GOLDGERG FINANCE P. LTD, THANE V. ACIT CIR 3, THANE

ITA 3128/MUM/2012

• Counselvise Citation: 312819914 RSA 2012
• Duration Of Justice: 2 year(s) 3 month(s) 28 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 05-09-2014
• Appeal Filed By: Assessee
• Order Result: Partly Allowed
• Bench Allotted: G
• Next Hearing Date: 24-07-2014
• Assessment Year: 2008-2009
• Appeal Filed On: 07-05-2012
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Department Lawyers: ADAGIRI
• Assessee Lawyers: V K TULSIAN
• Keywords: Maximum Marginal Rate
• Section: 143(3); 115JB

Judgement Text

, IN THE INCOME TAX APPELLATE TRIBUNAL G , BENCH MUMBAI , BEFORE : SHRI R.C.SHARMA , A M & SHRI SANJAY GARG, J M ITA NO. 3128 / MUM/20 1 2 ( ASSESSMENT YEAR : 200 8 - 0 9 ) M/S GOLD G ERG FINANCE PVT. LTD., 201, ARIHANT, PARSI AGYARI LANE, TEMBHI NAKA, THANE (W) - 400 602 VS. ACIT, CIRCLE - 3, THANE - 400 604 PAN/GIR NO. : A A ACG 9549 B ( APPELLANT ) .. ( RESPONDENT ) /ASSESSEE BY : SHRI V.K.TULSIAN /REVENUE BY : SHRI B. YADAGIRI DATE OF HEARING : 2 4 TH JULY , 201 4 DATE OF PRONOUNCEME NT : 5 TH SEPT , 201 4 O R D E R PER R.C.SHARMA ( A .M.) : TH IS IS AN APPEAL FILED BY THE ASSESSEE AGAINST THE ORDER CIT(A ) , DATED 31 - 1 - 2012 FOR THE ASSESSMENT YEAR 200 8 - 0 9 , IN THE MATTER OF ORDER PASSED U/S. 143(3) OF TH E ACT . 2 . RIVAL C ONTENTIONS HAVE BEEN HEARD AND RECORD PERUSED. FACTS IN BRIEF ARE THAT T HE ASSESSEE COMPANY IS MEMBER IN TWO AOPS VIZ. COSMOS ESTATE AND COSMOS PROPERTIES. THE AOPS ARE ENGAGED IN THE BUSINESS OF CONSTRUCTION AND DEVELOPMENT OF HOUSING PROJECT. THE ASSESSE E'S SHARE IS 20% IN THESE TWO AOPS. ON PERUSAL OF COMPUTATION OF INCOME OF THE ASSESSEE, THE AO FOUND THAT THE ASSESSEE HAS RECEIVED SHARE OF PROFIT OF RS.26,79,810 FROM COSMOS ESTATE AND RS. 1,91,83,452 FROM COSMOS ITA NO. 3128 /1 2 2 PROPERTIES. THE TOTAL SHARE INCOME RECE IVED F ROM THESE AOPS AMOUNT ED TO RS. 2,18,63,262 / - WHICH WAS CLAIMED AS EXEMPT BY THE ASSESSEE U/S. 10(2A). THE ASSESSEE, HOWEVER, DURING THE COURSE OF ASSESSMENT PROCEEDINGS CLARIFIED THAT EXEMPTION U/S. 10(2A) HAS BEEN WRONGLY CLAIMED AND THAT THE ASSESSEE IS ENTITLED TO EXEMPTION U/S. 86 IN RESPECT OF THE SHARE OF INCOME RECEIVED FROM TWO AOPS AND EXEMPTION U/S. 86 SHOULD BE ALLOWED ON THE ABOVE INCOME. HOWEVER, THE AO DID NOT ACCEPT THE ASSESSEES CLAIM AND HELD AS UNDER : - 3. I HAVE DULY CONSIDERED THE SU BMISSION