Best Wind Energy India Private Limited, Coimbatore V. ACIT, Salem

ITA 401/CHNY/2015

• Counselvise Citation: [2019] 117 COUNSELVISE.COM (IT) 1844 (ITAT-CHENNAI)
• Duration Of Justice: 4 year(s) 3 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 17-06-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2009-2010
• Appeal Filed On: 24-02-2015
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: MRS D ROHINI
• Assessee Lawyers: S SRIDHAR
• Section: 54

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL C BENCH: CHENNAI , . , & BEFORE SHRI GEORGE MATHAN, JUDICIAL MEMBER AND SHRI S. JAYARAMAN, ACCOUNTANT MEMBER ./ ITA NO.401/CHNY/2015 /ASSESSMENT YEAR: 2009-10 M/S.BEST WIND ENERGY INDIA PVT. LTD., 22A, MOHANUR ROAD, NAMAKKAL-637 001. [PAN: AACCB 7536 P] VS. THE ASST. COMMISSIONER- OF INCOME TAX, CIRCLE-I(1), SALEM. ( ( /APPELLANT) ( )*( /RESPONDENT) ( + / APPELLANT BY : MR.S.SRIDHAR, ADV. )*( + /RESPONDENT BY : MRS.D.ROHINI, JCIT + /DATE OF HEARING : 17.06.2019 + /DATE OF PRONOUNCEMENT : 17.06.2019 / O R D E R PER GEORGE MATHAN, JUDICIAL MEMBER : THIS IS AN APPEAL FILED BY THE ASSESSEE AGAINST TH E ORDER OF THE COMMISSIONER OF INCOME TAX (APPEALS), SALEM, IN ITA NO.86/2013-14 DATED 24.12.2014 FOR THE AY 2009-10. 2. MRS.D.ROHINI, JCIT, REPRESENTED ON BEHALF OF THE REVENUE AND MR. S.SRIDHAR, ADV., REPRESENTED ON BEHALF OF THE ASSES SEE. ITA NO.401/CHNY/2015 :- 2 -: 3. IT WAS SUBMITTED BY THE LD.AR THAT THE ONLY ISSU E IN THE ASSESSEES APPEAL IS AGAINST THE ACTION OF THE LD.CIT(A) IN CO NFIRMING THE ACTION OF THE AO IN DETERMINING THE BOOK PROFIT U/S.115JB AF TER ADDING BACK THE PROFIT ON SALE OF AGRICULTURAL LAND WHICH WAS EXEMP T. IT WAS A SUBMISSION THAT THE ASSESSEE HAD SOLD AGRICULTURAL LAND TO THE TUNE OF RS.7,90,68,000/-. FOR COMPUTING THE REGULAR TAX, TH E ASSESSEE WAS GRANTED THE BENEFIT PROVIDED U/S.10(1) OF THE ACT. HOWEVER, WHILE COMPUTING THE MAT U/S.115JB, THE AO INCLUDED THE SA ME FOR COMPUTING THE BOOK PROFITS. IT WAS A SUBMISSION THAT THE LD. CIT(A) ALSO CONFIRMED THE ORDER OF THE AO. IT WAS A SUBMISSION THAT THE ISSUE WAS SQUARELY COVERED BY THE DECISION OF THE HONBLE JURISDICTION AL HIGH COURT IN THE CASE OF M/S.METAL & CHROMIUM PLATER (P) LTD., REPORTED I N [2016] 76 TAXMANN.COM 229 (MADRAS), WHEREIN, IT HAS BEEN HELD AS FOLLOWS: 7. THUS, THE ADJUSTED BOOK PROFITS WOULD BE FURTHER ELIGIBLE TO THE BENEFITS SET OUT IN THE OTHER PROVISIONS OF THE ACT AND THE PLAIN LANGUAGE OF SECTION 115 JB THUS ADMITS OF THE GRANT OF RELIEF UNDER SECTION 54 EC IN AN ASSESSMEN T THEREUNDER. WE NOW DEAL WITH THE CASE LAW RELIED UPON BY THE ASSESSING OFFICER IN DE NYING RELIEF TO THE ASSESSEE. THE SUPREME COURT, IN THE CASE OF APOLLO TYRES, (SUPRA) IS TO THE EFFECT THAT THE ASSESSING OFFICER IS NOT EMPOWERED TO EMBARK ON AN ENQUIRY WI TH REGARD TO THE ENTRIES IN THE PROFIT AND LOSS ACCOUNT MAINTAINED IN ACCORDANCE WITH THE PROVISIONS OF THE COMPANIES ACT 1956 AND APPROVED IN THE AGM EXCEPT TO THE EXTENT OF