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2024 (6) TMI 1061 - AT - Income TaxRectification order u/s 154 - MAT computation u/s 115JB on profit earned by the assessee on sale of agricultural land which is exempt from income tax - HELD THAT - It is also not in dispute that the Assessing Officer has accepted the income earned by the assessee while assessing tax u/s 143(3) of the Act, however, raised the issue of taxable u/s 115JB of the Act under rectification proceedings. As far as the issue under consideration is whether the profit earned by the assessee which is not a capital assets as per the normal provision of the Act and the same was allow to be claimed under normal provisions of the Act, whether the same income can be charged to tax under MAT. Since, the issue under consideration is very much covered in favour of the assessee. We do not see any reason to remit the issue back to the file of the Ld. CIT(A) and can be disposed off by considering the relevant material available on record. We considered the submissions of the assessee and observed various benches of the ITAT had considered the similar issue and decided the issue in favour of the assessee See HARRISONS MALAYALAM LTD. AND ORS. 2009 (5) TMI 124 - ITAT COCHIN , GONTAK EXIMIS LTD. 2018 (5) TMI 1870 - ITAT DELHI and NILGIRI TEA ESTATES LTD. 2012 (2) TMI 553 - ITAT COCHIN wherein held once Assessing Officer has not treated the said gain for the purposes of book profit then by way of such ground the issue cannot be raised by the Department. Otherwise also when the income of agricultural land is exempt from tax, then the said exempt income cannot be added to the books profit while calculating the MAT u/s. 115JB - Decided in favour of assessee.
Issues Involved:
1. Validity of the assessment order without DIN. 2. Jurisdiction and legality of the rectification order u/s 154. 3. Inclusion of long-term capital gain from agricultural land in book profit u/s 115JB. 4. Ex-parte order passed by CIT(A) and principles of natural justice. Issue-wise Detailed Analysis: 1. Validity of the assessment order without DIN: The assessee raised a ground that the assessment order passed by the Assessing Officer is non-est as it does not have a Document Identification Number (DIN). However, this ground was not pressed by the assessee during the hearing, and accordingly, it was dismissed. 2. Jurisdiction and legality of the rectification order u/s 154: The assessee contended that the rectification order passed u/s 154 by the Assessing Officer was bad-in-law and without jurisdiction. The Assessing Officer had initially completed the assessment u/s 143(3) by accepting the return of income. Later, he issued a rectification order u/s 154 to include the profit on the sale of agricultural land in the book profit u/s 115JB. The assessee argued that there was no apparent mistake on record to invoke section 154, and the issue was debatable. The Tribunal considered the jurisdictional limitations of section 154, which is confined to rectifying apparent errors, and found that the Assessing Officer overstepped his jurisdiction by addressing a debatable issue under rectification proceedings. 3. Inclusion of long-term capital gain from agricultural land in book profit u/s 115JB: The primary dispute was whether the profit from the sale of agricultural land, which is not a capital asset under section 2(14), should be included in the book profit for MAT purposes u/s 115JB. The Tribunal noted that the profit on the sale of agricultural land is exempt from income tax and not part of book profit. The Tribunal cited several case laws, including Harisons Malayalam Ltd. vs. ACIT, where it was held that such income is agricultural and outside the purview of book profit u/s 115JB. The Tribunal concluded that the inclusion of such profit in book profit was incorrect and decided the issue in favor of the assessee. 4. Ex-parte order passed by CIT(A) and principles of natural justice: The assessee argued that the CIT(A) erred in passing an ex-parte order without providing a proper opportunity of being heard, thus violating the principles of natural justice. The Tribunal observed that the assessee had not complied with various notices issued by the CIT(A) and had not submitted relevant documents. Despite this, the Tribunal noted that the issue at hand was well-covered by judicial precedents in favor of the assessee and decided not to remit the matter back to the CIT(A), thereby addressing the merits directly. Conclusion: The Tribunal allowed the appeal partly, primarily on the ground that the profit from the sale of agricultural land should not be included in the book profit u/s 115JB. Other grounds raised by the assessee were not adjudicated at this stage. The judgment emphasized the confined jurisdiction of section 154 and upheld the principles of natural justice.
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