BAKHTAWAR CONSTRUCTION CO., P.LTD, V. ITO 2(1)(1),

MA 548/MUM/2011

• Counselvise Citation: [2012] 123 COUNSELVISE.COM (IT) 8797 (ITAT-MUMBAI)
• Duration Of Justice: 6 month(s) 27 day(s)
• Appeal Type: Miscellaneous Application
• Pronouncement Date: 20-06-2012
• Appeal Filed By: Assessee
• Order Result: Dismissed
• Bench Allotted: B
• Assessment Year: 2004-2005
• Appeal Filed On: 23-11-2011
• Result in Favour of: Revenue
• Court: TRIBUNAL
• Department Lawyers: A K NAYAK
• Assessee Lawyers: AMO GH M GHAISAS
• Keywords: Depreciation; Benefit of exemption
• Section: 115JB; 11

Judgement Text

IN THE INCOME TAX APPELLATE TRIBUNAL 'B' BENCH, MUMBAI BEFORE SHRI D. MANMOHAN, VICE PRESIDENT AND SHRI B. RAMAKOTAIAH, ACCOUNTANT MEMBER MA NO. 548/MUM/2011 (ARISING OUT OF ITA NO. 1814/MUM/2010 (ASSESSMENT YEAR: 2006-07) BAKHTAWAR CONSTRUCTION CO. P. LTD. INCOME TAX OFFIC ER - 2(1)(1) MEHER HOUSE, 1ST FLOOR AAYAKAR BHAVAN, M.K. ROAD 15, CAWASJI PATEL STREET, FORT VS. MUMBAI 400020 MUMBAI 400001 PAN - AAACB 4942 P APPLICANT RESPONDENT APPLICANT BY: SHRI AMOGH M. GHAISAS RESPONDENT BY: SHRI A.K. NAYAK DATE OF HEARING: 01.06.2012 DATE OF PRONOUNCEMENT: 20.06.2012 O R D E R PER D. MANMOHAN, V.P. THIS APPLICATION IS FILED AT THE INSTANCE OF THE AS SESSEE COMPANY AND IT IS DIRECTED AGAINST THE ORDER DATED 25 TH OCTOBER 2011 PASSED BY THE ITAT B BENCH, MUMBAI. 2. ADMITTEDLY, ASSESSEE DECLARED LONG TERM CAPITAL GAI NS BY CREDITING THE SAME IN THE BOOKS OF ACCOUNT PREPARED IN ACCORD ANCE WITH THE PROVISIONS OF PART II & III OF SCHEDULE 6 OF THE CO MPANIES ACT, 1956. SINCE PART OF THE AMOUNT RECEIVED WAS INVESTED IN NABARD, WHICH ARE ELIGIBLE FOR EXEMPTION UNDER SECTION 54EC OF THE ACT, ASSESSEE C ONTENDED BEFORE THE AO THAT ASSESSEE WAS NOT LIABLE TO PAY TAX ON NORMAL C OMPUTATION AND THE SAME HAS TO BE APPLIED FOR THE PURPOSE OF COMPUTING BOOK PROFIT I.E., EVEN WHILE COMPUTING THE BOOK PROFITS UNDER SECTION 115JB OF T HE ACT THE AMOUNT ELIGIBLE FOR EXEMPTION UNDER SECTION 54EC OF THE AC T SHOULD BE REDUCED FROM THE LONG TERM CAPITAL GAINS CREDITED TO THE P & L A CCOUNT FOR THE PURPOSE OF ARRIVING AT THE BOOK PROFIT. MA NO. 548/MUM/2011 BAKHTAWAR CONSTRUCTION CO. P. LTD. 2 3. THE AO AS WELL AS THE CIT(A) ARE OF THE OPINION THA T THERE IS NO PROVISION IN SECTION 115JB TO ALLOW DEDUCTION UNDER SECTION 54EC OF THE ACT. COMPUTATION OF BOOK PROFIT IS PROVIDED UNDER S ECTION 115JB, WHICH IS A SEPARATE CODE BY ITSELF, WHEREIN THE FIRST STEP IS TO COMPUTE BOOK PROFIT BY TAKING INTO CONSIDERATION THE PROFIT DECLARED IN TH E P & L ACCOUNT OF THE ASSESSEE PREPARED IN ACCORDANCE WITH THE PROVISIONS OF PART II & III OF SCHEDULE 6 OF COMPANIES ACT AND THEREAFTER PERMISSI BLE ADJUSTMENTS IN THE FORM OF ADDITIONS AND DEDUCTIONS ARE PROVIDED. ANY CLAIM WHICH DID NOT FORM WITHIN THE COMPASS OF PERMISSIBLE ADJUSTMENTS CANNOT BE TAKEN INTO CONSIDERATION. 