ITO, Ward - 34(3), Kolkata, Kolkata V. Shri Dipak Kumar Yaduka, Kolkata

ITA 1586/KOL/2011

• Counselvise Citation: [2012] 140 COUNSELVISE.COM (IT) 59634 (ITAT-KOLKATA)
• Duration Of Justice: 3 month(s) 21 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-03-2012
• Appeal Filed By: Department
• Bench Allotted: C
• Assessment Year: 2005-2006
• Appeal Filed On: 21-11-2011
• Court: TRIBUNAL
• Department Lawyers: D J MEHTA
• Assessee Lawyers: S S GUPTA
• Keywords: Maximum Marginal Rate
• Section: 80IB

Judgement Text

, , , IN THE INCOME TAX APPELLATE TRIBUNAL, BEN CH C, KOLKATA () BEFORE , ,, , , SHRI MAHAVIR SINGH, JUDICIAL MEMBER. /AND . .. . ! ! ! !. .. . , '# SHRI C.D.RAO, ACCOUNTANT MEMBER $ $ $ $ / ITA NO . 1586/KOL/2011 %& '(/ ASSESSMENT YEAR : 2005-06 (*+ / APPELLANT ) I.T.O., WARD-34(3), KOLKATA VS (,-*+/ RESPONDENT ) SRI DIPAK KUMAR YADUKA *+ . / '/ FOR THE APPELLANT: SHRI D.J.MEHTA ,-*+ . / '/ FOR THE RESPONDENT: SHRI S.S.GUPTA 0%1 . !# /DATE OF HEARING : 12.03.2012. 2' . !# /DATE OF PRONOUNCEMENT : 12.03.2012. '3 / ORDER . .. . ! ! ! !. .. . , '# PER SHRI C.D.RAO, AM THIS APPEAL BY THE REVENUE IS ARISIN G OUT OF THE ORDER OF CIT(A)-XX, KOLKATA IN APPEAL NO.80/CIT(A)-XX/WARD-34(3)/08-09/ KOL DATED 02.08.2011. 2. AT THE OUTSET, IT IS NOTICED THAT REVENUE APPEAL IS DELAYED BY SEVEN DAYS. LD. COUNSEL FOR THE ASSESSEE HAS NOT OBJECTED TO CONDON E THE DELAY. HENCE, WE CONDONE THE DELAY AND ADMIT THE APPEAL. 3. THE ONLY ISSUE IN THIS APPEAL OF REVENUE IS AGA INST THE ORDER OF CIT(A) IN DELETING THE ADDITION OF RS.9,72,457/- IN VIEW OF T HE SECOND PROVISION TO SECTION 86 OF THE ACT AND DECLARING ASSESSEE AS AOP. FOR THIS AS SESSEE HAS RAISED THE FOLLOWING GROUND:- 1. THE LD. CIT(A) HAS ERRED BOTH ON THE FACTS AND CIRCUMSTANCES OF THE CASE AND IN LAW BE DELETING THE ADDITION OF RS.9,72,457/- WHICH WAS RIGHTLY ADDED BY THE A.O. BY INVOLVING THE 2 ND PROVISO TO SECTION 86 OF THE I. T. ACT. 2 4. WE HAVE HEARD THE RIVAL CONTENTIONS AND GONE THO ROUGH FACTS AND CIRCUMSTANCES OF THE CASE. WE FIND THAT THE ASSESSING OFFICER FOU ND THAT THIS ASSESSEE BEING AN AOP ITS INCOME IS NOT CHARGED TO TAX AND INVOKING THE S ECOND PROVISO TO SECTION 86 OF THE ACT COMPUTED THE INCOME OF M/S.SHRI KRISHAN DEVELOP ER IN THE HANDS OF ASSESSEE. THE BRIEF FACTS OF THE CASE ARE THAT THE ASSESSEE I S A MEMBER OF AOP NAMELY M/S. SHRI KISHAN DEVELOPER WHICH IS ENGAGED IN BUILDING AND D EVELOPING HOUSING PROJECTS AND THEREBY