Oberoi Motors Vs ACIT (ITAT Delhi)
Income Tax Appellate Tribunal (ITAT), Delhi Bench, has delivered a partial victory to Oberoi Motors in its appeal against an order from the Commissioner of Income Tax (Appeals)-2, Gurgaon, concerning the assessment year 2012-13. The case revolved around the contentious issue of whether business losses could be set off against income voluntarily disclosed during a tax survey operation.
The genesis of the dispute dates back to September 2012, when survey operations under Section 133A of the Income Tax Act, 1961, were conducted at the premises of M/s Shaktiman/Kirtiman group of cases, which included Oberoi Motors. During these surveys, Oberoi Motors offered an additional income of Rs. 85,58,000/- for the assessment year 2012-13.
However, subsequent scrutiny by the Assessing Officer (AO) during the assessment proceedings for the 2013-14 assessment year revealed a discrepancy. Oberoi Motors had filed its income tax return for the 2012-13 assessment year declaring a total income of Rs. 65,42,853/-, after purportedly setting off business losses against the surrendered income. The AO contested this set-off, arguing that the surrendered amount constituted “deemed income” and therefore, business losses could not be adjusted against it. Consequently, the AO disallowed the set-off losses and made adjustments to the partners’ salary allowance.
