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2016 (6) TMI 1199 - AT - Income TaxMAT computation - inclusion of long term capital gain earned by a partnership firm, in which the assessee is the major partner in book profit computed u/s 115JB - Held that:- A partnership firm cannot become a share holder and hence it is not entitled to open a demat account. Hence the shares belonging to a partnership firm is usually held in the name of its partner. Further the partnership firm has filed declaration before the Registrar of Companies that it is the beneficial owner of the shares held by assessee company. Further the declaration in Form No. I, as prescribed under the section 187-C of the Companies Act, has also been filed by the assessee company to the companies in which shares were held declaring that the partnership firm is the beneficial owner of the shares. Hence we are of the view that the assessee has adopted a tax planning within the four corners of law and hence the same cannot be considered as a colourable device. Further, the accounts of the assessee have been audited and the same has been approved by the Share holders by adopting the same in the Annual General Meeting. The Hon’ble Supreme Court has held in the case of Apollo Tyres Ltd (2002 (5) TMI 5 - SUPREME Court) that the accounts prepared and audited under the Companies Act, which has been approved by the share holders should not be disturbed by the assessing officer. It is also well settled proposition that the provision of sec. 115JB is a code by itself and hence the book profit has to be computed strictly in accordance with the said provisions. Under the provisions of sec. 115JB the share of profit from a partnership firm, which is exempt u/s 10(2A), is required to be excluded from book profit. In this view of the matter also, the action of the tax authorities cannot be upheld. Accordingly we set aside the order of Ld CIT(A) and direct the AO to exclude the share income from the partnership firm while computing the book profit u/s 115JB - Decided in favour of assessee
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