MADE BY THE ASSESSEE. THE AMOUNT OF RS. 2,18,63,262 BEING THE INCOME RECEIVED BY THE ASSESSEE FORM THE TWO AOPS HAS BEEN CLAIMED AS EXEMPT U/S 86. THE ISSUE IS WHETHER TAX IS NOT CHARGEABLE ON THE INCOME OF RS. 2,18,63,262 AS IS CLAIMED. ACCORDING TO THE ASSESSEE, TAX IS NOT PAYABLE IN RESPECT OF THE ABOVE INCOME IN VIEW OF THE PROVISION OF SEC. 86. AT THIS POINT, IT WOULD BE APPROPRIATE TO REPRODUCE THE PROVISION OF SEC. 86 WHICH READS AS UNDER: SHARE OF MEMBER OF AN ASSOCIATION OF PERSONS OR BO DY OF INDIVIDUALS IN THE INCOME OF THE ASSOCIATION OR BODY. 86. WHERE THE ASSESSEE IS A MEMBER OF AN ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS {OTHER THAN A COMPANY OR A CO - OPERATIVE SOCIETY OR A SOCIETY REGISTERED UNDER THE SOCIETIES REGISTRATION AC T, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA), INCOME - TAX SHALL NOT BE PAYABLE BY THE ASSESSEE IN RESPECT OF HIS SHARE IN THE INCOME OF THE ASSOCIATION OR BODY COMPUTED IN THE MANNER PROVIDED IN SECTION 67A : PROVIDED THAT, - {A)WHERE THE ASSOCIATION OR BODY IS CHARGEABLE TO TAX ON ITS TOTAL INCOME AT THE MAXIMUM MARGINAL RATE OR ANY HIGHER RATE UNDER ANY OF THE PROVISIONS OF THIS ACT, THE SHARE OF A MEMBER COMPUTED AS AFORESAID SHALL NOT BE INCLUDED IN H IS TOTAL INCOME; (B)IN ANY OTHER CASE, THE SHARE OF A MEMBER COMPUTED AS AFORESAID SHALL FORM PART OF HIS TOTAL INCOME: PROVIDED FURTHER THAT WHERE NO INCOME - TAX IS CHARGEABLE ON THE TOTAL INCOME OF THE ASSOCIATION OR BODY, THE SHARE OF A MEMBER COMPUT ED AS AFORESAID SHALL BE CHARGEABLE TO TAX AS PART OF HIS TOTAL INCOME AND NOTHING CONTAINED IN THIS SECTION SHALL APPLY TO THE CASE. ITA NO. 3128 /1 2 3 4. IT IS THUS SEEN THAT SEC. 86 DEALS WITH THE SHARES OF MEMBER OF AN AOP OR BOI IN THE INCOME OF THE ASSOCIATION OR BOD Y. IT PROVIDES THAT INCOME - TAX SHALL NOT BE PAYABLE IN RESPECT OF THE SHARE AS COMPUTED IN THE MANNER PROVIDED IN SEC. 67 A . THE PROVISO TO THE SECTION L AYS DOWN THAT WHERE THE ASSOCIATION OR BODY IS TAXED AT THE MAXIMUM MARGINAL RATE, OR ANY HIGHER RATE, THE SHARE OF THE MEMBER AS COMPUTED U/S 67 A SHALL NOT BE INCLUDED IN ITS TOTAL INCOME. IT IS FURTHER PROVIDED THAT WHERE NO INCOME - TAX IS CHARGEABLE ON THE TOTAL INCOME OF THE AOP, THE SHARE OF A MEMBER THEREIN SHALL BE CHARGEABLE TO TAX AS PART OF ITS T OTAL INCOME. 