J. B BODA & CO. P.LTD, MUMBAI V. DCIT 1(2), MUMBAI

ITA 486/MUM/2017

• Counselvise Citation: [2018] 125 COUNSELVISE.COM (IT) 1744 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 7 month(s) 15 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 07-09-2018
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: Not Allotted
• Assessment Year: 2011-2012
• Appeal Filed On: 23-01-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: A MOHAN LD
• Assessee Lawyers: INDRA ANAND LD
• Keywords: Business income
• Section: 143(3); 115JB; 11

Judgement Text

ITA NO. 486/MUM/2017 J.B. BODA & CO. PVT.LTD ASSESSMENT YEAR-2011-12 IN THE INCOME TAX APPELLATE TRIBUNAL J BENCH, MUMBAI , BEFORE SHRI JOGINDER SINGH, JM AND SHRI MANOJ KUMAR AGGARWAL, AM I.T.A. NO.486/MUM/2017 ( ASSESSMENT YEAR: 2011-12) J.B. BODA & CO. PRIVATE LIMITED MAKER BHAVAN,1 SIR V.T.MARG MUMBAI 400 020 VS. DEPUTY COMMISSIONER OF INCOME TAX -1(2) [PRESENTLY ACIT-1(2)(1)] AAYKAR BHAVAN, M.K.ROAD MUMBAI-400 020 PAN/GIR NO. AABCJ-2289-F ( APPELLANT ) : ( !' RESPONDENT ) ASSESSEE BY : INDRA ANAND, LD. AR REVENUE BY : A.MOHAN, LD. SR. DR # $ DATE OF HEARING : 23/08/2018 %&' $ / DATE OF PRONOUNCEMENT : 07/09/2018 O R D E R PER MANOJ KUMAR AGGARWAL (ACCOUNTANT MEMBER) 1. AFORESAID APPEAL BY ASSESSEE FOR ASSESSMENT YEAR [AY] 2011-12 CONTEST THE ORDER OF LD. COMMISSIONER OF INCOME-TAX (APPEALS)-2 [CIT(A)], MUMBAI, APPEAL NO.CIT(A)-2/IT-409/2013-14 DATED 08/11/2016 BY RAISING THE FOLLOWING SOLE GROUND OF APPEAL:- 1. THE LEARNED COMMISSIONER OF APPEALS ERRED IN CON FIRMING THE COMPUTATION OF BOOK PROFITS MADE BY THE ASSESSING OFFICER UNDER SECTION 115JB OF THE INCOME TAX ACT, 1961 WHEREIN THE ADDED EXPENDITURE ON REPAIRS AND MAINTENANCE RS.224,898/- DISALLOWED UNDER NORMAL P ROVISIONS WITHOUT ITA NO. 486/MUM/2017 J.B. BODA & CO. PVT.LTD ASSESSMENT YEAR-2011-12 2 APPRECIATING THAT EXPLANATION 1 TO SECTION 115JB PR OVIDED SPECIFIC ADDITIONS/ DELETIONS TO BE MADE TO ARRIVE AT BOOK PROFITS WHIC H DID NOT INCLUDE DISALLOWANCES UNDER NORMAL INCOME TAX PROVISIONS. AS EVIDENT FROM GROUND OF APPEAL, THE SOLE SUBJECT MATTER OF THIS APPEAL IS ADJUSTMENT OF BOOK PROFITS U/S 115JB. THE ASSESS MENT FOR IMPUGNED AY WAS FRAMED BY LD. DEPUTY COMMISSIONER OF INCOME TAX-1(2) U/S 143(3) OF THE INCOME TAX ACT, 1961 ON 27/12/2013 WHEREIN THE INCOME OF THE ASSESSEE HAS BEEN DETERMINED AT RS.133.23 LA CS UNDER NORMAL PROVISIONS AFTER CERTAIN ADDITIONS / DISALLOWANCES AS AGAINST RETURNED INCOME OF RS.130.34 LACS E-FILED BY THE ASSESSEE ON 25/11/2011. THE BOOK PROFITS FOR THE PURPOSE OF COMPUTING MINIMUM ALTERNATIVE TAX [ MAT ] U/S 115JB HAS BEEN COMPUTED AT RS.224.51 LACS AS AGAINST RS.221.63 LACS COMPUTED BY THE ASSESSEE. DURING IMP UGNED AY, THE ASSESSEE BEING RESIDENT CORPORATE ASSESSEE WAS ENGAGED AS RE- INSURANCE BROKER . 