2024 (11) TMI 643 - AT - Income Tax

Sale proceeds of old rubber trees must be included in book profit computation under section 115JB

M/s. Kil Kotagiri and Thirumbadi Plantations Ltd. Versus The Assistant Commissioner of Income Tax, Circle – 2 (1), Kozhikode.

ITAT Cochin dismissed the appeal regarding inclusion of sale value of old rubber trees in book profit computation under section 115JB. The Kerala HC had ... MAT computation - inclusion of sale value of old rubber trees in computing book profit under section 115JB - HELD THAT:- There is no dispute that the claim of the assessee that the sale value of old rubber trees would not be treated as income while computing the book profit u/s. 115JB of the Act, was already decided by the Hon’ble Kerala High Court in the appellant’s own case for the A.Ys. 1997- 2001 [2011 (6) TMI 452 - KERALA HIGH COURT] The assessee’s contention that the said decision of the Hon’ble Kerala High Court has not become final since the assessee had challenged the same before the Hon’ble Supreme Court and the same are pending is in no way helps the assessee for allowing these appeals. In fact, in all the years, the dispute is with regard to, whether the sale of old rubber trees could be included while computing the book profit u/s. 115JB of the Act. It is also an admitted fact that the Hon’ble Kerala High Court had negatived the contention of the assessee and therefore the law prevailing as on today is that the value of the sale of old rubber trees should be included while computing the book profit u/s. 115JB of the Act. Unless and until the said order has been set aside by the Hon’ble Supreme Court, we have no other option except to confirm the order of the Ld.CIT(A). AO jurisdiction to pass an order u/s. 154 in which the AO had rectified the mistake and added the sale of old rubber trees while computing the book profit u/s. 115JB - We are of the view that the issue was already decided by the Hon’ble Kerala High Court against the assessee and therefore the same is a mistake apparent on the face of the record and therefore the AO had rightly invoked section 154 of the Act to rectify the said mistake. The non-consideration of the judicial precedence by the AO would be a valid reason for invoking section 154 of the Act and therefore we are dismissing the present appeal filed by the assessee. The other grounds raised by the assessee does not require any adjudication in view of the dismissal of the appeal. Issues:- Dispute regarding inclusion of sale value of old rubber trees in computing book profit under section 115JB of the Income Tax Act.- Disallowance of payment made to a supplier for latex supply and failure to deduct TDS.- Dispute over disallowance of bonus under section 43B of the Income Tax Act.Analysis:Issue 1: Inclusion of sale value of old rubber trees in book profit calculation- The assessee contended that the sale value of old rubber trees should not be included in computing book profit under section 115JB, citing pending Special Leave Petition (SLP) before the Supreme Court challenging the Kerala High Court's decision.- The Supreme Court's precedent in Kalpetta Estates Ltd. vs. CIT and Kerala High Court's decision in Roja Rubber & Produce Co. Ltd. were cited to support the argument that items not taxable under normal provisions should not be taxed under section 115JB.- However, the tribunal noted that the Kerala High Court had already ruled against the assessee in a previous case, and until the Supreme Court sets aside the decision, the sale value of old rubber trees must be included in book profit calculation under section 115JB.Issue 2: Disallowance of payment for latex supply and failure to deduct TDS- The AO disallowed a payment made for latex supply, treating it as a contractual payment and requiring TDS deduction under section 40(a)(ia) of the Act.- The tribunal upheld the AO's decision, stating that TDS should have been deducted on the payment made for the supply of latex, as it was considered a contractual payment.Issue 3: Disallowance of bonus under section 43B- The tribunal accepted the assessee's case regarding the disallowance of bonus under section 43B, overturning the CIT(A)'s decision and allowing the bonus as claimed by the assessee.Conclusion:- The tribunal dismissed all three appeals filed by the assessee, upholding the inclusion of sale value of old rubber trees in book profit calculation under section 115JB based on the Kerala High Court's decision. The disallowance of payment for latex supply and failure to deduct TDS was upheld, while the disallowance of bonus under section 43B was overturned in favor of the assessee.