5. IN THE PRESENT CASE, THE TOTAL INCOME OF COSMOS PROPERTIES AFTER CLAIMING DEDUCTION U/S 801(10) IS SHOWN AT NIL AND THE TOTAL INCOME OF THE OTHER AOP I.E. COSMOS ESTATE IS SHOWN AT RS. 1,20,330. THE ASSESSEE HAS 20% SHARE IN THE INCOME OF BOTH THE AOPS. IT IS THUS SEEN THAT IN THE CASE OF COSMOS PROPERTIES, NO TAX IS CHARGEABLE ON THE TOTAL INCOME OF THE AOP AND CONSEQUENTLY IN VIEW OF THE SECOND PROVISO TO SEC. 86, THE SHARE OF MEMBER IN THE INCOME OF THE AOP IS CHARGEABLE TO TAX. INSOFAR AS THE COSMOS ESTATE IS CONCERNED, EXCEPT THE INCOME OF RS. 24,066 IN RESPECT OF WHICH TAX HAS BEEN CHARGED IN THE HANDS OF AOP, THE BALANCE AMOUNT RECEIVED BY THE ASSESSEE FROM THE SAID AOP WILL BE CHARGEABLE TO TAX. 2. 1 THE AO ALSO BROUGHT TO TAX NET BOOK PROFIT OF ASSESSEE U/S. 115JB, WHICH ALSO INCLUDED SHARE OF PROFIT FROM TWO AOPS. 3 . BY THE IMPUGNED ORDER, CIT(A) CONFIRMED THE ACTION OF THE AO AND ASSESSEE IS IN FURTHER APPEAL BEFORE US, WHEREIN FOLLOWING GROUNDS HAVE BEEN TAKEN : - 1A. THE LEAR NED CIT (A) ERRED IN UPHOLDING THE ADDITION OF RS.2,18,39,396/ - AS TAXABLE INCOME OF THE APPELLANT AS SHARE FROM TWO JOINT VENTURE UNDERTAKINGS IN THE NATURE OF ASSOCIATION OF PERSONS (AOPS). 1 B. THE LEARNED CIT (A) ERRED IN ARRIVING AT THE CONCLUSION TH AT APPELLANTS SHARE IN THE INCOME OF TWO AOPS WAS LIABLE TO TAX IN THE HANDS OF THE APPELLANT NOT APPRECIATING THE PROVISIONS OF SECTION 67A/86 OF THE 1. T. ACT 1961 WHICH LAY DOWN THE SCHEME OF TAXATION OF MEMBERS OF AOP. 1 C. WITHOUT PREJUDICE, THE LD C IT (A) FAILED TO APPRECIATE THAT THE INCOME OF THE TWO AOPS HAD BEEN CHARGED TO TAX IN THEIR OWN HANDS AT MAXIMUM MARGINAL RATE IN THE ASSESSMENTS COMPLETED U/S 143(3) AND THEREFORE THE RATIONALE ADVOCATED BY THE LD A.O DID NOT HOLD GOOD. ITA NO. 3128 /1 2 4 1D. THE ACTION OF THE LD CIT (A) IN UPHOLDING THE ADDITION HAS RESULTED IN DOUBLE TAXATION OF THE SAME INCOME, ONCE IN THE HANDS OF THE AOPS AND AGAIN IN THE HANDS OF THE APPELLANT. 2. THE LD CIT (A) ERRED IN ARRIVING AT THE CONCLUSION THAT THE SUM OFRS.2,18,39,396/- A S SHARE OF THE APPELLANT FROM TWO JOINT VENTURE UNDERTAKINGS BEING AOPS WAS ALSO CHARGEABLE AS INCOME U/S 115 JB OF THE I T. ACT 1961. 