Kamsco Industries (P) Ltd. v. ITO

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The Tax Publishers2018 TaxPub(DT) 5274 (Kol-Trib) Kamsco Industries (P) Ltd. v. ITO INCOME TAX ACT, 1961 --MAT--Computation of book profitAdjustment on account of long-term capital gains----Long-term capital gains was to be added under section 115JB by making adjustment while computing book profit under MAT provision through shares were sold by defaulter of lender of security pledge by assessee as guarantor.--Assessee challenged correctness of lower authorities order adding long-term capital gains while computing book profits under section 115JB. Assessee contended that these gains were exempt under section 10(38). Assessee's plea was that it had not received a single penny due to default of lender against which assessee was a guarantor and latter sold shares and security of assessee pledged. Held : Impugned long term capital gains deserves to be included for computation of their book profits under section 115JB; whether or not they were actually received. Assessee's plea of having not received a single penny of its long term capital gains does not deserve to be accepted at cost of non-application of statutory provision in the nature of non obstante clause to all other normal provisions of the Act. Authorities below had not committed any error of facts or law in assessee's long-term capital gains added as book profits in MAT computation. Income Tax Act, 1961 Section 115JB r/w section 10(38) Distinguished :GKW Ltd. v. CIT (2012) 347 ITR 429 (Cal), Apollo Tyres Ltd. v. CIT (2002) 255 ITR 273 (SC), DCIT v. Binani Industries Ltd. (2016) 178 TTJ 658 (Kol), CIT v. Spencer Co. Ltd. (2013) 359 ITR 612 (Mad-HC), S.A Builders v. CIT (2007) 288 ITR 1 (SC), Hero Cycles Ltd. v. CIT (2016) 236 Taxman 447 (SC) and CIT v. Durga Prasad More (1969) 72 ITR 807 (SC). *REFERRED :* FAVOUR : Against the assessee. A.Y. : 2014-15 INCOME TAX ACT, 1961 --MAT--Computation of book profitAdjustment on account of amount written off as unrecoverable----Where there was absence of commercial expediency in pledging shares to group concerns and subsequently relevant amount written off in profit and loss account the same would be would be computed under normal provisions as per law and also under MAT provision.--Issue was as to whether claim of assessee for 'amount not recoverable' in its profit & loss account could be considered for computation of book profit under section 115JB. Both lower authorities had taken into consideration being debit made to profit and loss account for amount written off as unrecoverable. It was to be noted that same was not considered while computing income under normal provisions of IT Act. *Held :* All entities had same promoter having common directors which were having sufficient knowledge of all corresponding developments in group concerns cases indicating no business or commercial expediency to be involved in shares pledging exercise. Thus, assessee's arguments regarding instant issue of disallowance of write-off in normal computation was declined as well. AO was, therefore, directed to frame his consequential computation under normal provisions as well as per law. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers2018 TaxPub(DT) 5274 (Kol-Trib)

Kamsco Industries (P) Ltd. v. ITO

INCOME TAX ACT, 1961

--MAT--Computation of book profitAdjustment on account of long-term capital gains----Long-term capital gains was to be added under section 115JB by making adjustment while computing book profit under MAT provision through shares were sold by defaulter of lender of security pledge by assessee as guarantor.--Assessee challenged correctness of lower authorities order adding long-term capital gains while computing book profits under section 115JB. Assessee contended that these gains were exempt under section 10(38). Assessee's plea was that it had not received a single penny due to default of lender against which assessee was a guarantor and latter sold shares and security of assessee pledged. Held : Impugned long term capital gains deserves to be included for computation of their book profits under section 115JB; whether or not they were actually received. Assessee's plea of having not received a single penny of its long term capital gains does not deserve to be accepted at cost of non-application of statutory provision in the nature of non obstante clause to all other normal provisions of the Act. Authorities below had not committed any error of facts or law in assessee's long-term capital gains added as book profits in MAT computation.

Income Tax Act, 1961 Section 115JB r/w section 10(38)

Distinguished :GKW Ltd. v. CIT (2012) 347 ITR 429 (Cal), Apollo Tyres Ltd. v. CIT (2002) 255 ITR 273 (SC), DCIT v. Binani Industries Ltd. (2016) 178 TTJ 658 (Kol), CIT v. Spencer Co. Ltd. (2013) 359 ITR 612 (Mad-HC), S.A Builders v. CIT (2007) 288 ITR 1 (SC), Hero Cycles Ltd. v. CIT (2016) 236 Taxman 447 (SC) and CIT v. Durga Prasad More (1969) 72 ITR 807 (SC).

REFERRED :

FAVOUR : Against the assessee.

A.Y. : 2014-15

INCOME TAX ACT, 1961

--MAT--Computation of book profitAdjustment on account of amount written off as unrecoverable----Where there was absence of commercial expediency in pledging shares to group concerns and subsequently relevant amount written off in profit and loss account the same would be would be computed under normal provisions as per law and also under MAT provision.--Issue was as to whether claim of assessee for 'amount not recoverable' in its profit & loss account could be considered for computation of book profit under section 115JB. Both lower authorities had taken into consideration being debit made to profit and loss account for amount written off as unrecoverable. It was to be noted that same was not considered while computing income under normal provisions of IT Act. Held : All entities had same promoter having common directors which were having sufficient knowledge of all corresponding developments in group concerns cases indicating no business or commercial expediency to be involved in shares pledging exercise. Thus, assessee's arguments regarding instant issue of disallowance of write-off in normal computation was declined as well. AO was, therefore, directed to frame his consequential computation under normal provisions as well as per law.