2020 (1) TMI 117 - AT - Income Tax

MAT Computation u/s 115JB - deduction of agriculture income - income from tea growing manufacturing business - CIT(A) confirming the action of ld. A.O. who computed book profit u/s 115JB by deducting the exempt income u/s 10(1) - HELD THAT - As perused the fact of the case including the findings of the ld CIT(A) and other materials available on record. We note that the only ground in appeal for the year, is in the AO determining book profits u/s. 115JB by incorrectly deducting exempt agricultural income u/s. 10(1) of the I. T. Act at ₹ 1,19,74,638/-, as against ₹ 2,08,86,160/- correctly deductible. We note that exempt agricultural income u/s. 10(1) is a sum of ₹ 2,08,86,160/-, as worked out in the order by the AO, while computing taxable income as per normal income tax provisions, ₹ 3,48,10,266/- being the revised composite income less ₹ 1,39,24,106 being forty percent income chargeable to tax under I. T. Act as per Rule 8 . Therefore, we direct the Assessing Officer to take agricultural income u/s 10(1) at ₹ 2,08,89,160/- to compute book profit u/s 115JB of the Act. - Appeal of assessee allowed.

Summary

Issues:
Appeal against computation of book profit u/s 115JB by deducting exempt income u/s 10(1) at a lower amount than the correct figure.

Analysis:
1. The appeal was filed by the Assessee against the order passed by the Commissioner of Income Tax (Appeal)-2, Kolkata, arising from an assessment order by the Assessing Officer u/s 143(3) of the Income Tax Act, 1961 for the assessment year 2013-14.
2. The grounds of appeal raised by the assessee primarily challenged the computation of book profit u/s 115JB, specifically regarding the deduction of exempt income u/s 10(1) at a lower amount than calculated in the main income computation.
3. The Assessing Officer computed the revised income from the tea growing and manufacturing business and subsequently calculated the book profit u/s 115JB, leading to a discrepancy in the deduction of exempt agricultural income u/s 10(1).
4. The Assessing Officer directed the assessee to pay tax based on the book profit computed u/s 115JB, which was higher than the tax under normal provisions of the Act, leading to the appeal before the CIT(A).
5. The CIT(A) confirmed the addition made by the Assessing Officer, citing the incorrect deduction of exempt agricultural income u/s 10(1) at a lower amount than the actual figure, despite the correct calculations provided by the assessee's representative.
6. The matter was further appealed, and during the hearing before the ITAT Kolkata, both parties reiterated their respective positions, with the assessee relying on previous submissions made before the authorities.
7. After careful consideration of submissions, documents, case laws, and findings of the CIT(A), the ITAT Kolkata noted the discrepancy in deducting exempt agricultural income u/s 10(1) and directed the Assessing Officer to compute book profit u/s 115JB by considering the correct amount of &8377; 2,08,89,160/- as the exempt agricultural income.
8. Consequently, the appeal of the assessee was allowed, overturning the decision of the CIT(A) and providing relief to the assessee by correcting the computation of book profit u/s 115JB.

This detailed analysis highlights the procedural history, grounds of appeal, computations, discrepancies in deductions, judicial review, and final decision rendered by the ITAT Kolkata in favor of the assessee.