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Income Tax Appellate Tribunal, MUMBAI BENCH “C”, MUMBAI
Before: SHRI R.C. SHARMAAND SHRI PAWAN SINGH
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 order 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.
At the outset of hearing, the Ld.AR of the assessee 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 17-01-2014 and computed the book profit to Rs.71,10,711. In the assessment order, the AO held that the assessee is not entitled for exclusion of Rs.50 lakhs (exemption u/s 54EC
2 ITA 5944/Mum/2017 while computing book profit u/s 115JB). The Ld.AR submits that in assessee’s group case, which has also earned similar capital gain on sale of part of asset, the Tribunal allowed relief to the assessee by following the decision of Madras High Court in CIT Vs Metal & Chromium Plater (P.) Ltd (2016) 76 taxmann.com229 (Madras). The Ld.AR of the assessee also furnished copy of order of Tribunal in the case of assessee’s co-partner / group case in dated 08-08-2018.
On the other hand, the Ld.DR for the revenue supported 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 file of the AO for verification of fact and to pass the order afresh.
We have considered the submissions of both the parties, perused the orders of lower authorities and the decision cited by the Ld.AR of the assessee. We have noted that in assessee’s co-owner’s case, the Tribunal has allowed relief on identical issue by passing the following order:-
“ 7. We have heard the rival submissions and perused the relevant materials on record. The reasons for our decisions are given below.
“In Veekaylal Investment Co. (supra), relied on by the Ld. DR, the Hon’ble High Court held that if for computing the total income under the normal provisions, the capital gains computed u/s 45 has to be taken into account, it was not understood how in computing the book profits u/s 115J, the assessee could exclude capital gains.
3 ITA 5944/Mum/2017
The facts in the instant case are different as delineated below.
In Metal & Chromium Plater (P.) Ltd. (supra), the assessee filed its return of income claiming exemption u/s 54EC of the Act. The AO did not question the eligibility of the assessee to such exemption in regular computation. In so far as the tax payable as per regular 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 assessee’s claim. On revenue’s appeal, the Hon’ble High Court held that (i) the allowance or otherwise of the claim under section 54EC has to be seen in the context of the provisions of section 115JB which is self contained code of assessment. The levy of tax is on the book profits’ after effecting various upward and downward adjustments as set out in terms of the Explanation thereto. The provisions of sub-section (5) of section 115JB open the assessment to the application of all other provisions contained in the Act except if specifically barred by that section 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 section 115JB would be concluded exclusively on the basis of the book profits 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 would be further subjected to the effect of other provisions of the Act that are 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 claim of deduction of Rs.50,00,000/- u/s 54EC, while calculating the normal income. Only when computing the book profit u/s 115JB, the AO has disallowed 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 Hon’ble Madras High Court and hold that the assessee-company 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 identical issue, the ground of appeal raised by assessee is allowed. No contrary facts or law is brought to our notice to take other view.
In the result, appeal filed by the assessee is allowed.
Order pronounced in the open court on 12-09-2019.