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 Officer - 2(1)(1)
Meher House, 1st Floor Vs. Aayakar Bhavan, M.K. Road
15, Cawasji Patel Street, Fort 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
ORDER
Per D. Manmohan, V.P.
This application is filed at the instance of the assessee company and it
is directed against the order dated 25th October 2011 passed by the ITAT "B"
Bench, Mumbai.
2. Admittedly, assessee declared long term capital gains by crediting
the same in the books of account prepared in accordance with the
provisions of part II & III of Schedule 6 of the Companies Act, 1956. Since
part of the amount received was invested in NABARD, which are eligible for
exemption under section 54EC of the Act, Assessee contended before the AO
that assessee was not liable to pay tax on normal computation 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 the Act the amount
eligible for exemption under section 54EC of the Act should be reduced from
the long term capital gains credited to the P & L Account for the purpose of
arriving at the "book profit".
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Bakhtawar Construction Co. P. Ltd.
3. The AO as well as the CIT(A) are of the opinion that there is no
provision in section 115JB to allow deduction under section 54EC of the
Act. Computation of book profit is provided under section 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 the P & L Account of the
assessee prepared in accordance with the provisions of part II & III of
Schedule 6 of Companies Act and thereafter permissible 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 assessee relied upon
the decision of the Hon'ble Bombay High Court in the case of CIT vs. Ace
Builders Pvt Ltd. [2006] 281 ITR 210 but the same was distinguished on the
ground that it was not on the issue of exemption under 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 to the benefit of
exemption under section 54EC of the Act even while computing book profit
chargeable to tax under section 115JB of the Act. Another facet of the
argument, as raised in ground (b), is that the learned 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 2000) is not applicable to
the facts of the present case. As can be noticed from the aforementioned
ground, it is only an extension of the main issue and 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 the case of N.J. Jose & Co. P.
Ltd. vs. ACIT [2010] 321 ITR 132 squarely applies to the facts of the case and
there is no contrary decision of any other High Court on this issue.
6. In fact the Log Book of the Vice President (MZ) shows that the learned
counsel fairly admitted that the issue stands covered 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 Legislature, deposits made in
NABARD are meant to benefit the assessee. Page No. 74 of the paper book
3 MA No. 548/Mum/2011
Bakhtawar Construction Co. P. Ltd.
(internal page No. 13 of the Ace Builders Pvt. Ltd. case) was referred to
submit that section 50 carves out an exception in respect of depreciable
assets and provides that where depreciation has been 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 not 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 115JB of the Act.
8. Under these circumstances the assessee filed the present
Miscellaneous Application stating that ground (b) in 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 counsel relied upon the
decision of the Hon'ble Supreme Court in the case of JCIT vs. Rolta India
Ltd. [2011] 330 ITR 470 in support of his contention that even on the tax
determined, by application of sections 115J/115JA of the Act, all other
provisions of the Act are stated to be applicable and thus the Apex Court
noticed that interest under section under section 234B is payable; by
applying the same analogy even for computation of book profits under
section 115JB all other provisions of the Act can be 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 mention 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 dealing with the matter of
permissible adjustments to be made under section 115JB of the Act, which
was rightly highlighted by the learned CIT(A) and the said order having been
upheld by the Appellate Tribunal, impugned order does not contain a
mistake apparent from record and it has to be assumed that the second
ground, which is argumentative in nature, was considered by the Tribunal
impliedly. It is also submitted that the decision in the case of Rolta India
Ltd. (supra) has no application to the facts of the case since the Apex Court
4 MA No. 548/Mum/2011
Bakhtawar Construction Co. P. Ltd.
was concerned with the methodology to be followed after computation of the
taxable income and not with regard to computation scheme 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 remains that substantial issue
was dealt with by the Bench; Thus, omission to specifically mention the
decision of the Hon'ble Bombay High Court, which was not directly
applicable, does not give rise to a mistake apparent from record. In fact the
observation of the Bench `that the learned counsel, very painstakingly
argued the matter', implies that the other facets of the learned counsel's
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 mistake apparent on record.
11. On a conspectus of the matter we are of the view that the impugned
order does not suffer from any mistake apparent from record. We
accordingly reject the Miscellaneous Application filed by the assessee.
Order pronounced in the open court on 20th June 2012.
Sd/- Sd/-
(B. Ramakotaiah) (D. Manmohan)
Accountant Member Vice President
Mumbai, Dated: 20th 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.
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