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AI Drafter - (New and Powerful) ✕ Generate professional replies, appeals, opinions to Show Cause Notices, assessment orders, audit objections, and other legal communications using TaxTMI's AI Drafter.
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Issues: Whether the assessee was entitled to exemption under section 10(38) of the Income-tax Act, 1961 on long-term capital gains, and whether such gains were nevertheless required to be taken into account while computing book profit under section 115JB of the Income-tax Act, 1961.
Analysis: The proviso to section 10(38) was read as requiring long-term capital gains of a company to be considered for computation of book profit and tax under section 115JB, without withdrawing the exemption otherwise available under section 10(38). The Assessing Officer had proceeded on an incorrect construction by treating the reference to section 115JB as defeating the exemption itself. The interpretation adopted by the first appellate authority was found to be correct.
Conclusion: The assessee's claim of exemption under section 10(38) remained allowable, and the Revenue's challenge to the deletion of the addition failed.
Final Conclusion: The statutory proviso affects the computation of book profit under section 115JB but does not nullify the exemption available under section 10(38) of the Income-tax Act, 1961.
Ratio Decidendi: A proviso requiring a company's long-term capital gains to be considered in book profit computation under section 115JB does not by itself withdraw the substantive exemption under section 10(38).
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