ANILKUMAR SHROFF, MUMBAI V. ITO WD 2(2)(3), MUMBAI

ITA 1626/MUM/2013

• Counselvise Citation: [2016] 133 COUNSELVISE.COM (IT) 4484 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 10 month(s) 5 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-01-2016
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: A
• Next Hearing Date: 15-09-2015
• Assessment Year: 2009-2010
• Appeal Filed On: 28-02-2013
• Result in Favour of: Assessee
• Court: TRIBUNAL

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL A BENCH, MUMBAI BEFORE S/SHRI B.R.BASKARAN , AM AND AMARJIT SINGH , JM ./ I.T.A. NO . 6250 / MUM/ 201 1 AND ITA NO.1626/MUM/2013 ( / ASSESSMENT YE A R S : 200 8 - 0 9 AND 2009 - 10 ) SHRI ANILKUMAR PREMNATH SHROFF, 228 - 231, KALIANDAS UDYOG BHAVAN, CENTURY BAZAR LANE, PRABHADEVI, MUMBAI - 400025 / VS. INCOME TAX OFFICER 2 (2)(3), AAYAKAR BHAVAN, M K ROAD, MUMBAI - 400020 ( / APPELLANT ) .. ( / RESPONDENT ) ./ ./PAN. : AAJPS1929B / APPELLANT BY SHRI PRAKASH PANDI T / RESPONDENT BY SHRI MANOJ KUMAR / DATE OF HEARING : 5.1.2016 / DATE OF PRONOUNCEMENT: 5.1.2016 / O R D E R P ER B ENCH: BOTH THE APPEALS FILED BY THE ASSESSEE ARE DIRECTED AGAINST THE SEPARATE ORDERS PASSED BY LD CIT(A) - 5, MUMBAI FOR ASSESSMENT YEARS 2008 - 09 AND 2009 - 10, WHEREIN HE HAS CONFIRMED THE METHOD OF COMPUTATION OF SHARE INCOME FROM PARTNERSHIP FIRM ADOPTED BY THE ASSESSING OFFICER. 2. THE LD A.R SUBMITTED THAT THERE IS ALWAYS A DIFFERENCE BETWEEN THE NET PROFIT DECLARED IN THE BOOKS AND THE TOTAL INCOME DETERMINED, IN VIEW OF THE VARIOUS DEDUCTIONS AND ALLOWANCES. IN THE BOOKS OF THE PARTNER OF IT A NO. 6250 / MUM/ 201 1 AND ITA NO.1626/M/2013 2 THE FIRM, THE SHARE OF PROFIT AS PER BOOKS IS USUALLY CREDITED, BUT THE ENTIRE AMOUNT SO CREDITED IS CLAIMED AS EXEMPT UNDER SEC. 10(2A) OF THE ACT. HOWEVER, THE AO HELD THAT THE EXEMPTION U/S 10(2A) SHALL BE ALLOWED TO THE EXTENT OF ASSESSEES SHARE IN THE TOTAL INCOME OF THE ASSESSEE. THE LD A.R TOOK US THROUGH THE ASSESSMENT ORDER PASSED FOR AY 2008 - 09 TO EXPLAIN THE VIEW TAKEN BY THE AO. IT IS NOTICED THAT THE ASSESSEES SHARE IN NET PROFIT OF THE PARTNERSHIP FIRM WAS RS.18,22,109/ - (60%) ON THE NET PROFIT OF RS.30,36,849/ - SHOWN IN THE BOOKS OF THE PARTNERSHIP FIRM. HOWEVER, THE TOTAL INCOME COMPUTED IN THE HANDS OF THE PARTNERSHIP FIRM WORKED OUT TO RS.21,49,120/ - . IN VIEW OF THE REDUCTION IN TOTAL INCOME VIS - A - VIS THE NET PROFIT, THE AO HELD THAT THE EXEMPTION U/S 10(2A) SHALL BE