EFF ECTING MODIFICATIONS IN ACCORDANCE WITH THE EXPLANATION TO SECTION 115J. THE BOMBAY HIGH CO URT IN THE CASE OF VEEKAYLAL INVESTMENTS (SUPRA) CONSIDERS THE INCLUSION OF CAPIT AL GAIN FOR THE PURPOSES OF ASSESSMENT UNDER SECTION 115 J. BOTH JUDGMENTS ARE RENDERED IN THE CONTEXT OF SECTION 115 J WHICH DOES NOT CONTAIN A PROVISION ANALOGOUS TO SUB-SECTI ONS (4) OF SECTION 115 JA OR (5) OF SECTION 115 JB OF THE ACT. THUS WHILE AN ASSESSMENT U/S 115J WOULD BE CONCLUDED EXCLUSIVELY ON THE BASIS OF THE BOOK PROFITS AS ADJ USTED BY THE ITEMS SET OUT IN THE EXPLANATION THEREUNDER, IN AN ASSESSMENT IN TERMS O F SECTIONS 115 JA OR JB, THE ADJUSTED BOOK PROFITS WOULD BE FURTHER SUBJECTED TO THE EFFE CT OF OTHER PROVISIONS OF THE ACT THAT ARE SPECIFICALLY BROUGHT INTO PLAY BY VIRTUE OF SUB-SEC TIONS (4) OF SECTION 115JA AND (5) OF SECTION 115JB. 4. IT WAS A SUBMISSION THAT THE ISSUES WERE ALSO CO VERED BY THE DECISION OF THE SPECIAL BENCH OF THE TRIBUNAL IN TH E CASE OF M/S.SUTLEJ COTTON MILLS LTD. VS. ACIT REPORTED IN [1993] 45 IT D 22 (CALCUTTA) (SB), ITA NO.401/CHNY/2015 :- 3 -: WHEREIN, IT HAS BEEN CATEGORICALLY HELD THAT THE BO OK PROFIT WOULD NOT INCLUDE THE PROFIT IN REALIZATION OF ANY ASSET AND THE AO DOES NOT HAVE THE POWER TO DISTURB THE BOOK PROFITS COMPLETED IN ACCO RDANCE WITH PART-II TO SCHEDULE VI OF THE COMPANIES ACT, 1956. 5. IN REPLY, THE LD.DR VEHEMENTLY SUPPORTED THE ORD ER OF THE AO AND THE LD.CIT(A) 6. WE HAVE CONSIDERED THE RIVAL SUBMISSIONS. 7. ADMITTEDLY, FOR THE PURPOSE OF REGULAR COMPUTATI ON OF INCOME AND THE TAX THEREON, THE INCOME GENERATED BY THE SALE O F THE AGRICULTURAL LAND TO THE EXTENT OF RS.7,90,68,000/- HAS BEEN EXCLUDED IN VIEW OF THE PROVISIONS OF SEC.2(1A) R.W.S.10(1) OF THE ACT. THE FACT THAT THE SAID INCOME FROM THE SALE OF THE AGRICULTURAL LAND WHICH IS EXEMPTED IS NOT IN DISPUTE, THE QUESTION THAT WOULD ARISE IS WHETHER T HE SAME HAS TO BE CONSIDERED AND INCLUDED WHEN COMPUTING THE BOOK PRO FITS FOR THE PURPOSE OF SEC.115JB OF THE ACT. SUB-SECTION 5 TO SEC.115J B CLEARLY PROVIDES THAT ALL THE PROVISIONS OF IT ACT SHALL APPLY TO EVERY A SSESSEE BEING A COMPANY MENTIONED IN SEC.115JB. THIS BEING SO, THOUGH, ADMI TTEDLY IN VIEW OF THE PRINCIPLES LAID DOWN BY THE DECISION OF THE HONBLE JURISDICTIONAL HIGH COURT IN THE CASE OF M/S.METAL & CHROMIUM PLATER (P) LTD. , REFERRED TO SUPRA, THE ASSESSEE WOULD BE ENTITLED TO THE RELIEF U/S.10(1) R.W.S. 2(1A) IN RESPECT ITA NO.401/CHNY/2015 :- 4 -: OF THE PROFITS FROM THE SALE OF AGRICULTURAL LAND F OR THE PURPOSE OF COMPUTATION OF BOOK PROFITS U/S.115JB OF THE ACT. 8. IN THE RESULT, THE APPEAL FILED BY THE ASSESSEE IS ALLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON THE 17 TH DAY OF JUNE, 2019, IN CHENNAI. SD/- SD/- ( . ) ( S. JAYARAMAN ) /ACCOUNTANT MEMBER ( ) (GEORGE MATHAN) /JUDICIAL MEMBER /CHENNAI, 2 /DATED: 17 TH JUNE, 2019. TLN + )34 54 /COPY TO: 1. ( /APPELLANT 4. 6 /CIT 2. )*( /RESPONDENT 5. 4 ) /DR 3. 6 ( ) /CIT(A) 6. /GF