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Income Tax Appellate Tribunal, DELHI ‘B’ BENCH,
Before: SHRI N.K. BILLAIYA, & SHRI ANUBHAV SHARMA
PER N.K. BILLAIYA, ACCOUNTANT MEMBER:-
This appeal by the Revenue is preferred against the order of the ld. CIT(A) - 4, New Delhi dated 20.01.2020 pertaining to Assessment Year 2015-16.
The solitary grievance of the Revenue is that the ld. CIT(A) erred in allowing claim of exemption under section 10(38) of the Income-tax Act, 1961 [the Act, for short] on long-term capital gain to the extent of Rs. 2,47,52,73,951/–.
Briefly stated, the facts of the case or that the assessee company is engaged in real estate business. Return for the year was filed on 29.09.2015, declaring loss of Rs.1,03,42,687/– under normal provisions of the Act. Return was revised on 28.03.2017, declaring loss of Rs. 25,84,43,953/– under normal provisions and book loss of Rs.90,74,679/– under section 115JB of the Act.
Vide order dated 31.12.2017, assessment was framed under section 143(3) of the Act wherein the total assessed income by the Assessing Officer was Rs.2,21,68,30,000/– under normal provisions and book profit of Rs. 2,75,16,44,730/– after making the following additions/disallowances:
(a) upward adjustment of Rs. 2,47,52,73,952/- to the book profit in terms of clause (j) of Explanation 1 to Section 115JB of the Act.
(b) upward adjustment of Rs. 28,54,45,463/- to book profit in terms of clause (f) of Explanation 1 to section 115JB of the Act.
For normal income, the Assessing Officer denied claim of exemption under section 10(38) of the Act to the tune of Rs. 2,47,52,73,951/–.
The assessee challenged the order before the ld. CIT(A) who was convinced with the claim of the assessee and deleted the addition.
The entire quarrel is in respect of denial of exemption under section 10(38) of the Act. The claim of exemption was denied on the ground that the assessee has not fulfilled conditions of proviso to section 10(38) of the Act.
We have given thoughtful consideration to the orders of the authorities below. In our considered view the Assessing Officer has wrongly interpreted the relevant provision with the proviso. Proviso to section 10(38) of the Act says:
“provided that the income by way of long-term capital gain of a company shall be taken into account in computing the book profit and the income tax payable under section 115JB of the Act.”
The Assessing Officer misinterpreted as under:
“If income is taken for consideration for computation of section 115JB, then, exemption under section 10(38) of the Act is not available whereas proviso means that even if the income is exempt under section 10(38) of the Act, the same has to be considered while computing book profit under section 115JB of the Act.”
Once this proper interpretation is given to the section, there remains no quarrel. And this is how the ld. CIT(A) has interpreted the relevant provisions. We, therefore, do not find any reason to interfere with the findings of the ld. CIT(A).
In the result the appeal of the Revenue in is dismissed.
The order is pronounced in the open court on 20.07.2023.