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Income Tax Appellate Tribunal, “B” BENCH, KOLKATA
Before: SHRI SANJAY GARG, HON’BLE & DR. MANISH BORAD, HON’BLE
PER DR. MANISH BORAD, ACCOUNTANT MEMBER :
The captioned appeal filed by the assessee is directed against the order of the National Faceless Appeal Centre (hereinafter ‘the ld. CIT(A)’) passed u/s 250 of the Income Tax Act, 1961 (hereinafter ‘the Act’), dt. 08/06/2023, for Assessment Year 2021-22. 2. The effective ground of appeal is Ground No. 2 wherein the assessee has challenged the finding of the ld. CIT(A) confirming the action of the ld. Assessing Officer of not deducting the income exempted u/s 10(34A) of the Act while computing book profit u/s 115JB of the Act in spite of the fact that exempted income was duly disclosed in Schedule EI of the ITR. Assessment Year: 2021-22 M/s. Srinathji Tradecom Private Limited 2
At the outset, the ld. Counsel for the assessee submitted that the assessee has earned profit from buy back of equity shares at Rs.1,10,89,220/- and the said sum is exempt u/s 10(34A) of the Act and for the purpose of computing the book profit this exempt income needs to be reduced which both the lower authorities have failed to do so.
On the other hand, the ld. D/R submitted that the assessee did not appear before the ld. CIT(A) to explain the said issue and also to file necessary evidence to prove that the alleged sum is profit on by back.
We have heard rival contentions and perused the material placed before us. We notice that the assessee is a private limited company and filed its return of income on 28/02/2022 for Assessment Year 2021-22. The return was filed after the due date and, therefore, the option taken by the assessee u/s 115BBA of the Act was not allowed. The assessee has not challenged the said action of the CPC. The only grievance is that in the income tax return assessee has disclosed exempt income u/s 10(34A) of the Act received on account of buy back of shares at Rs. 1,10,46,994/-. In the return processed u/s 143(1)(a) of the Act, the exempt income from buy back of equity shares has not been reduced from the book profit and tax has been calculated accordingly. By virtue of provisions provided u/s 115JB of the Act, for the purpose of computing book profit, the amount of income of any of provisions of Section 10 of the Act other than the provisions contained Assessment Year: 2021-22 M/s. Srinathji Tradecom Private Limited 3 in clause (38), thereto or Section 11 or 12 of the Act, apply and if any such amount is credited to the statement of profit and loss then such amount needs to be reduced from the profit shown in the audited financial statements.
Thus, we find that for the purpose of book profit u/s 115JB of the Act, the exempt income from buy-back of equity shares was required to be reduced. Such prima-facie adjustment of disallowing the genuine claim of assessee could not be made u/s 143(1)(a) of the Act when the assessee has specifically show the said income in the income tax return. Thus, considering the fact that the assessee has earned exempt income from buy back of equity shares and necessary supporting evidences in support of the earning of the said exempt income has been filed before us in the paper book, therefore, for the purpose of computing book profit u/s 115JB of the Act, the exempt income from buy-back of equity shares at Rs.1,10,89,220/- needs to be reduced.
Accordingly the sole effective grounds raised by the assessee is allowed.
Other grounds raised being general in nature need no adjudication.
In the result, appeal of the assessee is allowed. Order pronounced in the Court on 22nd September, 2023 at Kolkata. (SANJAY GARG) ACCOUNTANT MEMBER Kolkata, Dated 22/09/2023 *SC SrPs Assessment Year: 2021-22 M/s. Srinathji Tradecom Private Limited 4
आदेश क" "ितिलिप अ"ेिषत/Copy of the Order forwarded to : 1. अपीलाथ" / The Appellant
""यथ" / The Respondent 3. संबंिधत आयकर आयु" / Concerned Pr. CIT 4. आयकर आयु" अपील ( ) / The CIT(A)- 5. िवभागीय "ितिनिध ,आयकर अपीलीय अिधकरण, कोलकाता/DR,ITAT, Kolkata, 6. गाड" फाई/ Guard file.
आदेशानुसार/ BY ORDER,