ALLOWED ONLY TO THE EXTENT OF 60% OF RS.21,49,120/ - , I.E. RS.12,89,471/ - . ACCORDINGLY HE RESTRICTED THE EXEMPTION U/S 10(2A) OF THE ACT TO R S.12,89,471/ - AS AGAINST THE CLAIM OF RS.18,22,109/ - . THE LD A.R SUBMITTED THAT THE EXEMPTION CLAIMED BY THE ASSESSEE IN AY 2009 - 10 WAS ALSO RESTRICTED IN THE SIMILAR MANNER. THE LD CIT(A) ALSO CONFIRMED THE SAME IN BOTH THE YEARS. 3. THE LD A.R SUB MITTED THAT THE METHODOLOGY ADOPTED BY THE AO TO RESTRICT THE EXEMPTION CLAIMED U/S 10(2A) OF THE ACT IS AGAINST THE CIRCULAR NO. 8 OF 2014 DATED 31 ST MARCH, 2014 ISSUED BY THE CBDT. THE LD A.R SUBMITTED THAT THE CBDT HAS CLARIFIED THAT THE ENTIRE PROFIT CREDITED TO THE PARTNERS ACCOUNTS IN THE FIRM WOULD BE EXEMPT FROM TAX IN THE HANDS OF SUCH PARTNERS, EVEN IF THE INCOME CHARGEABLE TO TAX BECOMES NIL IN THE HANDS OF THE FIRM ON ACCOUNT OF ANY EXEMPTION OR DEDUCTION AS PER THE PROVISIONS OF THE ACT. 4. THE LD D.R SUBMITTED THAT THE CIRCULAR ISSUED BY THE CBDT IS BINDING ON THE ASSESSING OFFICER. HOWEVER HE SUBMITTED THAT THE TAX AUTHORITIES HAVE TAKEN THE VIEW BEFORE THE ISSUING OF CIRCULAR. IT A NO. 6250 / MUM/ 201 1 AND ITA NO.1626/M/2013 3 5. WE HAVE HEARD THE PARTIES AND PERUSED THE RECORD. THERE BOUND TO BE A DIFFERENCE BETWEEN THE NET PROFIT SHOWN IN THE BOOKS OF ACCOUNT AND THE TOTAL INCOME COMPUTED UNDER THE INCOME TAX ACT DUE TO VARIOUS DEDUCTIONS AND EXEMPTIONS. FURTHER, THE CBDT HAS CLARIFIED THAT THE ENTIRE AMOUNT OF PROFIT CREDITED TO THE PARTNERS ACCOUNT IS EXEMPT U/S 10(2A) OF THE ACT. IN OUR VIEW, THE CBDT HAS ONLY CLARIFIED THE POSITION OF LAW AND HENCE THE SAME CAN BE CONVENIENTLY APPLIED TO THE YEARS UNDER CONSIDERATION. ACCORDINGLY, BY FOLLOWING THE CLARIFICATION ISSUED BY THE CBDT IN THE CIRCULAR CITED ABOVE, WE SET ASIDE THE ORDER OF LD CIT(A) ON THIS ISSUE IN BOTH THE YEARS AND DIRECT THE AO TO ALLOW EXEMPTION TO THE ASSESSEE AS PER THE CIRCULAR OF THE CBDT REFERRED ABOVE. 6. IN THE RESULT, BOTH THE APPEALS OF THE AS SESSEE ARE ALLOWED. PRONOUNCED ACCORDINGLY ON 5TH JAN UARY , 2016 . 5TH JANU ARY, 2016 SD SD ( AMARJIT SINGH ) ( B.R. BASKARAN) JUDICIAL MEMBER ACCOUNTANT MEMBER MUMBAI: 5TH JANUARY, 201 6 . . . ./ SRL , SR. PS / COPY OF THE OR DER FORWARDED TO : 1. / THE APPELLANT 2. / THE RESPONDENT. 3. ( ) / THE CIT(A) - CONCERNED 4. / CIT CONCERNED 5. , , / DR, ITAT, MUMBAI CONCERNED 6. / GUARD FILE. IT A NO. 6250 / MUM/ 201 1 AND ITA NO.1626/M/2013 4 / BY ORDER, TRUE COPY (ASSTT. REGISTRAR) , /ITAT, MUMBAI