Excess stock found during survey is taxable as Business Income and not Other Source Income

 

 

The ITAT bench of Pune in the case of Vidyatai Vijay Gundale, Shriram Collection v. ACIT,[ ITA No.80/PUN/2023] has  held that the excess stock offered as additional income during the course of survey is taxable under the business and no provision of the section 69B r.w.s. 115BBE of the Act is attracted. The Reliance was placed on the decision of the Hon’ble High Court of Rajasthan in the case of Bajargan Traders reported in (2017) 86 taxmann.com 295 (Rajasthan) where it was observed that the amount surrendered under unrecorded stock has to be brought to tax under the head “business income” as the excess stock which has been found during the course of survey is the investment in procurement of such stock is clearly identifiable and related to the regular business stock of the assessee. The Hon’ble High Court clearly held the investment in excess stock has to be brought to tax under the head “business income” but not under the head “income from other sources”.

 

The case detail is as under:

Vidyatai Vijay Gundale, Shriram Collection

Vs.

ACIT,

[80/PUN/2023]