4 . IT WAS CONTENDED BY LEARNED AR THAT THE AO HAS WRONGLY APPLIED PROVISIONS OF SECTION 86 READ WITH SECTION 67A AND ATT EMPTED TO BRING TO TAX THE ACCOUNTING PROFIT OF THE ASSESSEE INSTEAD OF THE PROFIT TO BE WORKED OUT AS PER PROVISIONS OF SECTION 67A. HE INVITED OUR ATTENTION TO THE SHARE OF INCOME COMPUTED BY THE AO IN PARA 8 OF HIS ORDER, ACCORDING TO WHICH SUCH SHARE C OME TO RS. 24,066/ - . AS PER LEARNED AR, THE MAXIMUM AMOUNT OF SHARE WHICH CAN BE BROUGHT TO TAX IS RS. 24,066/ - AND NOT THE BOOK PROFIT OF THE TWO AOPS WHOSE INCOME WAS SUBSTANTIALLY ELIGIBLE FOR CLAIM OF DEDUCTION UNDER SECTION 80IB(10). OUR ATTENTION WAS A LSO INVITED TO THE PROVISIONS OF SECTION 67A PROVIDING FOR COMPUTING OF SHARE OF MEMBER IN THE AOP, WHICH IS REPRODUCED AS UNDER : [METHOD OF COMPUTING A MEMBERS SHARE IN INCOME OF ASSOCIATION OF PERSONS OR BODY OF INDIVIDUALS. - 67A. (1) IN COMPUTING TH E TOTAL INCOME OF AN ASSESSEE WHO IS A MEMBER OF AN ASSOCIATION OF PERSONS OR A BODY OF INDIVIDUALS WHEREIN THE SHARES OF THE MEMBERS ARE DETERMINATE AND KNOWN {OTHER THAN A COMPANY OR A COOPERATIVE SOCIETY OR A SOCIETY REGISTERED UNDER THE SOCIETIES REGI STRATION ACT, 1860 (21 OF 1860), OR UNDER ANY LAW CORRESPONDING TO THAT ACT IN FORCE IN ANY PART OF INDIA}, WHETHER THE NET RESULT OF THE COMPUTATION OF THE TOTAL INCOME OF SUCH ASSOCIATION OR BODY IS A PROFIT OR A LOSS, HIS SHARE (WHETHER A NET PROFIT OR NET LOSS) SHALL BE COMPUTED AS FOLLOWS, NAMELY : - (A) ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION BY WHATEVER NAME CALLED, PAID TO ANY MEMBER IN RESPECT OF THE PREVIOUS YEAR SHALL BE DEDUCTED FROM THE TOTAL INCOME OF THE ASSOCIATION OR BODY A ND THE BALANCE ASCERTAINED AND APPORTIONED AMONG THE MEMBERS IN THE PROPORTIONS IN WHICH THEY ARE ENTITLED TO SHARE IN THE INCOME OF THE ASSOCIATION OR BODY; ITA NO. 3128 /1 2 5 (B) WHERE THE AMOUNT APPORTIONED TO A MEMBER UNDER CLAUSE (A) IS A PROFIT, ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION AFORESAID PAID TO THE MEMBER BY THE ASSOCIATION OR BODY IN RESPECT OF THE PREVIOUS YEAR SHALL BE ADDED TO THAT AMOUNT, AND THE RESULT SHALL BE TREATED AS THE MEMBER'S SHARE IN THE INCOME OF THE ASSOCIATION OR BODY; (C) WHERE THE AMOUNT APPORTIONED TO A MEMBER UNDER CLAUSE (A) IS A LOSS, ANY INTEREST, SALARY, BONUS, COMMISSION OR REMUNERATION AFORESAID PAID TO THE MEMBER BY THE ASSOCIATION OR BODY IN RESPECT OF THE PREVIOUS YEAR SHALL BE ADJUSTED AGAINST THAT AMOUNT, AND THE RESULT SHALL BE TREATED AS THE MEMBER'S SHARE IN THE INCOME OF THE ASSOCIATION OR BODY. (2) THE SHARE OF A MEMBER IN THE INCOME OR LOSS OF THE ASSOCIATION OR BODY, AS COMPUTED UNDER SUB - SECTION (1), SHALL, FOR THE PURPOSES OF