PALM SHELTER ESTATE DEVELOPMENT LLP (PALM SHELTER ESTATE DEVELOPMENT PRIVATE LIMITED SINCE CONVERTED TO LLP), MUMBAI V. DEPUTY CIT CEN CIR 4(2), MUMBAI

ITA 5944/MUM/2017

• Counselvise Citation: [2019] 115 COUNSELVISE.COM (IT) 8715 (ITAT-MUMBAI)
• Duration Of Justice: 1 year(s) 11 month(s) 23 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 12-09-2019
• Appeal Filed By: Assessee
• Order Result: Allowed
• Bench Allotted: C
• Assessment Year: 2013-2014
• Appeal Filed On: 19-09-2017
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Keywords: Capital Gains
• Section: 143(3); 115JB; 54EC; 2

Judgement Text

1 ITA 5944/MUM/2017 IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH C, MUMBAI BEFORE SHRI R.C. SHARMA, ACCOUNTANT MEMBERAND SHRI PAWAN SINGH, JUDICIAL MEMBER ITA NO. 5944/MUM/2017 FOR ASSESSMENT YEAR : 2013-14 PALM SHELTER ESTATE DEVELOPMENT LLP (PALM SHELTER ESTATE DEVELOPMENT PVT LTD SINCE CONVERTED TO LLP), PLOT NO.C-30, G BLOCK OPP SIDBI, BANDRA KURLA COMPLEX, BANDRA (E), MUMBAI-400 051 PAN :AAACP2732R VS DY.CIT (OSD), CIRCLE 2(2), MUMBAI APPELLANT RESPONDEDNT APPELLANT BY SHRI NITESH JOSHI RESPONDENT BY SHRI ABI RAMA KARTIKEYAN DATE OF HEARING 03-09-2019 DATE OF PRONOUNCEMENT 12-09-2019 O R D E R PER PAWAN SINGH, JUDICIAL MEMBER : THIS APPEAL BY ASSESSEE IS DIRECTED AGAINST THE OR DER OF CIT(A)-2, MUMBAI DATED 30-10-2015, WHICH IN TURN, ARISES FROM ASSESSMENT ORDER DATED 17-01-2014 PASSED U/S 143(3) FOR AY 2011-12. 2. AT THE OUTSET OF HEARING, THE LD.AR OF THE ASSES SEE SUBMITS THAT IN THE RETURN OF INCOME, THE ASSESSEE CLAIMED DEDUCTION OF RS.50 LAKHS AS EXEMPTION U/S 54EC. THE AO COMPLETED ASSESSMENT ON 17-01-201 4 AND COMPUTED THE BOOK PROFIT TO RS.71,10,711. IN THE ASSESSMENT ORD ER, THE AO HELD THAT THE ASSESSEE IS NOT ENTITLED FOR EXCLUSION OF RS.50 LAK HS (EXEMPTION U/S 54EC 2 ITA 5944/MUM/2017 WHILE COMPUTING BOOK PROFIT U/S 115JB). THE LD.AR SUBMITS THAT IN ASSESSEES GROUP CASE, WHICH HAS ALSO EARNED SIMILA R CAPITAL GAIN ON SALE OF PART OF ASSET, THE TRIBUNAL ALLOWED RELIEF TO THE A SSESSEE BY FOLLOWING THE DECISION OF MADRAS HIGH COURT IN CIT VS METAL & CHR OMIUM PLATER (P.) LTD (2016) 76 TAXMANN.COM229 (MADRAS). THE LD.AR OF TH E ASSESSEE ALSO FURNISHED COPY OF ORDER OF TRIBUNAL IN THE CASE OF ASSESSEES CO-PARTNER / GROUP CASE IN ITA NO.3910/MUM/2016 DATED 08-08-2018. 3. ON THE OTHER HAND, THE LD.DR FOR THE REVENUE SUP PORTED THE ORDER OF LOWER AUTHORITIES. THE LD. DR FURTHER SUBMITS THAT SECTION 115JB IS A SPECIAL PROVISION AND THE MATTER MAY BE RESTORED TO THE FIL E OF THE AO FOR VERIFICATION OF FACT AND TO PASS THE ORDER AFRESH. 4. WE HAVE CONSIDERED THE SUBMISSIONS OF BOTH THE P ARTIES, PERUSED THE ORDERS OF LOWER AUTHORITIES AND THE DECISION CITED BY THE LD.AR OF THE ASSESSEE. WE HAVE NOTED THAT IN ASSESSEES CO-OWNE RS CASE, THE TRIBUNAL HAS ALLOWED RELIEF ON IDENTICAL ISSUE BY PASSING THE FO LLOWING ORDER:- 7. WE HAVE HEARD THE RIVAL SUBMISSIONS AND PERUSED THE RELEVANT MATERIALS ON RECORD. THE REASONS FOR OUR DECISIONS ARE GIVEN BEL OW . IN VEEKAYLAL INVESTMENT CO. (SUPRA), RELIED ON BY THE LD. DR, THE HONBLE HIGH COURT HELD THAT IF FOR COMPUTING THE TOTAL INC OME UNDER THE NORMAL PROVISIONS, THE CAPITAL GAINS COMPUTED U/S 45 HAS T O BE TAKEN INTO ACCOUNT, IT WAS NOT UNDERSTOOD HOW IN COMPUTING THE BOOK PRO FITS U/S 115J, THE ASSESSEE COULD EXCLUDE CAPITAL GAINS. 