TO TAX IS TO BE ASSESSED AS PROVIDED U/SS. 28 TO 44DB OF THE ACT AND THE SET OFF OF CURRENT/BROUGHT FORWARD LOSSES IS TO BE ALLOWED AS PER THE PROVISIONS OF SECTIONS 70 TO 80 OF THE ACT WHICH ALLOWS SET OFF OF BUSINESS LOSSES AGAINST CURRENT YEAR BUS INESS LOSSES SUBJECT TO FULFILMENT OF CERTAIN CONDITIONS. THERE IS NO DISPU TE ABOUT THE ABOVE POSITION OF LAW. 14. FURTHER THE ACT ALSO PROVIDES FOR TREATING CERT AIN CREDITS INVESTMENTS EXPENSES FROM UNDISCLOSED SOURCES AS DEEMED INCOME S U/S. 68 69 69A/B/C OF THE ACT WHICH IS ALSO DEALT WITH IN CHAPTER VI OF THE ACT. SUCH DEEMED INCOMES ARE SUBJECTED TO TAX AT A SPECIAL RATE WITH OUT ALLOWING SET OFF OF EXPENSES OR LOSSES AGAINST THE SAME AS PROVIDED UN DER SECTION 115BBE OF THE ACT INTRODUCED VIDE FINANCE ACT 2012 W.E.F. 0 1-04-2013. SINCE BOTH THE APPEALS BEFORE US RELATE TO A.YS. 2013-14 & 201 4-15 THE PROVISIONS OF SECTION 115BBE ARE APPLICABLE TO BOTH OF THEM AND T O THIS EFFECT THERE IS NO DISPUTE ALSO BEFORE US. THE PROVISIONS OF SECTIONS 69 TO 69C OF THE ACT & SECTION 115BBE OF THE ACT ARE REPRODUCED HEREUNDER FOR CLARITY : SECTION 69 UNEXPLAINED INVESTMENTS. WHERE IN THE FINANCIAL YEAR IMMEDIATELY PRECEDING T HE ASSESSMENT YEAR THE ASSESSEE HAS MADE INVESTMENTS WHICH ARE NO T RECORDED IN THE BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOU T THE NATURE AND SOURCE OF THE INVESTMENTS OR THE EXPLANATION OFFERE D BY HIM IS NOT IN THE OPINION OF THE [2016][ASSESSING OFFICER] SA TISFACTORY THE VALUE OF THE INVESTMENTS MAY BE DEEMED TO BE THE IN COME OF THE ASSESSEE OF SUCH FINANCIAL YEAR. SECTION 69A [2017][UNEXPLAINED MONEY ETC. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE IS FOUND T O BE THE OWNER OF ANY MONEY BULLION JEWELLERY OR OTHER VALUABLE ART ICLE AND SUCH MONEY BULLION JEWELLERY OR VALUABLE ARTICLE IS NO T RECORDED IN THE ITA NO NO.1481/CHD/2017 6 BOOKS OF ACCOUNT IF ANY MAINTAINED BY HIM FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOU T THE NATURE AND SOURCE OF ACQUISITION OF THE MONEY BULLION JEWELL ERY OR OTHER VALUABLE ARTICLE OR THE EXPLANATION OFFERED BY HIM IS NOT IN THE OPINION OF THE [2018][ASSESSING OFFICER] SATISFACT ORY THE MONEY AND THE VALUE OF THE BULLION JEWELLERY OR OTHER VA LUABLE ARTICLE MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE OF SUCH FINANCIAL YEAR.] SECTION 69B [2019][AMOUNT OF INVESTMENTS ETC. NOT FULLY DISCL OSED IN BOOKS OF ACCOUNT. WHERE IN ANY FINANCIAL YEAR THE ASSESSEE HAS MADE I NVESTMENTS OR IS FOUND TO BE THE OWNER OF ANY BULLION JEWELLERY OR OTHER VALUABLE ARTICLE AND THE [2020][ASSESSING OFFICER] FINDS TH AT THE AMOUNT EXPENDED ON MAKING SUCH INVESTMENTS OR IN ACQUIRING