DCIT CEN CIR 5(1), MUMBAI V. ACKRUTI CITY LTD, MUMBAI

ITA 7696/MUM/2014

• Counselvise Citation: [2017] 128 COUNSELVISE.COM (IT) 0020 (ITAT-MUMBAI)
• Duration Of Justice: 2 year(s) 6 month(s) 4 day(s)
• Appeal Type: Income Tax Appeal
• Pronouncement Date: 30-06-2017
• Appeal Filed By: Department
• Order Result: Dismissed
• Bench Allotted: A
• Assessment Year: 2011-2012
• Appeal Filed On: 26-12-2014
• Result in Favour of: Assessee
• Court: TRIBUNAL
• Department Lawyers: R P MEENA
• Assessee Lawyers: VIRAL DOSHI
• Section: 143(3); 115JB

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL MUMBAI BENCH A , MUMBAI BEFORE SHRI G.S. PANNU, ACCOUNTANT MEMBER AND SHRI RAVISH SOOD , JUDICIAL MEMBER ITA NO. 7696 /MUM/ 2014 : A.Y : 2011 - 12 DCIT, CENTRAL CIRCLE - 5(1), MUMBAI (APPELLANT) VS. M/S. ACKRUTI CITY LIMITED 6 TH FLOOR, AKRUTI TRADE CENTER, ROAD NO. 7, MAROL, M.I.D.C, ANDHERI (E), MUMBAI 400067 PAN : AAACA6101D (RESPONDENT) APPELLANT BY : SHRI R.P. MEENA RESPONDENT BY : SHRI VIRAL DOSHI DATE OF HEARING : 27 / 06 /201 7 DATE OF PRONOUNCEMENT : 30 /0 6 /201 7 O R D E R PER G.S. PANNU , AM : THE CAPTIONED APPEAL BY THE REVENUE IS DIRECTED AGAINST THE ORDER OF THE CIT(A) - 41 , MUMBAI DATED 28.10.2014 , PERTAINING TO THE ASSESSMENT YEAR 2011 - 12 , WHICH IN TURN HAS ARISEN FROM THE ORDER PASSED BY THE ASSESSING OFFICER DATED 28.3.2014 UNDER SECTION 143(3) OF THE INCOME TAX ACT, 1961 (IN SHORT THE ACT). 2. IN ITS APPEAL, REVENUE HAS RAISED THE FOLLOWING GROUND OF APPEAL: - 1. WHETHER ON THE FACT S AND CIRCUMSTANCES OF THE CASE AND IN LAW, THE LD. CIT(A) ERRED IN HOLDING THAT THE DEBENTURE REDEMPTION RESERVE IS NOT A 2 M/S. ACKRUTI CITY LIMITED ITA NO. 7696/MUM/2014 RESERVE WITHIN THE MEANING OF EXPLANATION 1(B) OF THE SECTION 115JB OF THE INCOME TAX ACT, 1961. THE APPELLANT PRAYS THAT THE ORDE R OF THE COMMISSIONER OF INCOME - TAX (APPEAL) ON THE ABOVE GROUND BE SET ASIDE AND THAT OF THE ASSESSING OFFICER BE RESTORED. 3. AS A PERUSAL OF THE AFORESAID GROUND OF APPEAL REVEALS, THE SOLITARY DISPUTE RELATES TO THE MANNER OF COMPUTATION OF BOOK PROF ITS FOR THE PURPOSES OF DETERMINATION OF TAX LIABILITY U/S 115JB OF THE ACT. NOTABLY, WHILE COMPUTING THE BOOK PROFITS FOR THE PURPOSES OF SEC. 115JB OF THE ACT, THE ASSESSEE - COMPANY DEDUCTED A SUM OF RS.74,75,00,000/ - , WHICH REPRESENTED DEBENTURE REDEMPT ION RESERVE. THE SAID AMOUNT WAS CREATED OUT OF THE PROFITS SET - ASIDE AS DEBENTURE REDEMPTION RESERVE. AS PER THE ASSESSING OFFICER, THE SAID DEBE NTURE REDEMPTION RESERVE WAS A R ESERVE IN TERMS OF CLAUSE (B) OF EXPLANATION TO SEC. 115JB OF THE ACT WHEREAS ACCORDING TO THE ASSES SEE, THE SAID AMOUNT WAS NOT A R ESERVE, BUT IN THE NATURE OF