Business loss can be set off against addition u/s. 68 or undisclosed income

CA Prarthana Jalan

Once loss is determined, the same should be set off against the income determined under any other head of income including undisclosed income

Hon’ble ITAT Ahemdabad Bench in the case of M/s. K.R. Automobiles v/s ACIT in ITA No.1972/Ahd/2012 has held that business loss  can be set off against the addition u/s.68 of the Act by observing as follows:-

“6. I have considered rival submissions. I find that the decision of Hon’ble jurisdictional High Court in the case of Fakir Mohamed HajiHasan vs. CIT (supra) is distinguishable on facts. In this case the issue was that the assessee has claimed that the entire quantity of unaccounted gold confiscated by the Department of Custom should be allowed as deduction to the assessee out of its income chargeable to tax. I find that the decision of the Hon’ble Gujarat High Court in the case of CIT Vs. Shilpa Dyeing & Printing Mills P. Ltd., (supra) 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 (supra) 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 and the ground no.3 of the assessee is allowed.”