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2014 (6) TMI 774 - AT - Income TaxComputation of profit u/s 115JB - Minimum alternate tax (MAT) - Inclusion of profit on sale of agricultural land Held that - The land is not a Capital Asset in terms of sec. 2(14)(iii) of the Act as decided in assessee s own case for the earlier assessment year, Singhai Rakesh Kumar v. Union of India 2000 (11) TMI 2 - SUPREME Court was followed - the income arising on the transfer of agricultural land is not exigible to capital gains tax, being in the nature of agricultural income - there is complete parity of facts, so that there was no reason to take a different view of the matter - The provisions of Chapter XII-B of the Act do not operate to extend the scope of total income per section 5 on which the charge to tax u/s 4 is attracted, but is only toward providing an alternative basis for computing the same the inclusion of profit on account of sale of agricultural land is not a capital asset u/s 2(14), in the computation of book profit u/s 115JB of the Act -the profit from sale of agricultural land, which is not a Capital Asset , cannot be included for the purpose of computing book profit u/s 115JB of the Act thus, the decision of the CIT(A) is upheld Decided against Revenue.
Issues:
Whether profit on sale of agricultural land should be included for computing profit u/s. 115JB of the Act. Analysis: The appeal pertains to the assessment year 2008-09 and revolves around the inclusion of profit on the sale of agricultural land for calculating profit under section 115JB of the Income Tax Act. The assessee declared a loss under normal provisions of the Act and a negative book profit u/s. 115JB. The Assessing Officer noted a profit from the sale of agricultural land, which the assessee excluded from the book profit calculation. The AO contended that this profit should be included as it was declared in the profit and loss account and was not exempt under section 10(1) of the Act. The Ld. CIT(A) deleted the addition based on a Cochin Tribunal decision in a similar case. In the appellate proceedings, the Ld. CIT(A) relied on the Cochin Tribunal decision to delete the addition of profit on the sale of agricultural land. The Revenue argued that such profit should not be excluded from profit calculation u/s. 115JB. The assessee cited a previous ITAT decision in their favor regarding the treatment of such profits. The Tribunal observed that the impugned agricultural land did not qualify as a "Capital Asset" under sec. 2(14)(iii) of the Act. The Tribunal referenced previous decisions and concluded that profit from the sale of agricultural land, not being a "Capital Asset," should not be included in computing book profit u/s. 115JB. The Tribunal emphasized that income from the sale of agricultural land, not classified as a "Capital Asset," falls outside the purview of the Income Tax Act. It likened such income to profit from the sale of personal effects, which is not taxable. The Tribunal reiterated that the provisions of the Act do not extend the scope of total income for tax purposes but provide an alternative basis for computation. Therefore, it upheld the Ld. CIT(A)'s decision to exclude the profit from the sale of agricultural land for computing book profit u/s. 115JB. Consequently, the Revenue's appeal was dismissed, affirming the decision on 06-06-2014.
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