The ACIT, Vapi Circle, Vapi V. Themis Medicare Ltd., Vapi

ITA 1235/AHD/2012

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 1649 (ITAT-AHMEDABAD)
• Duration Of Justice: 3 year(s) 11 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 11-05-2016
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: D
• Next Hearing Date: 10-05-2016
• Assessment Year: 2006-2007
• Appeal Filed On: 06-06-2012
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: SONIA KUMAR
• Assessee Lawyers: MANISH KAJI
• Keywords: Rectification of order; Capital receipt
• Section: 143(3); 115JB; 154

Judgement Text

, D IN THE INCOME TAX APPELLATE TRIBUNAL D BENCH, AHMEDABAD BEFORE SHRI RAJPAL YADAV, JUDICIAL MEMBER AND SHRI N.K. BILLAIYA, ACCOUNTANT MEMBER ./ ITA.NO.1235/AHD/2012 [ASSTT.YEAR 2006-07] ACIT, VAPI CIRCLE VAPI. VS THEMIS MEDICARE LTD. PLOT NO.6O, GIDC VAPI. )* / (APPELLANT) +, )* / (RESPONDENT) REVENUE BY : SMT.SON I A KUMAR, SR.DR ASSESSEE BY : SHRI MANISH KAJI, AR / DATE OF HEARING : 10/05/2016 / DATE OF PRONOUNCEMENT: 11/05/2016 -./ O R D E R PER RAJPAL YADAV, JUDICIAL MEMBER: THE REVENUE IS IN APPEAL BEFORE US AGAINST THE ORDE R OF THE LD.CIT(A), VALSAD DATED 29.2.2012 PASSED FOR THE AS ST.YEAR 2006-07. 2. THE SOLITARY GRIEVANCE OF THE REVENUE IS THAT TH E LD.CIT(A) HAS ERRED IN DELETING THE ADDITION OF RS.49,88,918/- OU T OF THE BOOK PROFIT COMPUTED BY THE AO UNDER SECTION 115JB OF THE INCOM E TAX ACT, 1961. 3. BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE-CO MPANY HAS FILED ITS RETURN OF INCOME ON 21.12.2006 SHOWING LOSS OF RS.6 7,79,768/- UNDER ITA NO.1235/AHD/2012 2 NORMAL PROVISIONS OF THE INCOME TAX ACT, 1961. ASS ESSMENT ORDER WAS PASSED UNDER SECTION 143(3) OF THE ACT ON 8.12.2008 . THE TOTAL LOSS UNDER THE NORMAL PROVISIONS WERE DETERMINED AT RS.3 0,89,649/- AND BOOK PROFIT WAS DETERMINED EQUIVALENT TO THE ONE DECLARE D BY THE ASSESSEE. 4. DISSATISFIED WITH THE ASSESSMENT ORDER, THE ASSE SSEE WENT IN APPEAL AND AFTER GIVING EFFECT TO THE ORDER OF THE CIT(A), LOSSES WERE INCREASED TO RS.3,35,98,706/-. THE LD.AO HAS ISSUED NOTICE U NDER SECTION 154 OF THE ACT ON THE GROUND THAT THE ASSESSEE HAS REDUCED CAPITAL GAIN OF RS.49,88,918/- WHICH HAS NOT BEEN PROVIDED IN ANY O F THE EXCEPTIONS PROVIDED IN PROVISIONS OF SECTION 115JB OF THE ACT. HE, ACCORDINGLY, PASSED ORDER UNDER SECTION 154 AND ENHANCED THE BOO K PROFIT AT RS.1,90,49,470/-. 5. ON APPEAL, THE LD.CIT(A) DELETED INCLUSION OF CA PITAL GAIN IN THE BOOK PROFIT. THE LD.CIT(A) WAS OF THE VIEW THAT IT IS A DEBATABLE ISSUE AND IT CANNOT BE DONE UNDER SECTION 154 OF THE INCO ME TAX. THE DISCUSSION MADE BY THE LD.CIT(A) READS AS UNDER: DECISION :- I HAVE CONSIDERED THE OBSERVATION OF T HE AO IN THE RECTIFICATION ORDER AS WELL AS THE CONTENTION RAISE D BY THE AR OF THE APPELLANT IN THE WRITTEN SUBMISSION. THE AO OBSERVE D THAT THE APPELLANT DID NOT INCLUDE THE INCOME OF CAPITAL