Bakeri Construction Pvt. Ltd., Ahmedabad V. The Dy.CIT, Circle-1, Ahmedabad

CO 56/AHD/2014

• Counselvise Citation: [2017] 123 COUNSELVISE.COM (IT) 2754 (ITAT-AHMEDABAD)
• Duration Of Justice: 2 year(s) 9 month(s) 5 day(s)
• Appeal Type: Cross Objection
• Pronouncement Date: 17-02-2017
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Next Hearing Date: 24-01-2017
• Assessment Year: 2010-2011
• Appeal Filed On: 12-05-2014
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: JAGADISH
• Section: 80IB; 10

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL B BENCH, AHMEDABAD BEFORE SHRI R.P. TOLANI, JUDICIAL MEMBER AND SHRI PRADIP KUMAR KEDIA, ACCOUNTANT MEMBER ./ ITA NO. 3083/AHD/2013 & CO NO.56/AHD/2014 / ASSESSMENT YEAR : 2010-11 DCIT, CIRCLE-1, AHMEDABAD VS M/S. BAKERI CONSTRUCTION PVT LTD, 1 ST FLOOR, SANSKRUT, NR. OLD HIGH COURT, ASHRAM ROAD, AHMEDABAD PAN : AAACB 6285 H / (APPELLANT) / (RESPONDENT) & CROSS-OBJECTOR REVENUE BY : SHRI JAGADISH, CIT-DR ASSESSEE BY : SHRI BHARAT SHAH, AR DATE OF HEARING : 2 4/01/2017 DATE OF PRONOUNCEMENT IN COURT : 17/02/2 017 / O R D E R PER R.P. TOLANI, JUDICIAL MEMBER:- THIS APPEAL BY THE REVENUE AND CROSS-OBJECTION THER EOF FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE ORDER OF THE LEAR NED COMMISSIONER OF INCOME-TAX (APPEALS)-VI, AHMEDABAD DATED 07.10.2013 FOR ASSESSMENT YEAR 2010-11. 2. THE GROUNDS OF APPEAL RAISED BY THE REVENUE READ AS UNDER:- 1. THE CIT(A) HAS ERRED IN LAW AND ON FACTS IN CONSIDE RING THE SHARE OF PROFIT OF RS.47.48 CRORES AS EXEMPT U/S 10(2A) IN T HE HANDS OF THE ASSESSEE DESPITE THE FACT THAT THE TOTAL INCOME OF THE SAID FIRM NAMELY M/S PARASHAR WAS RS.NIL AFTER CLAIMING DEDUCTION U/S 80 IB. 2. THE CIT(A) HAS NOT APPRECIATED THE FACT THAT THE CI RCULAR NO.636 DATED 31.03.1992 WAS MEANT TO PREVENT OCCURRENCE TO DOUBL E TAXATION. IN THIS CASE, THE INCOME IS NOT TAXABLE IN THE HANDS OF THE FIRM AND HENCE THERE IS NO QUESTION OF DOUBLE TAXATION WHILE TAXING THE SAM E IN THE HANDS OF THE PARTNER (ASSESSEE). 3. THE BRIEF FACTS ARE THE ASSESSEE-COMPANY WAS A PARTNER IN THE FIRM M/S. PARASAR DEVELOPERS WHOSE INCOME WAS EXEMPT U/S 80IB OF THE ACT. ITA NO. 3083/AHD/2013 & CO NO.56/AHD/2014 DCIT VS. BAKERI CONSTRUCTION PVT LTD AY : 2010-11 2 THE ASSESSEE RECEIVED SHARE INCOME FROM THE FIRM AN D EXEMPT FROM TAX U/S 10(2A) OF THE ACT. THE LD. ASSESSING OFFICER, GOIN G BEYOND THE PROVISIONS OF SECTION 10(2A), BY APPLYING HIS OWN MISINTERPRETATI ON, HELD THAT THE SHARE INCOME FROM THE FIRM WAS TAXABLE. THE ASSESSEE REL IED ON THE CBDT CIRCULAR NO.636 DATED 31 ST AUGUST, 1992 AND FURTHER RELIED ON THE VARIOUS JUD GMENTS AS UNDER:- I) CIT VS. UTI BANK LTD, (2013) 256 CTR 76 II) UCO BANK V. CIT, (1999) 237 ITR 889 III) CIT VS. ASHOK MITTAL, (2013) 213 TAXMAN 197 3.1 LD. CIT(A), RELYING ON CBDT CIRCULAR NO.636 DAT ED 31.08.1992, THE MEMORANDUM EXPLAINING THE PROVISIONS OF FINANCE ACT , 1992 AND NOTES ON CLAUSES OF THE FINANCE BILL, 1992, HELD AS UNDER:- THEREFORE, HAVING GIVING MY CAREFUL CONSIDERATIO N TO THE ISSUE, I HOLD THAT DENIAL OF THE EXEMPTION/S 10(2A) OF THE APPELL ANTS SHARE INCOME FROM THE FIRM M/S PARASAR DEVELOPERS IS NOT IN ACCORDANC E WITH LAW. AO IS DIRECTED TO ALLOW THE EXEMPTION AS CLAIMED BY THE A PPELLANT IN THE RETURN OF INCOME. THIS GROUND OF APPEAL IS ALLOWED. 