ASSESSMENT, BE APPORTIO NED UNDER THE VARIOUS HEADS OF INCOME IN THE SAME MANNER IN WHICH THE INCOME OR LOSS OF THE ASSOCIATION OR BODY HAS BEEN DETERMINED UNDER EACH HEAD OF INCOME. (3) ANY INTEREST PAID BY A MEMBER ON CAPITAL BORROWED BY HIM FOR THE PURPOSES OF INVESTMENT IN THE ASSOCIATION OR BODY SHALL, IN COMPUTING HIS SHARE CHARGEABLE UNDER THE HEAD 'PROFITS AND GAINS OF BUSINESS OR PROFESSION' IN RESPECT OF HIS SHARE IN THE INCOME OF THE ASSOCIATION OR BODY, BE DEDUCTED FROM HIS SHARE. EXPLANATION. - IN THIS SECTION, 'PAID ' HAS THE SAME MEANING AS IS ASSIGNED TO IT IN CLAUSE (2) OF SECTION 43. 5 . IN SUM AND SUBSTANCE, THE CONTENTION OF THE LEARNED AR WAS THAT SHARE OF INCOME OF MEMBER FROM AOP WHICH CAN BE THE SUBJECT MATTER OF TAX IN THE HANDS OF INDIVIDUAL MEMBER CANNOT EXCEED AMOUNT DETERMINED AS PER PROVISIONS OF SECTION 67A, WHICH IN THE INSTANT CASE IS RS. 24,066/ - . HE FURTHER PLACED RELIANCE ON THE DECISION OF HON BLE SUPREME COURT IN THE CASE OF ITO VS. CH. ATCHAIAH, 218 ITR 239 (SC) , WHEREIN THE HONBLE APEX COURT HAS CATEGORICALLY STATED AS UNDER : - THERE ARE NO WORDS IN THE PRESENT ACT WHICH EMPOWER THE ITO OR GIVE HIM AN OPTION TO TAX EITHER THE AOP OR ITS MEMBERS INDIVIDUALLY OR FOR THAT MATTER TO TAX THE FIRM OR ITS PARTNERS INDIVIDUALLY. IF IT IS THE INCOME O F THE AOP IN LAW, AOP ALONE HAS TO BE TAXED, THE MEMBERS OF THE AOP CANNOT BE TAXED INDIVIDUALLY IN RESPECT OF THE AOP. CONSIDERATION OF THE INTEREST OF REVENUE HAS NO PLACE IN THIS SCHEME. ITA NO. 3128 /1 2 6 6 . HE FURTHER CONTENDED THAT THE INCOME OF THE AOP IS NOT EXEMPT BUT IS CHARGEABLE TO TAX ON WHICH A SPECIFIC DEDUCTION U/S.80IB(10) HAS BEEN CLAIMED. AS THE INCOME OF THE AOP IS CHARGEABLE TO TAX IN ITS OWN HANDS AT MAXIMUM MARGINAL RATE, THE SHARE OF A MEMBER IS NOT TO BE INCLUDED IN HIS TOTAL INCOME (CLAUSE (A) OF F IRST PROVISO TO SEC. 86). AS PER LEARNED AR THE ASSESSMENT OF THE TWO AOP'S FROM WHOM THE APPELLANT COMPANY HAS EARNED SHARE OF INCOME FOR ASST. YR.2008 - 09 HAVE BEEN COMPLETED U / S 143(3) BY THE HON. ACIT, CIRCLE 1 THANE. IN THE SAID COMPLETED ASSESSMENTS, THE 'INCOME' OF THE RESPECTIVE AOP'S IS HELD TO BE CHARGEABLE TO TAX IN T HEIR OWN HANDS. THE INCOME OF M/ S. COSMO S PROPERTIES IS ASSESSED AT RS.9,73,98,340/ - AND THAT OF M/ S. COSMOS ESTATES I S DETERMINED AT RS. 1,34,39,380/ - . COPIES OF ASST. ORDERS OF THE ABOVE AOPS WERE ALSO ENCLOSED AT ANNEXURE A & B RESPECTIVELY. 