ENTITLED TO DEDUCTION U/S 80IB OF THE ACT. THE ASSESSEE RECEIVED SHARE PROFIT AS WELL AS INTEREST FROM AOP. THE ASSESSEE RECEIVED IT S SHARE FROM AOP AT RS.9,72,457/- WHICH HE HAD NOT INCLUDING IN THE RETURN OF INCOME FOR THE PURPOSE OF INCOME TAX. ONCE THE AO ADDED THE SAME INCOME OF AOP IN ASSESSE ES HANDS BY ATTRACTING THE SECOND PROVISION TO SECTION 86 OF THE ACT AGGRIEVED , ASSESSEE PREFERRED APPEAL BEFORE CIT(A) AND CIT(A) ALLOWED THE CLAIM OF ASSESSEE BY GIVING THE FOLLOWING FINDINGS IN PARA 6 OF HIS ORDER :- 6 - I HAVE PERUSED THE ASSESSMENT ORDER AND CONSIDE RED THE SUBMISSIONS OF THE APPELLANT. I FIND THAT THE APPELLANT HAS SATISFACTO RILY EXPLAINED THE ISSUE RAISED BY THE AO. I ALSO FIND SUBSTANCE IN THE ARGUMENT THAT IN C ASE AN AOP IS CHARGEABLE TO TAX AT MAXIMUM MARGINAL RATE; CLAUSE (A) OF THE 1ST PROVIS O TO SECTION 86 IS APPLICABLE IN COMPUTING THE SHARE OF PROFIT FROM THE AOP FOR A ME MBER OF SUCH AOP. THE APPELLANT HAS FILED HIS COMPUTATION OF TOTAL INCOME FOR THE R ELEVANT YEAR. FROM SUCH COMPUTATION, IT IS CLEAR THAT THE INCOME OF THE APPELLANT (BEING A MEMBER) EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX; AND CONSEQUE NTLY, THE CONCERNED AOP, NAMELY, SHRI KRISHNA DEVELOPERS IS CHARGEABLE TO TAX AT MAX IMUM MARGINAL RATE IN VIEW OF THE PROVISIONS OF SECTION 167B(2)(I). THIS VIEW IS ALSO SUPPORTED BY THE CBDT CIRCULAR NO. 551 DATED 23.01.1990 AS FILED BEFORE ME. THE SAID C IRCULAR WAS ISSUED AS AN EXPLANATORY NOTE ON THE PROVISIONS OF THE DIRECT TA X LAWS (AMENDMENT) ACT, 1989. THE PROVISIONS OF SECTION 86 AS APPEARING TODAY WER E RESTORED THROUGH THIS AMENDMENT ACT; AND, THE SAID CIRCULAR WAS ISSUED TO EXPLAIN T HE PROVISIONS OF SECTION 86. THE CIRCULAR CATEGORICALLY MENTIONS THREE SITUATIONS IN WHICH THE SHARE OF INCOME FROM AN AOP WOULD BE INCLUDED IN ITS MEMBERS HANDS. THE SI TUATION WHERE NO INCOME TAX IS CHARGEABLE ON THE TOTAL INCOME OF THE AOP AND THE S HARE OF A MEMBER THEREIN SHALL BE FULLY CHARGEABLE TO TAX AS PART OF HIS TOTAL INCOME IN VIEW OF THE 2 PROVISO TO SECTION 86 SHALL ARISE ONLY WHERE THE AOP IS TAXABLE AT NORM AL RATES APPLICABLE TO INDIVIDUALS, ETC. BUT HAS INCOME BELOW THE TAXABLE LIMIT SO THAT NO INCOME-TAX IS CHARGEABLE ON THE TOTAL INCOME OF THE AOP. IN THE APPELLANTS CASE, T HE AOP IS CHARGEABLE AT MAXIMUM MARGINAL RATE AND NOT AT NORMAL RATES APPLICABLE TO INDIVIDUALS, ETC. THIS FACT HAS NOT BEEN DISPUTED BY THE AO ALSO. THE AO HAS WRONGLY