GAI N WHILE WORKING OUT THE BOOK PROFIT U/S. 115JB OF THE ACT. ACCORDIN GLY, HE CARRIED OUT THE RECTIFICATION U/S. 154 OF THE ACT AND RE-CO MPUTED THE BOOK PROFIT. THE ARGUMENTS ADVANCED BY THE AR OF THE APP ELLANT ARE PERUSED, WHO HAS DEALT WITH THE ISSUE OF PART-II AN D PART-ILL OF SCHEDULE-VI OF THE COMPANIES ACT, WHEREIN, THE MODE OF PREPARATION OF FINANCIAL STATEMENTS AND THE DISCLOS URE OF INCOME IS EXPLAINED. HOWEVER, CONSIDERING THE CONTRARY VIEWS OF DECISION OF THE HON.BLE MUMBAI HIGH COURT AND THE SPECIAL BENCH OF THE HON.BLE CALCUTTA TRIBUNAL IN THE CASE OF CIT V/S. V EEKAYLAL ITA NO.1235/AHD/2012 3 INVESTMENT COMPANY PVT. LTD. (2001) 259 ITR 597(BOM .) AND SUTLEJ COTTON MILLS LTD. V/S. ASSTT. C.I.T.[1993] 1 99 ITR(AT) 164 (CAL)[SB]. THE ISSUE RAISED BY THE AO WHILE CARRYIN G OUT THE RECTIFICATION 154 OF THE ACT IS DEBATABLE ONE. THER EFORE, THE AO IS NOT SUPPOSED TO CARRY OUT THE RECTIFICATION U/S.154 OF THE ACT. IN VIEW OF THE DECISION IN THE CASE OF APOLLO TYRES LT D. V/S. CIT [2002] 255 ITR 273 (SC), WHICH BINDS THE AO TO THE ACCOUNTS OF THE ASSESSEE, PRECAUTION EXCLUDING SUCH RECEIPTS FR OM P&L ACCOUNT IN PREPARATION OF ACCOUNTS AND LIMITING THE CREDITS TO PROFIT & LOSS ACCOUNT TO OPERATIVE THE PROFITS, SHO ULD MAKE A BETTER CASE FOR NON-INCLUSION OF SUCH CAPITAL RECEIPTS FOR LIABILITY TO BOOK PROFIT TAX. IN ANY CASE, IN VIEW OF THE DECISION OF APOLLO TYRES LTD., THE AO SHOULD NOT ALTER THE BOOK PROFIT DISCLOSED I N THE FINANCIAL STATEMENTS, WHICH WERE LAID BEFORE THE ANNUAL GENER AL MEETING. ACCORDINGLY, THE ADDITION MADE BY THE AO IS DELETED . 6. WE HAVE DULY CONSIDERED RIVAL CONTENTIONS AND GO NE THROUGH THE RECORD CAREFULLY. THE POWER OF RECTIFICATION UNDER SECTION 154 OF THE INCOME TAX ACT CAN BE EXERCISED ONLY WHEN THE MISTA KE, WHICH IS SOUGHT TO BE RECTIFIED, IS AN OBVIOUS PATENT MISTAK E, WHICH IS APPARENT FROM THE RECORD AND NOT A MISTAKE, WHICH IS REQUIRE D TO BE ESTABLISHED BY ARGUMENTS AND LONG DRAWN PROCESS OF REASONING ON PO INTS, ON WHICH THERE MAY CONCEIVABLY BE TWO OPINIONS. A PERUSAL OF THE ORDER OF THE CIT(A) EXTRACTED SUPRA WOULD INDICATE THAT WHETHER THE CAPITAL GAIN IS TO BE INCLUDED IN BOOK PROFIT WAS TO BE DECIDED AFTER GOING THROUGH THE ACCOUNTS AND OTHER DETAILS. IN THE OPINION OF THE LD.CIT(A), IT IS A DEBATABLE ISSUE. THE ACCOUNTS OF THE ASSESSEE WERE IN ACCORDANCE WITH PART-II AND III OF SCHEDULE-V OF THE COMPANIES ACT AND THE AO COULD NOT TINKER WITH THOSE ACCOUNTS, MORE SO, IN THE PRO CEEDINGS UNDER SECTION 154 OF THE ACT. HE HAS NOT MADE OUT HOW IT IS AN A PPARENT ERROR. ITA NO.1235/AHD/2012 4 THEREFORE, WE DO NOT FIND ANY REASON TO INTERFERE I N THE ORDER OF THE LD.CIT(A). IT IS CONFIRMED. 7. IN THE RESULT, THE APPEAL OF THE REVENUE IS DISM ISSED. ORDER PRONOUNCED IN THE COURT ON 11 TH MAY, 2016 AT AHMEDABAD. SD/- SD/- ( N.K. BILLAIYA ) ACCOUNTANT MEMBER (RAJPAL YADAV) JUDICIAL MEMBER