BOMBAY DIAMOND CO.PVT. LTD.,MUMBAI vs. D.C.I.T. CENTRAL CIRCLE - I, MUMBAI

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ITA 2294/MUM/2012Status: DisposedITAT Mumbai17 May 2017AY 2004-053 pages

In favour of the assessee: the assessee's appeal was allowed. From the AI summary of this appeal.

AI SummaryAllowed

What did the Tribunal hold?

The Tribunal noted that the assessee had filed an appeal before the jurisdictional High Court regarding the same assessment year and the appeal had been admitted. The AO was directed to wait for the High Court's decision before deciding the ground of appeal.

What were the facts?

A search was conducted on the assessee's group, leading to a notice under section 153C. The Assessing Officer (AO) made an addition to book profit for calculating tax under section 115JB, which was confirmed by the CIT(A).

What were the issues?

Whether profit on sale of capital assets should be included for calculating book profit under section 115JB when the taxability of such profit is under dispute before the High Court.

Which sections of the Income-tax Act were involved?

Section 115JB,Section 153C,Section 143(3)

AI-generated summary — verify with the full judgment below

Assessee by : Shri Rajesh P. Shah (AR) Revenue by : Shri N.P. Singh (DR) Date of hearing : 02.05.2017 Date of Pronouncement : 17.05.2017 Order Under Section 254(1) of Income Tax Act PER PAWAN SINGH, JUDICIAL MEMBER: 1. This appeal by assessee u/s 253 of the Income-tax Act (the Act) is directed against the order of ld. CIT(A)-36, Mumbai dated 15.02.2012 for Assessment Year (AY) 2004-05. The assessee has raised the following grounds of appeal: “On the facts and under the circumstances of the case and in law, the learned CIT(A) erred in confirming the action of AO of considering the profit on sale of capital assets of Rs. 10.38 crores for the purpose of calculating book profit u/s 115JB without appreciating that such profit is not taxable under the provision of Income Tax Act and same needs to be ignored for computing book profit u/s 115JB.”

2. Brief facts of the case are that a search and survey action u/s 132(1) and 133A was conducted in case of Su-Raj Diamond Group and its associate group on 22.08.2008. Consequent upon the assessee was served notice u/s 153C of the Act on 28.07.2009. In response to the notice, the assessee-company filed return of income on 27.08.2009 declaring loss of Rs. 1,12,64,969/-. The assessee in its regular return of income filed on 01.11.2004 u/s 139 also declared the similar loss/income. The assessment was completed u/s 143(3) of the Act on 30.11.2006.

- M/s Bombay Diamonds Co. Pvt. Ltd.

While framing the assessment order u/s 143(3) r.w.s. 153C of the Act, the Assessing Officer (AO) observed that in the assessment completed u/s 143(3) of the Act dated 30.11.2006. The AO worked out the book profit u/s 115JB at Rs.7,61,36,507/- against which the assessee filed appeal before the ld. CIT(A)-25, Mumbai. The ld CIT(A) decided it in favour of assessee vide order dated 29.09.2007. Aggrieved by the order of ld. CIT(A), the Revenue filed appeal before the Tribunal vide vide order dated 30.11.2009 decided in favour of Revenue. Hence, while passing assessment order u/s 143(3) r.w.s. 153C of the Act dated 14.12.2010, the AO made the addition of book profit of Rs. 7,61,36,507/-. Aggrieved by the assessment order, the assessee filed appeal before the ld. CIT(A)-36, Mumbai. The ld. CIT(A) following the decision of Tribunal in ITA No. 7488/Mum/2007 dated 30.11.2009 decided the appeal against the assessee. Thus, further aggrieved by the order of ld. CIT(A), the present appeal is filed before us.

3.

We have heard the ld. Authorized Representative (AR) of assessee and ld. Departmental Representative (DR) for the Revenue and perused the material available on record. At the outset of the proceeding, the ld. AR of the assessee argued that against the order of Tribunal in ITA No. 7488/Mum/2007 dated 30.11.2009, the assessee has filed appeal before the jurisdictional High Court and the same has been admitted. The ld. DR for the Revenue not disputed the finding on appeal before the Hon’ble High Court.

4.

We have considered the rival contention of the parties and gone through the order of authorities below. We have seen that search and seizure was conducted on 22.08.2008, when the notice u/s 153C dated 28.07.2009 was served; the assessment u/s 143(3) of the Act was already completed on 30.11.2006. Thus the assessment order completed on 30.11.2006 was not abated. Considering the pendency of appeal before the Hon’ble jurisdictional High Court, arising out of the order passed u/s 143(3) for same assessment year , we set-aside the order of AO and direct the AO to wait for the outcome of appeal filed by assessee before the - M/s Bombay Diamonds Co. Pvt. Ltd.

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