TMI Blog2019 (11) TMI 1077X X X X Extracts X X X X X X X X Extracts X X X X ..... ORDER PER P.M. JAGTAP, VICE-PRESIDENT (KZ) These two appeals are preferred by the Revenue against two separate orders passed by the Ld. CIT(A) 21, Kolkata both dated 09.02.2018 and the common grounds raised therein read as under: 1. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in law in computing book profit by considering 60% of adjusted income instead of 60% of composite income. 2. Whether on the facts and in the circumstances of the case, the Ld. CIT(A) has erred in appreciating Rule 8(1) of I.T. Rules, 1962, as eligible for computation of agricultural income. 2. The assessee in the present case is a company which is engaged in the business of cultivation, manufacturing sale of tea. It also purchases tea leaves from third parties and carries out manufacturing process and sales tea so manufactured. While computing the book profit u/s 115JB of the Act for A.Y. 2009-10, the assessee had deducted ₹ 9,84,06,438/- being 60% of composite profit of ₹ 16,40,10,729/- which comprised of profit from growing, manufacturing selling of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n order dated 03.02.2017 in ITA No. 731/Kol/2015 wherein the claim of the assessee for deduction on adjusted profit while computing the book profit u/s 115JB was allowed by the Tribunal on merit and following the said decision of the Tribunal, the Ld. CIT(A) vide his impugned orders passed for AY 2010-11 2013-14 directed the AO to allow the claim of the assessee for deduction of 60% of adjusted profit. Aggrieved by the same, the Revenue has preferred these appeals before the Tribunal. 5. We have heard the arguments of both the sides and also perused the relevant material available on record. As agreed by the learned representative of both the sides, the common issue involved in this appeal of the assessee is squarely covered in favour of the assessee by the order of the Tribunal dated 03.02.2017 (supra) wherein a similar issue as involved in the present appeals was decided by the Tribunal on merit in favour of the assessee vide paragraph no. 20 to 24 which read as under: 20. We have given a very careful consideration to the rival submissions. It is no doubt true that the assessee had income from growing, manufacturing and sale of tea as well as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of income; (b) The manner in which and the procedure by which the income shall be arrived at in the case of - (i) income derived in part from agriculture and in part from business; (ii) persons residing outside India; [(iii) an individual who is liable to be assessed under the provisions of sub- section (2) of section 64; Pursuant to the aforesaid provision of Rule 8 of IT Rules 1962 provides that in the case of income derived from sale of tea grown and manufactured by the seller in India, the income shall be computed as if they were income derived from business and 40% of such income shall deemed to be income liable to tax. It is thus clear from the reading of Rule 8(1) that 60% of the income computed as aforesaid is to be treated as agricultural income exempt u/s 10(1) of the Act. Since 60% of the income is exempt u/s 10(1) of the Act. The Assessee's claim is that 60% of the income which is exempt in terms of Rule 8 of the Rules, is nothing but income exempt u/s.10(1) of the Act and hence the same should be reduced from the book profits under Explanation 1 claus ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ope of determining of book profit u/.s 115JB of the Act r.w. CBDT Circular No.495 dated 22.09.1987 as well as the decision of the Hon'ble Supreme Court in the case of Apollo Tyres (supra). In Apollo Tyres Ltd. (supra), the Hon'ble Supreme Court had to decide the following question of law: Can an Assessing Officer while assessing a company for income tax under Section 115-J of the Income Tax Act question the correctness of the profit and loss account prepared by the assessee company and certified by the statutory auditors of the company as having been prepared in accordance with the requirements of Parts II and III of Schedule VI to the Companies Act ? The Hon'ble Supreme Court after extracting the provisions of Sec.115J of the Act found that the intent and purpose of Sec.115J of the Act, as explained by the Hon'ble Finance Minister when he introduced the relevant Bill containing the said provisions, was that highly profitable companies were showing nil income for the purpose of income tax calling them as zero-tax companies and that the provisions of Sec.115J were being inserted so that all profitable companies pay some tax a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Sec.115JB of the Act. He cannot make any adjustment which is not permitted under Explanation to Sec.115JB of the Act. The interpretation as above by the Hon'ble Supreme Court will equally apply to the provisions of Sec.115JB of the Act as well, as those provisions are identical to the provisions of Sec.115J of the Act with certain variations, which does not in any way alter the starting point of computation of book profit u/s.115J of the Act. If the CBDT Circular referred to above and the decision of the Hon'ble Supreme Court in the case of Apollo Tyres (supra) are read together, the only conclusion that can be reached that the computation of book profit as done by the Assessee is correct and cannot be termed as erroneous and prejudicial to the interest of the revenue. 24. We also find that similar computation has been accepted by the revenue even in A.Y.2012-13 to 2014-15. Orders of assessment for A.Y.2013-14 and 2014-15 have been passed after order passed u/s 263 of the Act. We therefore are of the view that the CIT was not justified in invoking the provision u/s 263 of the Act, in so far as it relates to determination of book profit u/s 115JB of the A ..... X X X X Extracts X X X X X X X X Extracts X X X X
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