Excess stock will fall under the definition of S. 14 of the Act and therefore entitled to set off u/s 71 : Guj HC
In a recent decision, Hon’ble Gujarat High Court held that:
We are also of the opinion that the submissions made by the Ld. advocate is that the case would fall under the proviso of S. 69(c) of the act does not apply to the facts of the present case. It is not the case of the revenue that there is an unexplained expenditure, which would cover under the proviso of this Act and therefore, the assessee would not be entitled for the set off under the proviso of S. 71 of the act. As far as applicability of the case of Commissioner of Income Tax V. Shilpa Dyeing & Printing Mills (P.) Ltd. (Supra) is concerned, the same would be applicable since the Court had held that the amount of excess stock would fall under the definition of income as per Section 14 of the Act and therefore, the assessee would be entitled for the set off under proviso of section 71 of the act. As far as the case of Attar Singh Gurmukh Singh V. Income Tax Officer, Ludhiana (Supra) is concerned, the same would not be applicable in the present facts and circumstances of the case since it is not the case that there was unexplained expenditure made by the assessee. Therefore, we are of the opinion that the CIT (Appeals) as well as the ITAT have committed error in refusing giving set off to the assessee u/s 71 of the act and accordingly, we allow these appeals.
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