4. AGGRIEVED, THE REVENUE IS IN APPEAL BEFORE US. 5. THE LD. DEPARTMENTAL REPRESENTATIVE RELIED ON TH E ORDER OF THE ASSESSING OFFICER. 6. THE LD. COUNSEL FOR THE ASSESSEE CONTENDS THAT T HE ABOVE CBDT CIRCULAR HAS BEEN AGAIN REEMPHASIZED BY A FRESH CIR CULAR NO.8 OF 2014, DATED 31.03.2014 AS UNDER:- A REFERENCE HAS BEEN RECEIVED IN THE BOARD IN CONN ECTION WITH THE INTERPRETATION OF PROVISIONS OF SECTION 10(2A) OF T HE INCOME TAX ACT, 1961 (ACT) SEEKING CLARIFICATION AS TO WHAT WILL BE TH E AMOUNT EXEMPT IN THE HANDS OF THE PARTNERS OF A PARTNERSHIP FIRM IN CASE S WHERE THE FIRM HAS CLAIMED EXEMPTION/DEDUCTION UNDER CHAPTER III OR VI A OF TIRE ACT. 2. THE MATTER HAS BEEN EXAMINED. SUB SECTION (2A) O F SECTION 10 WAS INSERTED BY THE FINANCE ACT, 1992 W.E.F. 1-4-1993 DUE TO A C HANGE IN THE SCHEME OF TAXATION OF PARTNERSHIP FIRMS. SINCE ASSESSMENT YEA R 1993-94, A FIRM IS ASSESSED AS SUCH AND IS LIABLE TO PAY TAX ON ITS TO TAL INCOME. A PARTNER IS NOT LIABLE TO TAX ONCE AGAIN ON HIS SHARE IN THE SAID T OTAL INCOME. ITA NO. 3083/AHD/2013 & CO NO.56/AHD/2014 DCIT VS. BAKERI CONSTRUCTION PVT LTD AY : 2010-11 3 3. IT IS CLARIFIED THAT TOTAL INCOME OF THE FIRM FOR SUB SECTION (2A) OF SECTION 10 OF THE ACT, AS INTERPRETED CONTEXTUALLY, INCLUDE S INCOME WHICH IS EXEMPT OR DEDUCTIBLE UNDER VARIOUS PROVISIONS OF THE ACT. IT IS, THEREFORE, FURTHER CLARIFIED THAT THE INCOME OF A FIRM IS TO BE TAXED IN THE HANDS OF THE FIRM ONLY AND THE SAME CAN UNDER NO CIRCUMSTANCES BE TAXED IN THE HANDS OF ITS PARTNERS. ACCORDINGLY, THE ENTIRE PROFIT CREDITED T O THE PARTNERS ACCOUNTS IN THE FIRM WOULD BE EXEMPT FROM TAX IN THE HANDS OF S UCH PARTNERS, EVEN IF THE INCOME CHARGEABLE TO TAX BECOMES NIL IN THE HANDS O F THE FIRM ON ACCOUNT OF ANY EXEMPTION OR DEDUCTION AS PER THE PROVISIONS OF THE ACT. 4. THIS MAY BE BROUGHT TO THE NOTICE OF ALL CONCERN ED. 6.1 THUS, THE ORDER OF LD. CIT(A) WAS PASSED ON 07. 03.2013. THERE IS NO INFIRMITY IN HIS ORDER WHICH IS FURTHER CORROBORATE D BY CIRCULAR DATED 31.03.2014. 7. WE HAVE HEARD THE RIVAL CONTENTIONS, PERUSED THE MATERIAL AVAILABLE ON RECORD AND GONE THROUGH THE ORDERS OF THE AUTHOR ITIES BELOW. WE FIND MERIT IN THE CONTENTION OF THE LD. COUNSEL FOR THE ASSESSEE. THE CBDT ITSELF HAS ACCEPTED THE PROPOSITION THAT THE SHARE INCOME FROM THE FIRM RECEIVED BY THE PARTNERS IS EXEMPT U/S 10(2A) OF THE ACT AND UNDER NO CIRCUMSTANCES CAN BE TAXED IN THE HANDS OF THE PARTNERS. IN VIEW THEREOF, THE ORDER OF THE LD. CIT(A) IS UPHELD AND THE APPEAL OF THE REVENUE IS ACCORDINGLY DISMISSED. 8. AS THE APPEAL FILED BY THE REVENUE ITSELF IS DIS MISSED AS ABOVE AND AS THE CROSS-OBJECTION OF THE ASSESSEE ARISES ONLY AS A RESULT OF THIS APPEAL & THE ORDER OF THE LD. CIT(A), THE CROSS OBJECTION FILED BY THE ASSESSEE IS ALSO DISMISSED AS INFRUCTUOUS. 9. IN THE RESULT, THE APPEAL OF THE REVENUE AND THE CROSS-OBJECTION OF THE ASSESSEE, BOTH ARE DISMISSED. SD/- SD/- (PRADIP KUMAR KEDIA) ACCOUNTANT MEMBER (R.P. TOLANI) JUDICIAL MEMBER AHMEDABAD; DATED 17/02/2017 *BIJU T. ITA NO. 3083/AHD/2013 & CO NO.56/AHD/2014 DCIT VS. BAKERI CONSTRUCTION PVT LTD AY : 2010-11 4 / COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / CONCERNED CIT 4. ( ) / THE CIT(A) 5. , , / DR, ITAT, AHMEDABAD 6. / GUARD FILE . / BY ORDER, TRUE COPY / ( DY./ASSTT.REGISTRAR) , / ITAT, AHMEDABAD