The Income Tax Appellate Tribunal (ITAT), Delhi Bench ‘H’, adjudicated on the appeal filed by Rishabh Farms & Industries Pvt Ltd, a company based in New Delhi, against the orders of the CIT(A)-Delhi-7. The appeal, registered as ITA No. 326/DEL/2021, pertains to the assessment year 2018-19. The primary issue at hand was the treatment of profit on sale of plant and machinery as business income.
Rishabh Farms & Industries Pvt Ltd filed its return of income for the assessment year 2018-19 on 30th October 2018, declaring nil income. The return was processed under section 143(1) of the Income Tax Act by the CPC, Bengaluru, resulting in an addition of Rs. 18,06,660/- to the business income, representing profit on the sale of plant and machinery as per the books of accounts.
The dispute arose when the Assessing Officer (AO) treated the profit on the sale of plant and machinery as business income, which the company argued was incorrect. The appellant contended that this amount had already been included in the profit and loss account and that the entire sale consideration was adjusted against the written down value (WDV) of the block of plant and machinery as per section 43(6)(c) of the Income Tax Act.
The grounds of appeal raised by Rishabh Farms & Industries Pvt Ltd included:
The tribunal, comprising Shri Saktijit Dey (Vice President) and Shri M. Balaganesh (Accountant Member), heard the case on 1st May 2023. The tribunal noted that the addition made by the AO and confirmed by the CIT(A) would result in double addition, as the profit on the sale of plant and machinery was already reflected in the profit and loss account and the entire sale consideration was adjusted against the WDV for depreciation purposes.
The tribunal found that the adjustments proposed by the CPC and confirmed by the CIT(A) were not justified and directed the AO to delete the addition of Rs. 18,06,660/- from the business income.
In conclusion, the tribunal allowed the appeal filed by Rishabh Farms & Industries Pvt Ltd, directing the deletion of the addition made to the business income.
The order pronounced on 27th July 2023 by the tribunal concluded the appeal in favor of the appellant.
Order Pronounced in the Open Court on 27/07/2023.
Signed by:
(Saktijit Dey) – Vice President
(M. Balaganesh) – Accountant Member
Date: 27/07/2023
Pk/sps
Copy forwarded to:
Assistant Registrar, ITAT, New Delhi
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