SUCH BULLION JEWELLERY OR OTHER VALUABLE ARTICLE EXCEED S THE AMOUNT RECORDED IN THIS BEHALF IN THE BOOKS OF ACCOUNT MAI NTAINED BY THE ASSESSEE FOR ANY SOURCE OF INCOME AND THE ASSESSEE OFFERS NO EXPLANATION ABOUT SUCH EXCESS AMOUNT OR THE EXPLANA TION OFFERED BY HIM IS NOT IN THE OPINION OF THE [2021][ASSESSING OFFICER] SATISFACTORY THE EXCESS AMOUNT MAY BE DEEMED TO BE THE INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR.] SECTION 69C [2022][UNEXPLAINED EXPENDITURE ETC. WHERE IN ANY FINANCIAL YEAR AN ASSESSEE HAS INCURRE D ANY EXPENDITURE AND HE OFFERS NO EXPLANATION ABOUT THE SOURCE OF SUCH EXPENDITURE OR PART THEREOF OR THE EXPLANATION IF ANY OFFERED BY HIM IS NOT IN THE OPINION OF THE [2023][ASSESSING OFFICER] SATISFACTORY THE AMOUNT COVERED BY SUCH EXPENDITUR E OR PART THEREOF AS THE CASE MAY BE MAY BE DEEMED TO BE TH E INCOME OF THE ASSESSEE FOR SUCH FINANCIAL YEAR:] [2024] [PROVIDED THAT NOTWITHSTANDING ANYTHING CON TAINED IN ANY OTHER PROVISION OF THIS ACT SUCH UNEXPLAINED EXPEN DITURE WHICH IS DEEMED TO BE THE INCOME OF THE ASSESSEE SHALL NOT B E ALLOWED AS A DEDUCTION UNDER ANY HEAD OF INCOME.] SECTION 115BBE ITA NO NO.1481/CHD/2017 7 [3052] [TAX ON INCOME REFERRED TO IN SECTION 68 OR SECTION 69 OR SECTION 69A OR SECTION 69B OR SECTION 69C OR SECTIO N 69D. [3052] ['(1) WHERE THE TOTAL INCOME OF AN ASSESSEE (A) INCLUDES ANY INCOME REFERRED TO IN SECTION 68 SECT ION 69 SECTION 69A SECTION 69B SECTION 69C OR SECTION 69D AND RE FLECTED IN THE RETURN OF INCOME FURNISHED UNDER SECTION 139; OR (B) DETERMINED BY THE ASSESSING OFFICER INCLUDES ANY IN COME REFERRED TO IN SECTION 68 SECTION 69 SECTION 69A SECTION 69B SECTION 69C OR SECTION 69D IF SUCH INCOME IS NOT COVERED UNDER CL AUSE (A) [3052A][AND CLAUSE (B)] THE INCOME-TAX PAYABLE SHALL BE THE AGGREGATE OF (I) THE AMOUNT OF INCOME - TAX CALCULATED ON THE INCOME REFERRED TO IN CLAUSE (A) AND CLAUSE (B) AT THE RATE OF SIXTY PER CENT; AND (II) THE AMOUNT OF INCOME- TAX WITH WHICH THE ASSESSEE WOULD HAVE BEEN CHA RGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AM OUNT OF INCOME REFERRED TO IN CLAUSE (I).' [3052] SUBS. BY THE TAXATION LAWS (SECOND AMENDMENT ) ACT 2016. THE CLAUSE BEFORE SUBS. READ AS UNDER. (W.E.F . 1-04-2017) (1) WHERE THE TOTAL INCOME OF AN ASSESSEE INCLUDES ANY INCOME REFERRED TO IN SECTION 68 SECTION 69 SECTION 69A SECTION 69B SECTION 69C OR SECTION 69D THE INCOME-TAX PAYABLE SHALL BE THE AGGREGATE OF (A) THE AMOUNT OF INCOME - TAX CALCULATED ON INCOME REFERRED TO IN SECTION 68 SECTI ON 69 SECTION 69A SECTION 69B SECTION 69C OR SEC TION 69D AT THE RATE OF THIRTY PER CENT; AND (B) THE AMOUNT OF INCOME- TAX WITH WHICH THE