4. BEFORE THE CIT(A) THE LEARNED COUNSEL FOR THE ASSES SEE RELIED UPON THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN TH E CASE OF CIT VS. ACE BUILDERS PVT LTD. [2006] 281 ITR 210 BUT THE SAME W AS DISTINGUISHED ON THE GROUND THAT IT WAS NOT ON THE ISSUE OF EXEMPTION UN DER SECTION 54EC OF THE ACT. IT IS ALSO STRESSED THAT THERE IS NO PROVISION IN SECTION 115JB TO ALLOW DEDUCTION UNDER SECTION 54EC IN RESPECT OF CAPITAL GAINS. 5. AGGRIEVED, ASSESSEE CONTENDED THAT IT IS ENTITLED T O THE BENEFIT OF EXEMPTION UNDER SECTION 54EC OF THE ACT EVEN WHILE COMPUTING BOOK PROFIT CHARGEABLE TO TAX UNDER SECTION 115JB OF THE ACT. A NOTHER FACET OF THE ARGUMENT, AS RAISED IN GROUND (B), IS THAT THE LEAR NED CIT(A) ERRED IN HOLDING THAT THE DECISION OF THE HON'BLE BOMBAY HIGH COURT IN THE CASE OF ACE BUILDERS PVT. LTD. (INCOME TAX APPEAL NO. 1006 OF 2 000) IS NOT APPLICABLE TO THE FACTS OF THE PRESENT CASE. AS CAN BE NOTICED FR OM THE AFOREMENTIONED GROUND, IT IS ONLY AN EXTENSION OF THE MAIN ISSUE A ND IT IS NOT INDEPENDENT OF THE MAIN ISSUE. AT THE TIME OF HEARING THE LEARNED COUNSEL FAIRLY ADMITTED THAT THE DECISION OF THE HON'BLE KERALA HIGH COURT IN TH E CASE OF N.J. JOSE & CO. P. LTD. VS. ACIT [2010] 321 ITR 132 SQUARELY APPLIES T O THE FACTS OF THE CASE AND THERE IS NO CONTRARY DECISION OF ANY OTHER HIGH COU RT ON THIS ISSUE. 6. IN FACT THE LOG BOOK OF THE VICE PRESIDENT (MZ) SHO WS THAT THE LEARNED COUNSEL FAIRLY ADMITTED THAT THE ISSUE STANDS COVER ED AGAINST THE ASSESSEE BUT IT WAS CONTENDED THAT PROVISION OF SECTION 54EC OVERRIDES SECTION 115JB OF THE ACT AND GOING BY THE INTENTIONS OF THE LEGIS LATURE, DEPOSITS MADE IN NABARD ARE MEANT TO BENEFIT THE ASSESSEE. PAGE NO. 74 OF THE PAPER BOOK MA NO. 548/MUM/2011 BAKHTAWAR CONSTRUCTION CO. P. LTD. 3 (INTERNAL PAGE NO. 13 OF THE ACE BUILDERS PVT. LTD. CASE) WAS REFERRED TO SUBMIT THAT SECTION 50 CARVES OUT AN EXCEPTION IN R ESPECT OF DEPRECIABLE ASSETS AND PROVIDES THAT WHERE DEPRECIATION HAS BEE N CLAIMED AND ALLOWED ON THE ASSET, A DIFFERENT METHOD OF COMPUTATION OF CAPITAL GAIN IS PROVIDED IN THE ACT. 7. THE BENCH, WHILE PASSING THE ORDER, HOWEVER, DID NO T REPRODUCE GROUND (B) AND FOLLOWED THE DECISION OF THE HON'BLE KERALA HIGH COURT TO HOLD THAT THE ASSESSEE IS NOT ENTITLED TO DEDUCTION UNDER SECTION 54EC OF THE ACT WHILE COMPUTING THE BOOK PROFIT UNDER SECTION 1 15JB OF THE ACT. 8. UNDER THESE CIRCUMSTANCES THE ASSESSEE FILED THE PR ESENT MISCELLANEOUS APPLICATION STATING THAT GROUND (B) I N THE MEMO OF APPEAL WAS OMITTED TO BE CONSIDERED BY THE TRIBUNAL AND HENCE THERE IS A MISTAKE APPARENT FROM RECORD THAT NEEDS TO BE RECTIFIED BY REFIXING THE CASE FOR HEARING TO CONSIDER GROUND NO. 2. THE LEARNED COUNS EL RELIED UPON THE DECISION OF THE HON'BLE SUPREME COURT IN THE CASE O F JCIT VS. ROLTA INDIA LTD. [2011] 330 ITR 470 IN SUPPORT OF HIS CONTENTIO N THAT EVEN ON THE TAX DETERMINED, BY APPLICATION OF SECTIONS 115J/115JA O F THE ACT, ALL OTHER PROVISIONS OF THE ACT ARE STATED TO BE APPLICABLE A ND THUS THE APEX COURT NOTICED THAT INTEREST UNDER SECTION UNDER SECTION 2 34B IS PAYABLE; BY APPLYING THE SAME ANALOGY EVEN FOR COMPUTATION OF B OOK PROFITS UNDER SECTION 115JB ALL OTHER PROVISIONS OF THE ACT CAN B E SAID TO BE APPLICABLE. 