AN ASCERTAINED LIABILITY. THE CIT(A) HAS SINCE UPHELD THE STAND OF THE ASSESSEE BY RELYING ON THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RAYMOND LTD., [2 012] 209 TAXMAN 65 (BOMBAY) AS WELL AS THE JUDGMENT OF THE HON'BLE SUPREME COURT IN THE CASE OF NATIONAL RAYON LTD., 227 ITR 764 (SC) . ACCORDINGLY, THE CIT(A) DIRECTED THE ASSESSING OFFICER TO RE - COMPUTE THE BOOK PROFITS FOR THE PURPOSES OF SEC. 115JB OF THE ACT AFTER EXCLUDING THE AMOUNT OF RS.74,75,00,000/ - SET - ASIDE BY THE ASSESSEE AS DEBENTURE REDEMPTION RESERVE. AGAINST SUCH A DECISION, REVENUE IS IN APPEAL BEFORE US. 3 M/S. ACKRUTI CITY LIMITED ITA NO. 7696/MUM/2014 4. BEFORE US, THE LD. CIT - DR HAS REITERATED THE STAND OF THE ASSESSING OFFICER, WHICH IS PRIMARILY TO THE EFFECT THAT THE IMPUGNED AMOUNT WAS MERELY A RESERVE AND, THEREFORE, WAS NOT DEDUCTIBLE WHILE DETERMINING THE BOOK PROFITS U/S 115JB OF THE ACT. 5. ON T HE OTHER HAND, THE LEARNED REPRESENTATIVE FOR THE ASSESSEE POINTED OUT THAT THE CIT(A) MADE NO MISTAKE IN ALLOWING THE CLAIM OF THE ASSESSEE, WHICH IS ALSO IN CONSONANCE WITH THE DECISION OF THE TRIBUNAL ON A SIMILAR ISSUE IN THE CASE OF JSW ENERGY LTD., [ 2014] 150 ITD 406 (MUMBAI - TRIB.) . 6. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS. IN OUR CONSIDERED OPINION, HAVING REGARD TO THE JUDGMENT OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF RAYMOND LTD. (SUPRA) AS WELL AS THE DECISION OF OUR COORDI NATE BENCH IN THE CASE OF JSW ENERGY (SUPRA) , THE IMPUGNED ISSUE IS NO LONGER RES INTEGRA . IN THE CASE OF JSW ENERGY (SUPRA) , THE TRIBUNAL WAS CONSIDERING THE DEDUCTIBILITY OF THE AMOUNT SET APART AS DEBENTURE REDEMPTION RESERVE FOR THE PURPOSES OF COMPUT ING THE BOOK PROFITS U/S 115JB OF THE ACT. AFTER DETAILED DISCUSSION, IT HAS BEEN HELD THAT ADJUSTMENT OF THE AMOUNT OF DEBENTURE REDEMPTION RESERVE MADE WHILE COMPUTING THE BOOK PROFITS U/S 115JB OF THE ACT IS PERMISSIBLE AND IS WITHIN THE PURVIEW OF THE LAW. THE DECISION OF CIT(A) IS IN CONSONANCE WITH THE AFORESAID LEGAL POSITION AND EVEN BEFORE US, NO CONTRARY DECISION HAS BEEN BROUGHT OUT BY THE 4 M/S. ACKRUTI CITY LIMITED ITA NO. 7696/MUM/2014 REVENUE AND AS A CONSEQUENCE, WE HEREBY AFFIRM THE DECISION OF CIT(A) ON THIS ASPECT. THUS, THE REVENUE F AILS IN ITS APPEAL. 7. IN THE RESULT, APPEAL OF THE REVENUE IS DISMISSED. ORDER PRONOUNCED IN THE OPEN COURT ON 3 0 T H JUNE, 2017. SD/ - SD/ - ( RAVISH SOOD ) JUDICIAL MEMBER ( G.S. PANNU ) ACCOUNTANT MEMBER MUMBAI, DATE : 3 0 T H JUNE , 201 7 * SSL * COPY TO : 1) THE APPELLANT 2) THE RESPONDENT 3) THE CIT(A) CONCERNED 4) THE CIT CONCERNED 5) THE D.R, A BENCH, MUMBAI 6) GUARD FILE BY ORDER DY./ASSTT. REGISTRAR I.T.A.T, MUMBAI