ASSESSEE WOULD HAVE BEEN CHARGEABLE HAD HIS TOTAL INCOME BEEN REDUCED BY THE AMOUNT OF INCOME REFERRED TO IN CLAUSE (A). (2) NOTWITHSTANDING ANYTHING CONTAINED IN THIS ACT NO DEDUCTION IN RESPECT OF ANY EXPENDITURE OR ALLOWANCE [3052A][ 'OR SET OFF OF ANY LOSS'] SHALL BE ALLOWED TO THE ASSESSEE UNDER A NY PROVISION OF THIS ACT IN COMPUTING HIS INCOME REFERRED TO IN CLA USE (A) OF SUB- SECTION (1).] ITA NO NO.1481/CHD/2017 8 [3052] OMITTED THE WORDS FIGURES AND LETTERS 'FOR THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR BEGINNING ON T HE 1ST DAY OF APRIL 2012 OR BEGINNING ON THE 1ST DAY OF APRIL 2 013 OR BEGINNING ON THE 1ST DAY OF APRIL 2014' BY FINANCE (NO. 2) ACT 2014 (W.E.F. 1-4-2015). INS. BY FINANCE ACT 2016 (W.E.F. 1-04-2017). [3052A] INS. BY FINANCE ACT 2018 (W.E.F. 1-04-2017 ). 15. AS IS EVIDENT FROM A BARE READING OF THE ABOVE SECTIONS ANY INVESTMENTS MONEYS AND EXPENDITURE WHICH ARE NOT D ISCLOSED IN THE BOOKS OF THE ASSESSEE IF ANY MAINTAINED BY IT AND THE SOURCE OF WHICH HAS ALSO BEEN NOT EXPLAINED SATISFACTORILY BY THE ASSES SEE ARE TREATED AS DEEMED INCOMES OF THE ASSESSEES. THUS THE AMOUNTS TO BE T REATED AS DEEMED INCOMES ARE INVESTMENTS MONEYS OR EXPENDITURE FUL FILLING THE TWIN CRITERIA OF: (A) NOT BEING RECORDED IN THE BOOKS IF ANY MAINTAINED A ND (B) THE SOURCE OF WHICH THE ASSESSEE IS UNABLE TO EXPLA IN SATISFACTORILY. 16. IN OTHER WORDS TO PUT IT SIMPLY THE UNRECORDE D INVESTMENTS/ASSETS/EXPENDITURES MADE OUT OF UNEXPLA INED SOURCES ARE TREATED AS DEEMED INCOMES OF THE ASSESSEE. THE ONUS IS ON THE ASSESSEE TO ESTABLISH THE SOURCE OF THE SURRENDERED INCOME FAIL ING WHICH IT IS TO BE CATEGORIZED AS DEEMED INCOME U/S. 69/69A/B/C OF THE ACT. AND ESTABLISHING THE SOURCE OF INCOME IS A FACTUAL MATT ER. THE LD. DR HAD DRAWN OUR ATTENTION TO THE DECISION OF THE HON'BLE JURISDICTIONAL HIGH COURT IN THE CASE OF PR.CIT V. KHUSHI RAM & SONS FO ODS (P) LTD IN [IT APPEAL NO.126 OF 2015 DATED 29-07-16] WHEREIN THE ASSESSEE HAD SET OFF UNABSORBED LOSSES U/SS. 70 & 71 AGAINST INCOME SURR ENDERED ON ACCOUNT OF BUILDING RENOVATION OFFICE EQUIPMENT AND SUNDRY RECEIVABLE TO WHICH THE HON'BLE HIGH COURT HAD HELD THAT IT IS FOR THE ASSESSEE TO ESTABLISH THAT THE SOURCE OF THE SURRENDERED INCOME WAS FROM BUSINESS TO CLAIM IT AS SUCH AND SET OFF BUSINESS LOSSES AGAINST THE SAME. OUR VIEW THEREFORE IS FORTIFIED BY THE AFORESAID JUDGMENT OF THE HON'BLE HIGH COURT. 