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TMI Blog2017 (11) TMI 1939X X X X Extracts X X X X X X X X Extracts X X X X ..... e a fact that long term capital gain from sale of shares is not exempt for computing book profit under section 115JB, however, such exemption claimed by the assessee appears to be for the reason that assessee was under a bona fide belief that, since, long term capital gain as per section 10(38) is exempt from taxation under the normal provisions of the Act, the same would also apply for computing book profit. The explanation of the assessee that non-inclusion of long term capital gain for computing book profit was due to bona fide reasons cannot be brushed aside lightly. In any case of the matter, the factual matrix clearly reveals that the assessee has made full disclosure of facts relating to earning of long term capital gain from sale of equity shares in the return of income as well as in the computation of income. Non-inclusion of long term capital gains by computing book profit under section 115JB , in our view, is a mere computational error due to a bona fide belief entertained by the assessee that such income is exempt from taxation. That being the case, the ratio laid down by in the case of Pricewaterhouse Cooper Pvt. Ltd. [ 2012 (9) TMI 775 - SUPREME COURT ] will clea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fficer initiated proceedings for imposition of penalty under section 271(1)(c) of the Act alleging furnishing of inaccurate particulars of income by the assessee and issued a show cause notice under section 274 of the Act. In response to the show cause notice it was submitted by the assessee that non-inclusion of long term capital gain while computing book profit was under a bona fide belief that it is exempt from tax. The Assessing Officer, however, did not find the explanation of the assessee convincing. Ultimately, the Assessing Officer concluded that by not including long term capital gain for computing the book profit under section 115JB, the assessee has furnished inaccurate particulars of income. He further observed, even after the assessee was made aware of the fact that long term capital gain has to be included for computing book profit, the assessee chose to stick to his earlier explanation. Thus, the Assessing Officer imposed penalty of ₹ 14,58,630/ under section 271(1)(c) of the Act. Being aggrieved by the penalty imposed, assessee preferred an appeal before the Commissioner (Appeals). However, learned Commissioner (Appeals) upheld the penalty imposed on the reas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ilip N. Shroff v/s JCIT 291 ITR 519 (SC) iv. CIT v/s S.M. Construction, ITA no. 412 of 2013 (Bom) v. CIT v/s Dalmia Dychem Industries Ltd. (2015) 279 CTR 133 (Bom) vi. Anoopgarh Kraya Vikraya Shahakari Samiti Ltd. v/s ACIT (2015) 374 ITR 558 (Raj.) 4. The learned Departmental Representative justifying the imposition of penalty submitted, the assessee by not including long term capital gain in the book profit offered in the return of income has made a wrong claim. He submitted, even after the Assessing Officer pointed out the error/omission on the part of the assessee in the notices issued under section 142(1) and 143(2), the assessee continued with its claim of exemption. He submitted, to demonstrate that the non-inclusion of long term capital gains in books profit was due to a bona fide mistake the assessee should have come forward and offered it as income once the Assessing Officer brought it to the notice of the assessee. He submitted, by not doing so, the assessee has compelled the Department to conclude that the claim of the assessee was not bona fide. Therefore it amounts to furnishing of inaccurate particulars of income. In support of his contention learned Depar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee has disclosed full particulars relating sale of equity shares and the long term capital gain derived therefrom. Further, a perusal of the assessment order also reveals that the information relating to earning of long term capital gain from sale of equity shares by the assessee and non-inclusion of the same for computing book profit under section 115JB came to the notice of the Assessing Officer from the statement of total income filed by the assessee along with the return of income and not from any other source. Thus, the aforesaid facts would make it clear that the assessee has furnished full particulars of the income derived from sale of equity shares. Though, it may be a fact that long term capital gain from sale of shares is not exempt for computing book profit under section 115JB, however, such exemption claimed by the assessee appears to be for the reason that assessee was under a bona fide belief that, since, long term capital gain as per section 10(38) is exempt from taxation under the normal provisions of the Act, the same would also apply for computing book profit. The explanation of the assessee that non-inclusion of long term capital gain for computing book pr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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