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| The Tax Publishers2020 TaxPub(DT) 3791 (Del-Trib) : (2020) 185 ITD 0854 INCOME TAX ACT, 1961
Section 115JB(2)(k)(ii)
Where CIT(A) was satisfied that the income which is exempt under section 10 was included in the book profit under section 115JB, which should not be done, CIT(A) was justified in directing AO to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies.
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MAT - Book profit under section 115JB - Sale of rural agricultural land - Income being exempt
Assessee was company, deriving income from agricultural activities and earning from investments. The return was processed under section 143(1) and AO noticed that assessee claimed exempt income on account of profit on sale of agricultural land and AO treated the agricultural land as capital asset under section 2(14)(iii) and income arising out of transfer of such land under the head 'LTCG'. AO noticed that in financial year 2009-10 also, lands were sold in part and that there was no income declared in respect of its profits earned on sale of land. Assessee before CIT(A) argued that income earned from sale of land was exempt under section 10, as the land sold by assessee was in village, which was more than 8 Kms. away from Municipal limits. Assessee further argued that even for purpose of section 115JB, profits arising from sale of agricultural land cannot be added to book profits under the provisions of section 115JB(2)(k)(ii). Held: Land sold was located in village, which was more than 8 kms. away from municipal limits and the profits earned on sale of such land are exempt under section 10. Further, provisions of section 115JB(2)(k)(ii) provide that amount of income to which any of the provisions of section 10 or section 11 or section 12 apply, shall be reduced from computation of book profit, if any such amount is credited to the statement of profit and loss. Assessee computed the book profits while crediting the sale consideration of agricultural land to the profit and loss account and offered the same to tax. When CIT(A) was satisfied that the income which is exempt under section 10 was included in the book profit under section 115JB, which should not be done, CIT(A) was justified in directing AO to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies.
REFERRED :
FAVOUR : In assessee's favour
A.Y. : 2009-10
IN THE ITAT, DELHI 'A' NEW DLEHI BENCH
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