9. ON THE OTHER HAND, THE LEARNED D.R. SUBMITTED THAT THOUGH THE BENCH, WHILE DISPOSING OF THE APPEAL, DID NOT MENTI ON SPECIFICALLY WITH REGARD TO GROUND (B), THE FACT IS THAT SUBSTANTIAL ISSUE WAS DEALT WITH BY NOT GIVING MUCH EMPHASIS TO THE NON-APPLICABLE DECISION . IN THE CASE OF ACE BUILDERS PVT. LTD. (SUPRA) THE COURT WAS NOT DEALIN G WITH THE MATTER OF PERMISSIBLE ADJUSTMENTS TO BE MADE UNDER SECTION 11 5JB OF THE ACT, WHICH WAS RIGHTLY HIGHLIGHTED BY THE LEARNED CIT(A) AND T HE SAID ORDER HAVING BEEN UPHELD BY THE APPELLATE TRIBUNAL, IMPUGNED ORDER DO ES NOT CONTAIN A MISTAKE APPARENT FROM RECORD AND IT HAS TO BE ASSUM ED THAT THE SECOND GROUND, WHICH IS ARGUMENTATIVE IN NATURE, WAS CONSI DERED BY THE TRIBUNAL IMPLIEDLY. IT IS ALSO SUBMITTED THAT THE DECISION I N THE CASE OF ROLTA INDIA LTD. (SUPRA) HAS NO APPLICATION TO THE FACTS OF THE CASE SINCE THE APEX COURT MA NO. 548/MUM/2011 BAKHTAWAR CONSTRUCTION CO. P. LTD. 4 WAS CONCERNED WITH THE METHODOLOGY TO BE FOLLOWED A FTER COMPUTATION OF THE TAXABLE INCOME AND NOT WITH REGARD TO COMPUTATION S CHEME FOR ARRIVING AT THE TAXABLE INCOME. 10. WE HAVE CAREFULLY CONSIDERED THE RIVAL SUBMISSIONS AND PERUSED THE RECORD. AT THE OUTSET IT MAY BE NOTICED THAT THERE WAS OMISSION TO REPRODUCE GROUND (B) IN THE IMPUGNED ORDER BUT THE FACT REMAI NS THAT SUBSTANTIAL ISSUE WAS DEALT WITH BY THE BENCH; THUS, OMISSION TO SPEC IFICALLY MENTION THE DECISION OF THE HON'BLE BOMBAY HIGH COURT, WHICH WA S NOT DIRECTLY APPLICABLE, DOES NOT GIVE RISE TO A MISTAKE APPAREN T FROM RECORD. IN FACT THE OBSERVATION OF THE BENCH THAT THE LEARNED COUNSEL, VERY PAINSTAKINGLY ARGUED THE MATTER, IMPLIES THAT THE OTHER FACETS O F THE LEARNED COUNSELS CONTENTIONS WERE TAKEN DUE NOTE OF. MERELY BECAUSE THERE IS NO SPECIFIC MENTION ABOUT THE NON-APPLICABILITY OF THE RATIO OF ACE BUILDERS CASE, IN OUR CONSIDERED OPINION, IT DOES NOT GIVE RISE TO A MIST AKE APPARENT ON RECORD. 11. ON A CONSPECTUS OF THE MATTER WE ARE OF THE VIEW TH AT THE IMPUGNED ORDER DOES NOT SUFFER FROM ANY MISTAKE APPARENT FRO M RECORD. WE ACCORDINGLY REJECT THE MISCELLANEOUS APPLICATION FI LED BY THE ASSESSEE. ORDER PRONOUNCED IN THE OPEN COURT ON 20 TH JUNE 2012. SD/- SD/- (B. RAMAKOTAIAH) (D. MANMOHAN) ACCOUNTANT MEMBER VICE PRESIDENT MUMBAI, DATED: 20 TH JUNE 2012 COPY TO: 1. THE APPELLANT 2. THE RESPONDENT 3. THE CIT(A) 4, MUMBAI 4. THE CIT II, MUMBAI CITY 5. THE DR, B BENCH, ITAT, MUMBAI BY ORDER //TRUE COPY// ASSISTANT REGISTRAR ITAT, MUMBAI BENCHES, MUMBAI N.P.