TaxTMI 
TaxTMI 
2018 (5) TMI 130
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....e fact that the share application money was not converted into share capital and ploughed back into the business as windfall and therefore, a revenue receipt? 2. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in upholding the assessee's claim that the profit u/s 10A is not liable to be included in the book profit computed u/s 115JB of the Act and ignoring the amendment by Finance Act, 2007 w.e.f. 01,04.2008 whereby the words 10A and 10B have been omitted from Explanation 1(f) and (ii) of Section 115JB of the Act, thereby bringing the profits /loss of 10A & 10B units within the purview of MAT? 3. Whether on the facts and in the circumstances of the case and in law, the Ld.CIT(A) erred in holding that assessee is not liable to tax u/s 115JB of the Act as its unit is in the Special Economic Zone and, hence its case is covered within the exemption provided in clause (6) of section 115JB of the Act ignoring the specific omission of the words 10A and 10B in Explanation 1(f) and (ii) of Section 115JB of the Act by Finance Act, 2007 w.e.f. 01.04.2008.? 4. Whether on the facts and in the circumstances of the case and ....
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....the Balance-sheet that the share application money of Rs. 43,72,750/- was outstanding for a substantial period of time and, therefore, asked for full details. The assessee explained before the Assessing Officer its action of writing back the said share application money in financial year 2011-12 corresponding to Assessment Year 2012-13. In the course of assessment proceedings, the Assessing Officer show-caused the assessee as to why the impugned sum should not be treated as a revenue receipt chargeable to tax in the instant assessment year even though the assessee-company had written back the impugned share application money in the subsequent Assessment Year of 2012-13. The assessee vide written communication dated 28.01.2013 resisted the stand of the Assessing Officer, but the Assessing Officer treated the impugned sum as a revenue receipt and consequently, brought to tax the same in the instant year itself. The reasoning advanced by the Assessing Officer can be understood as follows. On the issue of treating it as a revenue receipt, the Assessing Officer noted that initially the money was received by the assessee through automatic route under FEMA and, therefore, in the absence o....
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....out that the share application money in question was not converted into Share Capital even in the future years and instead, it has been ploughed back into business as a windfall and, therefore, it constituted revenue receipt. 7. We have carefully considered the rival submissions. Before proceeding to adjudicate the precise controversy, we may briefly cull out the relevant facts. The assessee-company received subscription towards share application money from one, Mr. Basil Dubb in the previous year relevant to Assessment Year 2005-06 of Rs. 43,72,750/-. The said share application money continued to be reflected as part of Shareholder's Funds in the accounts of the assessee starting from the year ending 31.03.2005 to 31.03.2011; and, it was only in the year ending 31.03.2012 that the management of the assessee-company decided to write-back the same. It is also not in dispute that the source of receipt of share application money is identified and, for that matter, assessee had brought out before the CIT(A) that the assessment for the period ending 31.03.2005 corresponding to Assessment Year 2005-06 has been completed u/s 143(3) of the Act. It has also been brought out that even for....
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....id provision would apply only when a benefit or perquisite is received in kind and has no application where the benefit is received in the form of cash or money. In fact, based on such reasoning, the Hon'ble Bombay High Court in the case of CIT vs Xylon Holdings Pvt. Ltd., 90 DTR 205 held that the waiver of liability to repay a loan towards purchase of a capital asset would not fall within the purview of Sec. 28(iv) of the Act as the said section applies only when the benefit or perquisite is received in kind. Factually speaking, in the instant case, the so-called benefit understood by the Assessing Officer, has been received in cash, namely, share application money and, therefore, its forfeiture would not fall within the purview of Sec. 28(iv) of the Act. Therefore, so far as invoking of Sec. 28(iv) of the Act is concerned, there is a clear error on the part of the Assessing Officer, and the same has been rightly negated by the CIT(A). 9. So far as the stand of the Assessing Officer that the receipt of share application money is a revenue receipt is concerned, the same, in our view, is also untenable and has been rightly set-aside by the CIT(A). Factually, since the Assessm....