2. DURING ASSESSMENT PROCEEDINGS, AN AMOUNT OF RS.2 ,24,898/- DEBITED BY THE ASSESSEE UNDER THE HEAD REPAIRS AND MAINTENANCE OF BUILDING, WAS DISALLOWED WHILE COMPUTING BUSINESS INCOME SINCE THE SAME WAS INCURRED TO EARN THE RENTAL INCOME WHICH W AS SEPARATELY ASSESSED UNDER THE HEAD INCOME FROM HOUSE PROPERTY . THE AFORESAID ADDITION WAS MADE WHILE ARRIVING AT THE NORMAL INCOME AS WELL AS WHILE COMPUTING BOOK PROFITS U/S 115JB. SINCE TAX LIABILITY U/S 115JB WAS HIGHER, THE ASSESSEE WAS LIABLE TO PAY TAX AS PER MAT PROVISIONS U/S 115JB. 3. THE ASSESSEE, BEING AGGRIEVED BY AFORESAID ADJUS TMENT U/S 115JB, AGITATED THE SAME WITHOUT ANY SUCCESS BEFORE LD. CI T(A) VIDE IMPUGNED ITA NO. 486/MUM/2017 J.B. BODA & CO. PVT.LTD ASSESSMENT YEAR-2011-12 3 ORDER DATED 08/11/2016 WHEREIN THE STAND OF LD. AO, IN THIS REGARD, GOT CONFIRMED. AGGRIEVED, THE ASSESSEE IS IN FURTHER AP PEAL BEFORE US. 4. THE LD. AUTHORIZED REPRESENTATIVE FOR ASSESSEE [ AR], MS. INDRA ANAND , PLACED RELIANCE ON THE DECISION OF HONBLE APEX C OURT RENDERED IN APOLLO TYRES LTD. VS CIT [122 TAXMAN 562] TO SUBMIT THAT LD. AO HAD NO JURISDICTION TO GO BEYOND NET PROFIT SHOWN IN PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN SECTION 11 5JB. PER CONTRA , LD. SENIOR DR PLACED RELIANCE ON THE STAND OF LD. CIT(A ). 5. WE HAVE CAREFULLY HEARD THE RIVAL CONTENTIONS AN D PERUSED RELEVANT MATERIAL ON RECORD INCLUDING CITED JUDICIAL PRONOUN CEMENT AND STATUTORY PROVISIONS AS CONTAINED IN SECTION 115 JB OF THE IN COME TAX ACT, 1961. IT IS UNDISPUTED FACT THAT THE ASSESSEE IS A CORPORATE ENTITY AND HAS DRAWN ITS ACCOUNTS IN ACCORDANCE WITH THE PROVISION S OF THE COMPANIES ACT. ANOTHER UNDISPUTED FACT IS THAT IT HAS DEBITED AFORESAID EXPENDITURE IN THE PROFIT AND LOSS ACCOUNT AND THE ADJUSTMENT OF SUCH A NATURE, WHILE ARRIVING AT BOOK PROFITS, IS NOT ENVISAGED BY EXPLANATION 1 TO SECTION 115JB, WHICH AS PER SETTLED LEGAL POSITION, IS A SE PARATE AND COMPLETE CODE IN ITSELF. UPON DUE CONSIDERATION, WE FIND THA T THE FACTS OF THE PRESENT CASE ARE SQUARELY COVERED BY THE CITED JUDG MENT OF HONBLE APEX COURT RENDERED IN THE CONTEXT OF ERSTWHILE SEC TION 115J WHEREIN THE HONBLE HIGH COURT HAS HELD AS UNDER:- THEREFORE, WE ARE OF THE OPINION THAT THE ASSESSIN G OFFICER WHILE COMPUTING THE INCOME UNDER SECTION 115J HAS ONLY THE POWER OF EXA MINING WHETHER THE BOOKS OF ACCOUNT ARE CERTIFIED BY THE AUTHORITIES UNDER THE COMPANIES ACT AS HAVING BEEN PROPERLY MAINTAINED IN ACCORDANCE WITH THE COMPANIE S ACT. THE ASSESSING OFFICER THEREAFTER HAS THE LIMITED POWER OF MAKING INCREASE AND REDUCTIONS AS PROVIDED FOR IN THE EXPLANATION TO THE SAID SECTION. TO PUT IT D IFFERENTLY, THE ASSESSING OFFICER DOES NOT HAVE THE JURISDICTION TO GO BEHIND THE NET PROFIT SHOWN IN THE PROFIT AND LOSS ACCOUNT EXCEPT TO THE EXTENT PROVIDED IN THE EXPLAN ATION TO SECTION 115J. ITA NO. 486/MUM/2017 J.B. BODA & CO. PVT.LTD ASSESSMENT YEAR-2011-12 4 THE PROVISIONS OF SECTION 115JB ARE ON SIMILAR LINE S AS THE PROVISIONS OF SECTION 115J. THEREFORE, DRAWING ANALOGY FROM THE R ATIO OF THE ABOVE CITED DECISION OF HONBLE APEX COURT, WE DELETE THE IMPUGNED ADJUSTMENT U/S 115JB AND ALLOW THE GROUND RAISED IN THE APPEAL. 6. RESULTANTLY, THE ASSESSEES APPEAL STANDS ALLOWE D. ORDER PRONOUNCED IN THE OPEN COURT ON 07 TH SEPTEMBER, 2018 SD/- SD/- (JOGINDER SINGH) (MANOJ KUMAR AGGARWAL) / JUDICIAL MEMBER / ACCOUNTANT MEMBER (# MUMBAI; DATED :07.09.2018 SR.PS:-THIRUMALESH ! COPY OF THE ORDER FORWARDED TO : 1. / THE APPELLANT 2. !' / THE RESPONDENT 3. ) / THE CIT(A) 4. ) / CIT CONCERNED 5. * !$+ +' (# / DR, ITAT, MUMBAI 6. ,-. # GUARD FILE ' / BY ORDER, # '$% (DY./ASSTT.REGISTRAR) (# / ITAT, MUMBAI