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

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 previously ruled against the assessee for assessment years 1997-2001, holding that sale proceeds of old rubber trees must be included in book profit calculations. Despite the assessee's pending SC appeal, ITAT held the HC decision remains binding. The AO properly invoked section 154 to rectify the mistake of excluding these proceeds, as non-consideration of judicial precedent constituted an apparent error requiring correction.

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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.

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