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....son as to why the same cannot be assessed in the current year". The Assessing Officer has wrongly put the onus on the assessee, rather, in our view, the onus was on the Assessing Officer to show as to why, inspite of assessee having written-back the amount in the subsequent year, the impugned sum was liable to be assessed in the instant year itself. In our view, the Assessing Officer has assessed the same in the instant year without any rationale which, in our view, has been rightly set-aside by the CIT(A). Thus, insofar as Ground of appeal no. 1 is concerned, the same is hereby dismissed. 11. Insofar as Ground of appeal nos. 2 to 4 are concerned, the same relate to determination of profit u/s 115JB of the Act. In this context, the relevant facts are that the Assessing Officer noted that the book profit u/s 115JB of the Act was declared at NIL while as per the Profit & Loss Account, there was positive book profit of Rs. 3,10,85,092/-. On being show-caused, assessee submitted that its manufacturing unit eligible for the benefit u/s 10A of the Act was located in a SEZ area and by virtue of Sec. 115JB(6) of the Act, the provisions of MAT are not applicable to the income accrued or ....
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....ing the book profit u/s 115JB of the Act. Thus, the CIT(A) made no mistake in setting aside the action of the Assessing Officer, which is hereby affirmed. 14. In the result, appeal of the Revenue for Assessment Year 2009-10 is dismissed. 15. Now, we take-up the cross-appeal preferred by the assessee for Assessment Year 2009-10, wherein the following Grounds have been raised:- "1. On the facts and circumstances of the case and in law, the Learned Commissioner of Income Tax (Appeals) ought to have directed the Learned Assessing Officer (Ld.AO)- (a) not to exclude the interest income earned of Rs. 4,48,942/- in determining the profits of the business; Without prejudice to the above and in the alternate (a.i) to exclude the net interest income of Rs. 2,20,273/- in determining the profits of the business. (b) not to exclude the sundry credit balances written back of Rs. 4,73,614/- in determining the profits of the business. (c) to increase the profits of the business by interest income of Rs. 4,48,942/- as in the assessment order, the said income has been reduced twice. 2. It is humbly prayed that the relief as prayed ....
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....Soft Ltd., ITA No. 812/2007 dated 30.10.2017 wherein interest income earned on funds placed with the bank was held to be eligible for benefits of Sec. 10A of the Act on the ground that such income was incidental to the business eligible for the benefits of Sec. 10A of the Act. In the case before us, it is factually evident that the interest income on FDRs with bank is with respect to the borrowings which have in turn been utilised for the eligible business and, therefore, such interest income would be eligible for the benefits of Sec. 10A of the Act. So far as the interest earned on electricity security deposit is concerned, in a similar situation, our co-ordinate Bench in the case of M/s. Dania Oro Jewellery Pvt. Ltd. vs ITO, ITA No. 7635/Mum/2014 dated 03.01.2018 held such interest income to be eligible for the benefits of Sec. 10A of the Act. Following the aforesaid decisions which are directly on the point, we approve the stand of the assessee for including the interest income of Rs. 4,48,942/- in order to determine the profits of business for the calculation of deduction u/s 10A of the Act. 20. Since assessee has succeeded on the main plea in Ground of appeal no. 1(a), the ....
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....ase and in law, the Ld.CIT(A) erred in holding that assessee is not liable to tax u/s 115JB of the Act as its unit is in the special economic Zone and, hence its case is covered within the exemption provided in clause (6) of section 115JB of the Act ignoring without appreciating that the clause (6) has been inserted by the Special Economic Zones Act 2005, w.e.f. 10.02.2006 concurrently within the insertion of section 10AA, also by the Special Economic Zone Act 2005, w.e.f. 10.02.2006 and hence, clause (6) of section 115JB of the Act is applicable only to 10AA units and not to 10A units since due to amendment in clause (f) and (ii) of Explanation 1 of seciion 115JB by Finance Act 2007, profit/Loss of 10A &10B units has been expressly brought within the purview of MAT w.e.f. AY2008-09. 3) The appellant prays that the order of the CIT (A) on the above ground be set aside and that of the AO be restored." 25. Insofar as Grounds of appeal nos. 1 to 3 are concerned, it was a common point between the parties that so far as the facts and circumstances in the instant assessment year are concerned, they stand on an identical footing to those considered by us in Grounds of appeal n....