17. FURTHER THE LEGISLATURE REQUIRES SUCH TYPE OF D EEMED INCOMES TO BE TAXED ON THE GROSS AMOUNT SO DETERMINED WITHOUT SET TING OFF ANY EXPENDITURE OR ALLOWANCES AGAINST THE SAME U/S. 11 5BBE OF THE ACT. SUBSEQUENTLY THE SECTION WAS AMENDED W.E.F 1.4.2017 BY THE FINANCE ACT 2016 PROHIBITING SET OFF OF LOSSES ALSO AGAINST TH E SAID DEEMED INCOME. ITA NO NO.1481/CHD/2017 9 7. IN THE LIGHT OF THE ABOVE LET US EXAMINE THE FACTS OF T HE PRESENT CASE. THE STAND OF THE ASSESSEE IS THAT EXPENDITURE INCURRE D FOR CONSTRUCTION OF BUILDING WAS FROM THE ROUTINE BUSINESS AND SUC H ADDITION OF RS.32 LAKHS OUGHT TO BE TREATED AS BUSINESS INCO ME. WE FIND FORCE IN THIS CONTENTION OF THE LD.COUNSEL FOR THE ASSESSEE BE CAUSE THE EXPENDITURE INCURRED FOR CREATING A BUSINESS ASSET AND IT MUS T HAVE BEEN GENERATED THROUGH THE BUSINESS CARRIED OUT BY THE ASSESSEE. IT IS PERTINENT TO BEAR IN MIND THAT EXPENDITURE LAID OUT FOR THE PU RPOSE OF BUSINESS IS TO BE ALLOWED DEDUCTION EITHER AS EXPENDITURE OR TO BE CAPITALIZED ON WHICH DEPRECIATION WILL BE ALLOWED. THE ASSESSEE M IGHT HAVE EARNED INCOME FROM THE BUSINESS WHICH HAS NOT BEEN ACCOUNTE D AND USED FOR CONSTRUCTING THE BUSINESS ASSET THOUGH SPECIFIC DETAILS HAVE NOT BEEN DISCUSSED EITHER IN THE IMPUGNED ORDER ABOUT THE NATU RE OF EVIDENCE FOUND DURING THE COURSE OF SURVEY. WE ALSO NEED NOT TO PONDER ON THIS ASPECT BECAUSE THE ASSESSEE HAS ADMITTED T HIS UNEXPLAINED EXPENDITURE ON CONSTRUCTION OF BUILDING. THIS ADMISSION HAS TO BE ACCEPTED AS GIVEN BY THE ASSESSEE WHEREIN IT WAS ALLEGED THAT IT IS FOR THE PURPOSE OF THE BUSINESS. THEREFORE TO THE EX TENT THE EXPENDITURE INCURRED FOR CONSTRUCTION OF THE BUILDING OUT OF UNEXPLAINED SOURCE IS CONCERNED IT IS TO BE CONSTRUED AS EAR NED FROM THE BUSINESS AND IT WILL TAKE CHARACTER OF THE BUSINESS INCOME. ONC E THIS INCOME IS TO BE ASSESSED UNDER THE BUSINESS INCOME THEN ALL INCIDENTAL BENEFITS FOR SET OFF FROM BROUGHT FORWARD LOSS OR ANY O THER EXPENDITURE IS TO BE GIVEN TO THE ASSESSEE. ITA NO NO.1481/CHD/2017 10 8. IN THE JUDGMENTS RELIED UPON THE LD.COUNSEL FOR THE ASSES SEE SIMILAR TREATMENT HAS BEEN GIVEN ON THE AMOUNTS WHICH WERE AD MITTED AS TRADE RECEIVABLE DURING THE COURSE OF SEARCH/SURVEY. R ESPECTFULLY FOLLOWING THE ORDER OF THE CO-ORDINATE BENCH WE DIRECT THE ASS ESSING OFFICER TO TREAT SURRENDERED INCOME TO THE EXTENT OF RS. 32 LAKHS AS BUSINESS INCOME. 9. AS FAR AS EXCESS CASH BALANCE IS CONCERNED THE ASSES SEE FAILED TO EXPLAIN THE SOURCE OF SUCH INCOME AND IT IS TO BE TREATED AS DEEMED INCOME AND IT IS TO BE ASSESSED ON GROSS BASIS AS TREATE D BY THE ASSESSING OFFICER. IN VIEW OF THE ABOVE DISCUSSION THE APP EAL OF THE ASSESSEE IS PARTLY ALLOWED. 10. IN THE RESULT APPEAL OF THE ASSESSEE IS PARTLY ALLOWED . PRONOUNCED IN THE OPEN COURT ON 6 TH NOVEMBER 2019. SD/- SD/- (N.K. SAINI) VICE-PRESIDENT (RAJPAL YADAV) JUDICIAL MEMBER CHANDIGARH; DATED 06/11/2019