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2020 (9) TMI 870 - AT - Income TaxMAT Computation - adding capital gains arsing out of sale of agricultural land for the purpose of computing book profit u/s. 115JB - AO treated the agricultural land as capital asset u/s. 2(14)(iii) and income arising out of transfer of such land under the head ‘Long-term Capital gains’ - HELD THAT:- Land that was sold was located in village Kishora, which is more that 8 kms away from municipal limits and the profits earned on sale of such land are exempt u/s. 10. Provisions of section 115JB(2)(k)(ii) provide that the amount of income to which any of the provisions of section 10 (other than the provisions contained in clause (38) thereof) or section 11 or section 12 apply, shall be reduced from computation of book profit, if any such amount is credited to the statement of profit and loss. Assessee computed the book profits while crediting thesale consideration of agricultural land to the profit and loss account and offered thesame to tax. Obviously, it is a mistake. In view of the decision of Shelly Products [2003 (5) TMI 4 - SUPREME COURT] such a mistake has to be rectified by the Revenue Authorities when it is brought to their notice and they are satisfied with the genuineness of the claim. Therefore, when the ld. CIT(A) is satisfied that the income which is exempt u/s. 10 of the Act is included in the book profit u/s. 115JB, which should not be done, the ld. CIT(A) is justified in directing Assessing Officer to follow the law and to compute the tax in accordance with provisions of section 115JB by reducing the amount of income to which section 10 applies, if such amount is credited to the profit and loss account. The action of the ld. CIT(A) is perfectly legal and does not suffer any infirmity. We see no ground to interfere with the same. - Decided against revenue.
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