2012 (2) TMI 553 - AT - Income Tax

Exclusion of Agricultural Land Profit from Book Profit Calculation under Section 115JB

The Appellate Tribunal held that profit from the sale of agricultural land, not considered a capital asset under the Income-tax Act, should be excluded ... - Issues involved: Validity of addition on account of sale of agricultural land as book profit u/s. 115JB of the Income-tax Act, 1961.The judgment by the Appellate Tribunal ITAT COCHIN in the case involved the appeal by the Revenue against the Order by the Commissioner of Income-tax (Appeals)-IV, Kottayam, for the assessment year 2007-08. The sole issue was the validity of the addition on account of sale of agricultural land as book profit u/s. 115JB of the Income-tax Act, 1961.The Revenue contended that profit on the disposal of an asset should be incorporated in the Profit & Loss Account of a company for computing the 'book profit' under the MAT provisions, including s. 115JB. They argued that there is no basis for excluding the profit derived from the sale of agricultural land by the assessee. On the other hand, the assessee relied on previous tribunal decisions and Circular No. 550 issued by CBDT to contest the Revenue's claim.The tribunal, after hearing both parties and examining the material on record, held that the profit from the sale of agricultural land, which is not considered a capital asset u/s. 2(14) of the Act, should be excluded from the computation of book profit u/s. 115JB. The tribunal's decision was based on previous rulings and the nature of agricultural income as exempt from capital gains tax. The tribunal found no reason to deviate from this view and dismissed the Revenue's appeal accordingly.