3 ITA 5944/MUM/2017 THE FACTS IN THE INSTANT CASE ARE DIFFERENT AS DELI NEATED BELOW. IN METAL & CHROMIUM PLATER (P.) LTD. (SUPRA), THE ASSESSEE FILED ITS RETURN OF INCOME CLAIMING EXEMPTION U/S 54EC OF THE ACT. T HE AO DID NOT QUESTION THE ELIGIBILITY OF THE ASSESSEE TO SUCH EX EMPTION IN REGULAR COMPUTATION. IN SO FAR AS THE TAX PAYABLE AS PER RE GULAR COMPUTATION WAS LESS THAN 7.5% OF THE BOOK PROFITS, THE PROVISIONS OF MINIMUM ALTERNATE TAX (MAT) STOOD ATTRACTED. THE AO, WHILE PROCESSING THE COMPUTATION OF TAX IN TERMS OF SECTION 115JB, TOOK A VIEW THAT THE ASSESSEE WAS NOT ENTITLED TO THE GRANT OF RELIEF U/S 54EC. THE CIT(A) AS WELL AS TRIBUNAL, HOWEVER, ALLOWED THE ASSESSEES CLAIM. ON REVENUES APPEAL, THE HONBLE HIGH COURT HELD THAT (I) THE ALLOWANCE OR OTHERWISE OF THE CLA IM UNDER SECTION 54EC HAS TO BE SEEN IN THE CONTEXT OF THE PROVISIONS OF SECT ION 115JB WHICH IS SELF CONTAINED CODE OF ASSESSMENT. THE LEVY OF TAX IS ON THE BOOK PROFITS AFTER EFFECTING VARIOUS UPWARD AND DOWNWARD ADJUSTMENTS A S SET OUT IN TERMS OF THE EXPLANATION THERETO. THE PROVISIONS OF SUB-SECT ION (5) OF SECTION 115JB OPEN THE ASSESSMENT TO THE APPLICATION OF ALL OTHER PROVISIONS CONTAINED IN THE ACT EXCEPT IF SPECIFICALLY BARRED BY THAT SECTI ON ITSELF, (II) 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 115JB THUS ADMITS OF THE GRANT OF RELIEF UNDER SECTION 54EC IN AN ASSESSMENT THERE UNDER, (III) THUS, WHILE AN ASSESSMENT UNDER SECTIO N 115JB WOULD BE CONCLUDED EXCLUSIVELY ON THE BASIS OF THE BOOK PROF ITS AS ADJUSTED BY THE ITEMS SET OUT IN THE EXPLANATION THERE UNDER, IN AN ASSESSMENT IN TERMS OF SECTION 115JA OR JB, THE ADJUSTED BOOK PROFITS WOUL D BE FURTHER SUBJECTED TO THE EFFECT OF OTHER PROVISIONS OF THE ACT THAT A RE SPECIFICALLY BROUGHT INTO PLAY BY VIRTUE OF SUB-SECTION (4) OF SECTION 115JA AND (5) OF SECTION 115JB. 7.1 IN THE INSTANT CASE, THE AO HAS ALLOWED THE CLA IM OF DEDUCTION OF RS.50,00,000/- U/S 54EC, WHILE CALCULATING THE NORM AL INCOME. ONLY WHEN COMPUTING THE BOOK PROFIT U/S 115JB, THE AO HAS DIS ALLOWED THE CLAIM OF DEDUCTION OF RS.50,00,000/- U/S 54EC. 4 ITA 5944/MUM/2017 FACTS BEING IDENTICAL, WE FOLLOW THE ABOVE JUDGMENT OF THE HONBLE MADRAS HIGH COURT AND HOLD THAT THE ASSESSEE-COMPAN Y IS ENTITLED TO CLAIM DEDUCTION U/S 54EC WHILE CALCULATING BOOK PROFIT U/ S 115JB OF THE ACT. 5. CONSIDERING THE DECISION OF TRIBUNAL ON IDENTICA L ISSUE, THE GROUND OF APPEAL RAISED BY ASSESSEE IS ALLOWED. NO CONTRARY F ACTS OR LAW IS BROUGHT TO OUR NOTICE TO TAKE OTHER VIEW. 6. IN THE RESULT, APPEAL FILED BY THE ASSESSEE IS A LLOWED. ORDER PRONOUNCED IN THE OPEN COURT ON 12-09-2019. SD/- SD/- (R.C. SHARMA) (PAWAN SINGH) ACCOUNTANT MEMBER JUDICIALMEMBER MUMBAI, DT : 12 TH SEPTEMBER, 2019 PK/- COPY TO : 1. APPELLANT 2. RESPONDENT 3. CIT(A) 4. CIT 5. DR /TRUE COPY/ BY ORDER ASSTT. REGISTRAR, ITAT, MUMBAI