AP PLIED THE 2 ND PROVISO TO SECTION 86 INSTEAD OF CLAUSE (A) OF THE 1ST PROVISO TO THE SAID SECTION. I ALSO FIND FORCE IN THE ARGUMENT THAT THE SHARE OF INCOME FROM THE AOP IS T O BE COMPUTED IN THE MANNER AS PROVIDED U/S 67A AS REQUIRED BY SECTION 86 WHICH HA S NOT BEEN DONE BY THE AO THOUGH THE RELEVANT COMPUTATION U/S 67A WAS FILED BY THE A PPELLANT AT THE ASSESSMENT STAGE. I ALSO FIND SUBSTANCE IN THE ARGUMENT THAT ENTITLEMEN T OF DEDUCTION U/S 8OLB TO THE AOP WOULD BE RENDERED REDUNDANT IF THE AOS CONCLUSION IS TAKEN AS CORRECT WHICH CAN NOT BE THE INTENTION OF THE LEGISLATURE. IN VIEW OF THE ABOVE, I AM OF THE OPINION THAT THE AO HAS WRONGLY CONCLUDED THAT AS NO INCOME TAX WAS PAI D BY THE AOP, ITS TOTAL INCOME WAS NOT CHARGEABLE TO INCOME TAX; AND CONSEQUENTLY, THE 2 ND PROVISO TO SECTION 86 WAS 3 ATTRACTED IN THE CASE OF THE APPELLANT. THE DECISIO N OF THE AO IS BASED ON WRONG INTERPRETATION AND APPLICATION OF THE PROVISIONS OF SECTION 86. ACCORDINGLY, THE ADDITION OF RS.9,72,457/.- MADE BY THE AO IS DIRECTED TO BE DELETED. GROUND NO.1 IS ALLOWED. 5. WE FIND THAT IT IS A FACT THAT AOPS INCOME IS E XEMPTED IN VIEW OF PROVISION OF SECTION 80IB(10) OF THE ACT AND NO INCOME OF AOP IS CHARGED TO TAX. EVEN THE DISTRIBUTING SHARES OF ASSESSEE ARE NOT SUBJECT TO TAX IN THE HANDS OF AOP. THERE IS NO QUESTION OF TAX IN THE HANDS OF ASSESSEE. WE FIND N O INFIRMITY IN THE ORDERS OF CIT(A) AS REPRODUCED ABOVE. HENCE, WE CONFIRM THE SAME. TH IS ISSUE OF THE REVENUES APPEAL IS DISMISSED. 6. THE NEXT ISSUE IS AS REGARDS TO ASSESSEE THE INC OME OF RS.9,72,457/- BEING THE TOTAL INCOME OF AOP TO BE ASSESSED AS SHARE IN THE HANDS OF ASSESSEE. THIS BEING A CONSEQUENTIAL ISSUE AS WE HAVE ALREADY DECIDED THE SAME ISSUE IN FAVOUR OF ASSESSEE THIS WILL NOT BE TAXED IN THE HANDS OF ASSESSEE. TH IS BEING CONSEQUENTIAL WE DISMISS THIS ISSUE. 7. IN THE RESULT APPEAL OF THE REVENUES IS DISMISSE D. ORDER PRONOUNCED IN THE OPEN COURT. SD/- SD/- , ,, , MAHAVIR SINGH, JUDICIAL MEMBER . .. . ! ! ! !. .. . , , , , '# '# '# '# , C.D.RAO, ACCOUNTANT MEMBER. ( (( (!# !# !# !#) )) ) DATE: 12.03.2012. R.G.(P.S.) '3 . ,4 5'4'6- COPY OF THE ORDER FORWARDED TO: 1. SRI DIPAK KUMAR YADUKA, 133, CANNING STREET, R.NO.9 , CHOPRA HOUSE, KOLKATA- 700001. 2 I.T.O., WARD-34(3), KOLKATA. 3. THE C.I.T. 4. CIT(A)-XX, KOLKATA. 5. THE CIT(DR), KOLKATA BENCHES, KOLKATA -4 ,/ TRUE COPY, '3%0/ BY ORDER, DEPUTY /ASST. REGISTRAR , ITAT, KOLKATA BENCHES