THE ACIT, CIRCLE - 2(1), Vijayawada V. M/s Buddha Palitha Timber Estates Pvt. Ltd., Vijayawada

ITA 507/VIZ/2014

• Counselvise Citation: [2017] 126 COUNSELVISE.COM (IT) 6543 (ITAT-VISAKHAPATNAM)
• Duration Of Justice: 3 year(s) 2 month(s) 10 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 08-11-2017
• Appeal Filed By: Department
• Order Result: Partly Allowed
• Bench Allotted: DB
• Assessment Year: 2011-2012
• Appeal Filed On: 28-08-2014
• Result in Favour of: Partly Allowed
• Court: TRIBUNAL
• Keywords: Business income
• Section: 115JB

Judgement Text

, , IN THE INCOME TAX APPELLATE TRIBUNAL, VISAKHAPATNAM BENCH, VISAKHAPATNAM . , . . , BEFORE SHRI V. DURGA RAO, JUDICIAL MEMBER & SHRI D.S. SUNDER SINGH , ACCOUNTANT MEMBER . / I . T .A.NO. 50 7 /VIZ/ 201 4 ( / ASSESSMENT YEAR: 20 11 - 12 ) THE ACIT, CIRCLE - 2(1) CENTRAL REVENUES BUILDING M.G.ROAD VIJAYAWADA 520 002 M/S BUDHAPALITHA TIMBER ESTATES PVT. LTD., D.NO.40 - 6 - 3, 3 RD FLOOR NIMMAGADDA SOMASANKARA RAO STREET, OLD REVENUE COLONY, LABBIPET, VIJAYAWADA 520 010 [ PAN : A AD CB3447N ] ( / APPELLANT) ( / RESPONDENT) / REVENUE BY : SHRI M.N.MURTHY NAIK, DR / ASSESSEE BY : SHRI G.V.N.HARI, AR / DATE OF HEARING : 2 5 . 10 .2017 / DATE OF PRONOUNCEMENT : 08 .1 1 .2017 / O R D E R PER D.S. SUNDER SINGH, ACCOUNTANT MEMBER: 1. THIS APPEAL IS FILED BY THE REVENUE AGAINST THE ORDER OF THE COMMISSIONER OF INCOME TAX ( APPEALS ) , VIJAYAWADA VIDE ITA 2 ITA NO. 50 7 /VIZ/201 4 M/S BUDHA PALITHA TIMBER ESTATES PVT. LTD., VIJAYAWADA NO.5 37 / CIT(A) / VJA /201 3 - 1 4 DATED 30 .0 6 .201 4 FOR THE ASSESSMENT YEAR 20 11 - 12 . 2. ALL THE GROUNDS OF APPEAL ARE RELATED TO THE ASSESSMENT OF INTEREST AS INCOME FROM OTHER SOURCES. THE ASSESSEE IS CARRYING ON THE BUSINESS OF REAL ESTATE I.E. PURCHASE OF LAND AND DEVELOPING AND SELLING THE SAME. DURING THE PREVIOUS YEAR RELEVANT TO THE ASSESSMENT YEAR 201 1 - 1 2 , THE ASSESSEE FILED T HE RETURN OF INCOME ADMITTING TOTAL INCOME OF RS.1,48,34,643/ - . DURING THE ASSESSMENT PROCEEDINGS, THE ASSESSING OFFICER FOUND THAT THE ASSESSEE RECEIVED THE INTEREST INCOME OF RS.1,55,66,971/ - BUT THE RECEIPT OF INTEREST WAS OFFERED UNDER THE HEAD BUSIN ESS INCOME . THE ASSESSING OFFICER WAS OF THE VIEW THAT THE INTEREST RECEIVED BY THE ASSESSEE WAS ON FIXED DEPOSITS MADE IN BANKS WITH AN INTENTION TO EARN THE INTEREST INCOME, HENCE THE SAID SUM REQUIRED TO BE ASSESSED AS INCOME FROM OTHER SOURCES. FOR THE PURPOSE OF ASSESSING THE INCOME AS INCOME FROM OTHER SOURCES , T HE ASSESSING OFFICER RELIED ON THE DECISIONS OF TUTICORIN ALKALI CHEMICALS AND FERTILIZERS LTD. [227 ITR 271 SC] AND ACCORDINGLY COMPUTED THE INTEREST INCOME AS INCOME FROM OTHER SOURCES . THE ASSESSING OFFICER ALSO COMPUTED THE INCOME U/S 115JB AT RS.89,01,524/ - . 3 ITA NO. 50 7 /VIZ/201 4 M/S BUDHA PALITHA TIMBER ESTATES PVT. LTD., VIJAYAWADA 3. AGGRIEVED BY THE ORDER OF THE ASSESSING OFFICER, THE ASSESSEE WENT ON APPEAL BEFORE THE CIT AND THE LD.CIT (A) ALLOWED THE APPEAL OF THE ASSESSEE AND DIRECTED THE ASSESSING OFFICER TO TREAT THE INTEREST INCOME AS BUSINESS INCOME AND NOT AS INCOME FROM OTHER SOURCES. SIMILARLY, FOR COMPUTING THE BOOK PROFITS U/S 115JB, THE LD.CIT(A) HAS DIRECTED THE ASSESSING OFFICER NOT TO MAKE ANY OTHER ADJUSTMENTS EXCEPT AS PROVIDED FOR U/ S 115JB OF THE ACT . AGGRIEVED BY THE ORDER OF THE LD.CIT(A) THE REVENUE IS IN APPEAL BEFORE US. 4 . WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE MATERIAL PLACED ON RECORD. IN THIS CASE, T HE ASSESSEE FILED THE RETURN OF INCOME ADMITTING TOTA L INCOME OF RS.1,48,34,643/ - AND ACCORDING TO THE ASSESSING OFFICER, THE ASSESSEE INCLUDED THE INTEREST INCOME OF RS.1,55,66,971/ - RECEIVED ON FIXED DEP OSITS IN THE BUSINESS INCOME , HENCE ASSESSED THE INTEREST RECEIVED AS INCOME FROM OTHER SOURCES SEPARATELY . ONCE, THE INTEREST RECEIVED IS RE DUC ED FROM THE BUSINESS INCOME AND ASSESSED SEPARATELY , THE BUSINESS INCOME RESULT ED INTO LOSS OF RS.7,32,328/ - [ RS.1,55,66,971 - 1,48,34,643] WHICH SHOULD HAVE BE EN ALLOWED AS SET OFF FROM THE INCOME FROM OTHER SOURCES AND COMPUTE THE TOTAL INCOME UNDER THE NORMAL PROVISIONS OF THE ACT . WHILE COMPUTING THE TOTAL INCOME, THE ASSESSING 4 ITA NO. 50 7 /VIZ/201 4 M/S BUDHA PALITHA TIMBER ESTATES PVT. LTD., VIJAYAWADA OFFICER DID NOT ALLOW THE SET OFF OF BUSINESS LOSS INCURRED BY THE ASSESSEE CORRECTLY . BY NOT ALLOWING THE CORRECT SET OFF OF BU SINESS LOSS FROM THE INCOME FROM OTHER SOURCES, THE ASSESSING OFFICER HAS OVERSTATED THE TOTAL INCOME AND COMMITTED AN ERROR. FURTHER THE ASSESSING OFFICER WHILE COMPUTING THE INCOME UNDER THE NORMAL PROVISIONS ALLOWED THE SET OFF OF THE BUSINESS LOSS AS COMPUTED U/S 115JB INSTEAD OF BUSINESS LOSS AS PER NORMAL COMPUTATION. FROM THE ABOVE, IT IS CLEAR THAT THE AO HAS COMMITTED THE MULTIPLE MISTAKES WHILE COMPUTING THE TOTAL INCOME OF THE ASSESSEE AS WELL AS PROFITS U/S 115JB, HENCE, WE ARE OF THE CONSIDERED OPINION THAT THE ASSESSING OFFICER HAS MISUNDERSTOOD THE PROVISIONS OF I.T.ACT AND REQUIRE TO RECOMPUTE THE TOTAL INCOME AS PER THE NORMAL PROVISIONS OF I.T.ACT AND BOOK PROFITS AS PER THE PROVISIONS OF 115JB OF I.T.ACT. THEREFORE, WE SE T ASIDE THE ORDERS OF THE LOWER AUTHORITIES AND REMIT THE MATTER BACK TO THE FILE OF THE ASSESSING OFFICER AND DIRECT THE AO TO DETERMINE THE INCOME UNDER VARIOUS HEADS CORRECTLY AND ALLOW THE SET OFF OF BUSINESS LOSSES AS PER SECTION 70 AND 71 OF I.T.ACT AND RECOMPUTE THE TOTAL INCOME CORRECTLY. 4 . 1 . WITH REGARD TO THE COMPUTATION OF PROFITS U/S 115JB, THE ASSESSING OFFICER IS NOT PERMITTED TO MAKE ANY ADJUSTMENTS OTHER THAN WHAT IS PROVIDED IN SECTION 115JB OF THE ACT . THIS VIEW IS SUPPORTED BY THE 5 ITA NO. 50 7 /VIZ/201 4 M/S BUDHA PALITHA TIMBER ESTATES PVT. LTD., VIJAYAWADA DECI SION OF HONBLE SUPREME COURT IN THE CASE OF APPOLLO TYRES VS. COMMISSIONER OF INCOME TAX [255 ITR 273]. T HEREFORE, WE DO NOT FIND ANY INFIRMITY IN THE ORDER OF THE LD.CIT(A) AND THE SAME IS UPHELD. 5 . IN THE RESULT, APPEAL OF THE REVENUE IS PARTLY ALLOWE D FOR STATISTICAL PURPOSE. T HE ABOVE ORDER WAS PRONOUNCED IN THE OPEN COURT ON 8 TH NOV 20 17 . SD/ - SD/ - ( . ) ( . . ) (V. DURGA RAO) ( D.S. SUNDER SINGH ) /JUDICIAL MEMBER /ACCOUNTANT MEMBER /VISAKHAPATNAM /DATED : 08 . 1 1 .2017 L. RAMA, SPS / COPY OF THE ORDER FORWARDED TO: - 1. / REVENUE - THE ACIT, CIRCLE - 2(1), CENTRAL REVENUES BUILDING , M.G.ROAD, VIJAYAWADA 520 002 2. - ASSESSEE - M/S BUDHAPALITHA TIMBER ESTATES PVT. LTD., D.NO.40 - 6 - 3, 3 RD FLOOR, NIMMAGADDA SOMASANKARA RAO STREET, OLD REVENUE COLONY, LABBIPET, VIJAYAWADA 520 010 3 . THE COMMISSIONER OF INCOME TAX - , VIJAYAWADA 4. THE COMMI SSIONER OF INCOME TAX (APPEALS), VIJAYAWADA 5 . , , / DR, ITAT, VISAKHAPATNAM 6 . / GUARD FILE / BY ORDER // TRUE COPY // SR. PRIVATE SECRETARY ITAT, VISAKHAPATNAM