MAHINDRA HOLDINGS AND FINANCE LIMITED Vs. DCIT AND ITO
INCOME TAX APPELLATE TRIBUNAL
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K.C. Singhal, Judicial Member -
(1.) AS there was difference of opinion between the Members constituting the Bench, the hon'ble President, Income Tax Appellate Tribunal has nominated me to express my opinion on the following point of difference:
Whether provisions of Section 67A of the I.T. Act, 1961 can be invoked for computing total income of the assessee, who is a company, is a member of association of persons or body of individual, wherein the shares of the members are determinate and known?
(2.) The facts relevant to the question mentioned above, arc in short compass. The assessee was a member of an Association of Persons (AOP) namely, India Auto Ancillary Trust (IAAT). The said AOP declared loss for the year under consideration and the share of loss in the hands of the assessee was computed at Rs. 12,89,911/- being 7.69% of the total loss since the stake of the assessee in the AOP was 7.69%. The assessee claimed the set off for the above share of loss against the income computed under other heads. Such claim was made as per the provisions of Section 67A(1) of the Income-tax Act, 1961 (the Act). The claim of the assessee was rejected by the Assessing Officer on the ground that the provisions of Section 67A of the Act were not applicable in the case of the assessee. According to the Assessing Officer, the words "Other than a company or a cooperative society or a society registered under the Societies Registration Act, 1860 (21 of 1860) or under any law corresponding to that Act in force in any part of India" in the parenthesis in Section 67A(1) of the Act would relate to a member of an AOP or Body of Individuals (BOI) and not to AOP or BOI. Therefore, the Assessing Officer refused to set oil the said loss against the other income of the assessee. On appeal, the order of the Assessing Officer was upheld by the CIT(A).
On further appeal, the Members constituting the Bench differed on the interpretation of the provisions of Section 67A(1) of the Act. According to the learned Judicial Member, the words in the parenthesis in Section 67A(1) of the Act relate to the member of AOP or BOI and not to the AOP/BOI. According to him, if the contention of the assessee is accepted it would give an absurd interpretation because BOI or AOP cannot be a company or a cooperative society or a society. Since the assessee is a company, it was held by him that the share of the assessee in AOP could not be adjusted against its income computed under various heads. It was also observed by him that no other provision in the Act provides such type of adjustment of loss against the other income of the asscssee. Consequently, he confirmed the order of lower authorities on this issue.
(3.) HOWEVER, the learned Accountant Member took a different view by holding that the words in parenthesis in Section 67A(1) of the Act relate to the AOP/BOI and not to the member an AOP or BOL According to him, the provisions of Section 67A of the Act should be considered along with the corresponding provisions of Section 167B of the Act because both these Sections deal with the charge of tax where the shares of members of AOP or BOI arc determinate and known and undeterminate and unknown, respectively. Thus, both these provisions should apply to the same category of the assessee. After referring to the provisions of Section 167B of the Act, it was observed by him that the words in parenthesis have been used by the Legislature with regard to an AOP or BOI. Therefore, similar would be the position with regard to the provisions of Section 67A of the Act. It was further observed that if the Legislature intended to exclude the applicability of the provisions of Section 67A of the Act to an assessee being a company then it should have excluded the same by way of making the provisions as "in computing the total income of the assessee other than a company or cooperative society or a society registered under the Societies Registration Act, 1860 or under any law corresponding to that Act in force in any part of India who is a member".... According to him, since the words in parenthesis had been incorporated in the latter part of Section 67A of the Act, the same should be excluded from AOP or BOI and not from the member of AOP or BOI. He also referred to the definition of the word 'person' appearing in Section 2(31) to point out that such definition includes an AOP or BOI whether incorporated or not. According to him, these words include the juridical person within its ambit. In support of his view reliance was placed on the hon'ble Supreme Court judgement in the case of Meera & Co., 224 ITR 635. Therefore, even for such reasons, the provisions of Section 67A have to be understood so as to mean that a company or a cooperative society or society have been used with reference to the AOP or BOI. Accordingly, it was held by him that share of loss from the AOP should be set off in the hands of the assessee against other income computed under various heads.;
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