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Issues: Whether the Commissioner was justified in invoking revision under section 263 of the Income-tax Act, 1961 on the ground that the Assessing Officer failed to include profit on sale of agricultural land in the computation of book profit under section 115JB of the Income-tax Act, 1961.
Analysis: The land sold was accepted as agricultural land and the profit arising on its transfer was treated as agricultural income under section 2(1A) of the Income-tax Act, 1961. Such income is not includible in total income under section 10 of the Income-tax Act, 1961 and, on the same reasoning, is to be reduced while computing book profit under section 115JB of the Income-tax Act, 1961. Since the assessee's regular assessment had proceeded on that basis, the order of revision was not sustainable. The decision followed the coordinate bench view on identical facts.
Conclusion: The revisionary order under section 263 of the Income-tax Act, 1961 was unjustified and was quashed.
Final Conclusion: The assessee's appeal succeeded and the Commissioner's revision was set aside because the profit on transfer of agricultural land was held to be outside the MAT computation.
Ratio Decidendi: Profit arising from the transfer of agricultural land constitutes agricultural income and must be excluded from book profit under section 115JB of the Income-tax Act, 1961; where the Assessing Officer has taken that legally permissible view, revision under section 263 is not warranted.
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