7 . AS PER LEARNED AR, I NCLUDING THE SHARE OF PROFIT FROM THE AOPS IN THE ASSESSEE TOTAL INCOME WOULD RESULT IN DOUBLE TAXATION OF THE SAME INCOME, ONCE IN THE HANDS OF AOPS AND AGAIN IN THE HA NDS OF THE ASSESSEE. I N VIEW OF THE ABOVE FACTS AND PROVISION OF LAW, THE LEARNED AR SUBMITTED THAT SHARE OF PROFIT FROM THE AOPS IS NOT REQUIRED TO BE INCLUDED IN THE HANDS OF THE APPELLANT FOR DETERMINING THE TOTAL INCOME LIABLE TO TAX FOR THE YEAR UNDER AP P EAL. THE ACTION OF THE LD A.O IN MAKING ADDITION IS CONTRARY TO THE PROVISIONS OF LAW. ITA NO. 3128 /1 2 7 8 . ON THE OTHER HAND, LEARNED DR RELIED ON THE ORDER OF LOWER AUTHORITIES AND CONTENDED THAT AO HAS CORRECTLY BROUGHT TO TAX THE SHARE OF ASSESSEE IN TWO AOPS. 9 . RI VAL CONTENTIONS HAVE BEEN CONSIDERED AND RECORD PERUSED. FROM THE RECORD, WE FOUND THAT ASSESSEE COMPANY IS A MEMBER OF TWO AOPS, INCOME OF WHICH WAS CLAIMED AS EXEMPT U/S. 10(2A) IN THE RETURN OF INCOME. IT WAS EXPLAINED BEFORE THE AO THAT ASSESSEE H A S WRO NGLY CLAIMED EXEMPTION U/S. 10(2A) AND IT IS ACTUALLY ENTITLED FOR EXEMPTION U/S. 86 IN RESPECT OF SHARE INCOME RECEIVED FROM TWO AOPS . H OWEVER, THE AO DID NOT ALLOW EXEMPTION U/S. 86 ON THE PLEA THAT THE PROFIT OF AOPS WERE ELIGIBLE FOR DEDUCTION U/S. 80IB(10 ). THE AO STATED THAT AFTER CLAIM OF DEDUCTION U/S.80IB, THE INCOME OF COSMOS ESTATE HAS BECOME NILL ON WHICH NO TAX IS PAYABLE . I N RESPECT OF COSMOS PROPERTIES , THE AO STATED THAT ENTIRE INCOME WAS ELIGIBLE FOR DEDUCTION U/S. 80IB(10) EXCEPT A SUM OF RS. 24 ,066/ - . ACCORDINGLY, IT WAS HELD BY AO THAT INCOME OF RS. 24,066/ - WILL BE THE AMOUNT O N WHICH TAX WILL NOT BE CHARGEABLE AS PER PROVISIONS OF SECTION 86. BALANCE AMOUNT OF RS. 2,18,39,396/ - WAS BROUGHT TO TAX. THE CIT(A) CONFIRMED THE ACTION OF THE AO . I NCO ME OF ASSESSEE WAS ALSO FOUND BY THE AO TO BE TAXABLE U/S. 115JB WITH RESPECT TO TH E SHARE OF INCOME FROM TWO AOPS CREDITED IN THE P&L ACCOUNT. T HERE IS NO DISPUTE TO THE FACT THAT ASSESSEE WAS HAVING SHARE OF INCOME FROM TWO AOPS. AS PER 1 ST PROVISO OF CL AUSE (A) TO SECTION 86 OF THE IT ACT, SHARE OF MEMBER IN AOP IS NOT INCLUDIBLE IN TOTAL INCOME WHEN THE INCOME OF AOP IS CHARGEABLE TO TAX IN ITS OWN ITA NO. 3128 /1 2 8 HANDS AT A MAXIMUM MARGINAL RATE. WE ARE NOT IN AGREEMENT WITH THE FINDING OF THE LOWER AUTHORITIES THAT S INCE BOTH THE AOPS HAVE CLAIMED DEDUCTION