TaxTMI 
TaxTMI 
2024 (12) TMI 1281
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....T(A)] in respect of the assessment year (AY) 2015-16, whereby the CIT(A) had held that the respondent (hereafter the Assessee) was entitled to exemption of an amount of Rs. 2,47,52,73,951/- under Section 10 (38) of the Act, which was denied by the Assessing Officer (AO). 3. According to the Revenue, the said decision is erroneous as the Long Term Capital Gains (hereafter LTCG), which the Assessee claimed were exempted under Section 10 (38) of the Act, were not included in the Assessee's profit and loss account for the relevant period. Therefore, the said gains were excluded from the calculations of the book profits under Section 115JB of the Act. The CIT(A) found no merit in the aforesaid contention. The learned ITAT had found no fault with the decision of the CIT(A) and rejected the Revenue's appeal. QUESTION OF LAW 4. Aggrieved by the same, the Revenue has preferred the present appeal and has projected the following question for consideration of this court:- "Whether on the facts and circumstances of the case and in law, the Ld. ITAT was justified in deleting the addition of Rs. 247,52,73,951/- made by the AO on account of disallowance of exemption of LTCG claimed u/s. 10 (3....
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....f tax under the normal provision and for determination of MAT under Section 115JB of the Act, as set out in the assessment order dated 31.12.2017, is reproduced below:- "13. In view of the above discussion, income of the assessee is computed Under normal provisions the Act: Particulars Amount (in Rs.) Business income as shown in ITR 6497469 Less : Brought forward losses 6497469 Capital loss as declared by the assesses 25,84,43,953 Additions 1. Disallowance of exemption of LTCG claimed u/s 10 (38) as discussed above in para 12 above. 247,52,73,951 Total Assessed Income 221,68,29,998 Rounded Off 221,68,30,000 14. In view of the above discussion, book profit of the assessee is computed u/s 115JB of the Act: Particulars Amount (in Rs.) Book loss as declared by the assessee 90,74,679 Additions: 1. Profit on sale of shares as discussed in para 10 above 247,52,73,951 2. Expenses towards redemption of mutual fund 28,54,45,463 Total Assessed Income 275,16,44,735 Rounded Off 275,16,44,730" 9. Aggrieved by the assessment order, the Assessee preferred an appeal before the CIT(A) under Section 246A of the Act. The CIT(A) held that the e....
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....l before the learned ITAT was confined to the question, whether the LTCG arising from the sale of investments in question were exempted under Section 10 (38) of the Act. The Assessee had not succeeded before the CIT(A) in respect of the AO's decision to include gains from sale of shares for computing book profits. The CIT(A) did not interfere with the assessment order adding gains arising from the sale of shares of IBHFL to book profits as computed by the Assessee, for the purpose of Section 115JB of the Act. 16. The question, whether the Assessee is entitled to claim benefit under Section 10 (38) of the Act, is required to be determined on the basis of a plain reading of the said provision. 17. Sub-section (38) of Section 10 of the Act is reproduced below:- "Incomes not included in total income. 10. In computing the total income of a previous year of any person, any income falling within any of the following clauses shall not be included- ..... (38) any income arising from the transfer of a long-term capital asset, being an equity share in a company or a unit of an equity oriented fund or a unit of a business trust where- (a) the transaction of sale of such equity shar....
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....e book profits but other incomes covered under Section 10 of the Act were excluded. 21. The relevant extract of the notes on clauses to the Finance Bill, 2006 is set out below:- "The Explanation to sub-section (2) of section 115JB says that "book profit" means the net profit as shown in the profit and loss account for the relevant previous year, prepared in accordance with the provisions of Parts II and III of Schedule VI to the Companies Act, 1956, and as increased or reduced by certain adjustments as specified in the said Explanation. The aforesaid Explanation, inter alia, provides that the book profit shall be increased by the amount or amounts of expenditure relatable to any income referred to in section 10 (other than the provisions contained in clause (23G) thereof) if any such amount is debited to the profit and loss account and it shall be reduced by the amount of income referred to in the said section 10 if any such amount is credited to the profit and loss account. It is proposed to omit the reference to "other than the provisions contained in clause (23G) thereof" from clause (f) and clause (ii) of the Explanation to section 115JB. The proposed amendment is conseque....