U/S. 80IB(10), THE ASSESSEES SHARE OF INCOME IN THESE AOPS WILL NOT BE ELIGIBLE FOR EXEMPTION. IT MAY BE NOTED THAT SECTION 67A OF THE INCOME TAX ACT PROVIDES METHOD FOR COMPUTING A MEMBERS SHARE IN INCOME OF ASS OCIATION OF PERSONS OR BODY OF INDIVIDUALS. THE INCOME OF THE MEMBER COMPANY OF THE AOP IS TO BE COMPUTED AS PER SECTION 67A OF THE INCOME TAX ACT AND THE INCOME TAX AUTHORITIES CANNOT GO BEYOND THE PROVISIONS OF SECTION 67A OF THE ACT. U/S. 86, WHATEVER T HE SHARE OF THE MEMBER COMPANY IS COMPUTED U/S. 67A OF THE ACT, IS DEDUCTIBLE/WILL NOT BE CHARGEABLE TO TAX , SUBJECT TO THE PROVISO TO SECTION 86 . FURTHER AS PER SECTION 167B OF THE ACT, THE AOP WILL BE CHARGEABLE TO MAXIMUM MARGINAL RATE OF TAX IF THE INCO ME OF THE MEMBER OF AOP EXCEEDS THE MAXIMUM AMOUNT WHICH IS NOT CHARGEABLE TO TAX. AS PER SECOND PROVISO TO SECTION 86, IF THE TOTAL INCOME OF THE AOP IS LESS THAN THE PRESCRIBED LIMIT FOR TAXATION, THEN THERE WILL BE NO APPLICATION OF SECTION 86 WHILE COM PUTING THE TOTAL INCOME OF THE MEMBER OF AOP. SO THE INCOME OF THE AOP IS TO BE COMPUTED AS PER THE PROVISIONS OF THE ACT AND THE MEMBERS SHARE IS TO BE COMPUTED AS PER THE PROVISIONS OF SECTION 67A OF THE ACT AND NOT OTHERWISE. WE ACCORDINGLY SET ASIDE T HE ORDER OF THE LOWER AUTHORITIES AND RESTORE THE MATTER TO THE FILE OF THE AO TO WORK OUT THE TOTAL INCOME OF THE ASSESSEE AS PER THE PROVISIONS OF SECTION 67A READ WITH PROVISIONS OF SECTION 86 OF THE I.T. ACT. HERE, IT IS PERTINENT TO MENTION ITA NO. 3128 /1 2 9 THAT COMPU TATION OF SHARE OF THE ASSESSEE WILL BE DEPENDENT UPON THE FINAL DETERMINATION/COMPUTATION OF TOTAL INCOME OF THE AOP. IF THE AOP WILL NOT BE ALLOWED DEDUCTION U/S. 80IB, THERE WILL BE ENHANCEMENT IN THE SHARE OF THE ASSESSEE TO BE COMPUTED U/S. 67A OF THE A CT . HENCE, IT IS DIRECTED THAT THE AO WILL ALSO TAKE INTO CONSIDERATION THE TOTAL INCOME COMPUTED OF THE CONCERNED AOPS WHILE COMPUTING SHARE OF THE ASSESSEE COMPANY. 10 . FROM THE RECORD WE ALSO FOUND THAT THE AO HAS ALSO BROUGHT TO NET OF TAX ITS BOOK PR OFIT WHICH INCLUDED SHARE OF PROFIT IN TWO AOPS AS PER PROVISIONS OF SECTION 115JB . IN THIS REGARD CONTENTION OF LEARNED AR WAS THAT AMOUNT OF SHARE OF MEMBER FROM AN AOP CANNOT BE INCLUDED IN TOTAL INCOME FOR THE PURPOSE OF SECTION 115JB , BECAUSE INCOME O F AOPS HAVE ALREADY SUFFERED TAX IN THEIR RESPECTIVE HANDS . WE DO NOT FIND ANY MERIT IN THE CONTENTION OF LEARNED AR INSOFAR AS THE ASSESSEE COMPANY HAD CREDITED THEIR SHARE OF INCOME FROM AOP IN ITS BOOK PROFIT IN P&L ACCOUNT AND BOOK PROFIT HAS BEEN WORK ED OUT AFTER TAKING INTO ACCOUNT SUCH SHARE OF INCOME IN AOP . AS PER SECTION 115JB, THE BOOK PROFIT MEANS THE NET PROFIT AS SHOWN IN THE P&L ACCOUNT FOR THE RELEVANT PREVIOUS YEAR. THEREFORE, BOOK PROFIT IS TO BE COMPUTED ON THE BASIS OF INCOME SHOWN IN TH E P&L ACCOUNT SUBJECT TO THE ADJUSTMENT AS PROVIDED UNDER EXPLANATION 1 TO SECTION 115JB. WE HAD CAREFULLY GONE THROUGH THE ADJUSTMENT PROVIDED UNDER EXPLANATION 1 AND FOUND THAT NOWHERE THE EXPLANATION PROVIDE FOR EXCLUSION OF SUCH SHARE OF PROFIT FROM AO P WHILE COMPUTING INCOME U/S. 115JB OF THE ACT. ITA NO. 3128 /1 2 10 THE CONTENTION OF THE LEARNED AR TO THE EFFECT THAT ASSESSEE HAS WRONGLY INCLUDED THE SHARE OF INCOME FROM AOP IN THE P&L ACCOUNT, COPY OF BOARD CIRCULAR WAS ALSO PLACED ON RECORD IN SUPPORT OF PROPOSITION THA T INCOME TAX AUTHORITY SHOULD POINT OUT ANY MISTAKE ON THE PART OF ASSESSEE AND TAX SHOULD BE LEVIED ON THE CORRECT INCOME OF ASSESSEE. WE DO NOT FIND ANY MERIT IN THE ARS CONTENTION INSOFAR AS SECTION 115JB HAS BEEN BROUGHT IN STATUTE TO TAX THE BOOK PRO FIT SHOWN IN THE BOOKS OF ACCOUNT AS PART II & PART III OF SCHEDULE VI OF THE COMPANIES ACT. IT IS NOT THE CASE OF THE ASSESSEE THAT SHARE OF INCOME OF AOP HAS NOT BEEN CREDITED IN THE P&L ACCOUNT AS PER PART II & PART III OF THE SCHEDULE VI OF THE COMPANI ES ACT . SINCE THE PROFIT AND LOSS ACCOUNT SO PREPARED HAS BEEN APPROVED BY THE BOARD OF DIRECTOR OF ASSESSEE COMPANY , THERE IS NO REASON TO EX CLUDE THE PROFIT CREDITED IN THE P&L ACCOUNT IN RESPECT OF SHARE OF ASSESSEES INCOME IN TWO AOPS WHILE COMPUTING BOOK PROFIT U/S. 115JB . ACCORDINGLY, GROUND RAISED BY ASSESSEE WITH REGARD TO EXCLUSION OF SUCH INCOME WHILE COMPUTING BOOK PROFIT U/S. 115JB IS NOT TENABLE. 11 . IN THE RESULT, APPEAL OF THE ASSESSEE IS ALLOWED IN PART FOR STATISTICAL PURPOSES . ORDER PRONOU NCED IN THE OPEN COURT ON THIS 05/09/ 201 4 . 2014 SD/ - SD/ - ( ) ( SANJAY GARG ) ( ) ( R.C.SHARMA ) / JUDICIAL MEMBER / ACCOUNTANT MEMBE R MUMBAI ; DATED 05 / 0 9 /2014 /PKM , PS ITA NO. 3128 /1 2 11 COPY OF THE ORDER FORWARDED TO : / BY ORDER, ( ASSTT. REGISTRAR) / ITAT, MUMBAI 1. / THE APPELLANT 2. / THE RESPONDENT. 3. / THE CIT(A), MUMBAI. 4. / CIT 5. / DR, ITAT, MUMBAI 6. GUARD FILE. //TRUE COPY//