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2014 (1) TMI 866 - AT - Income TaxComputation of book profits u/s 115JB of the Act - Whether in computing the book profit u/s115JB the profit from joint venture, which are in the nature of AOPs of which the assessee is a member, should be included or excluded – Held that:- The share of income from joint venture has been included by the Assessee in their P&L account in their books of account - The only difference is that instead of including a single entry viz. assessee’s share of profits from joint venture, the assessee has included all the items of income and expenditure of the joint venture in proportion of their shares - This is the only a way of presentation of profits in the P&L Account - instead of single line entry showing share of profit from joint venture, the assessee’s share in all the entries of the joint venture are incorporated in the accounts of the assessee’s books - the result will be same and the net profit from the joint venture amounts to Rs.11,09,10,108 is included in the total profits as computed in the books - This is confirmed by the fact that in the memo of income the Assessee has excluded this amount from the total profits as per books on the ground that it is not taxable u/s 86 - the so called line-by-line inclusion of the joint venture accounts into the books of the company has resulted in the net profit of Rs.11,09,10,108/- from Joint ventures which forms part of the profit & loss of Rs.13,74,21,107/- computed in the P&L account of the assessee company. Profits to be Excluded or not - Whether profits from the Joint Ventures should be excluded in computing the Book Profits for the purpose of sec 115JB – Held that:- The share of profits of the Assessee from the Joint venture AOPs have been included in the P&L account in the Books – Relying upon APOLLO TYRES Vs. CIT [2002 (5) TMI 5 - SUPREME Court] - the only adjustment that can be made to the profits as per the P&L account is as per explanation to sec 115JB - None of the explanations provided for exclusion of share of profits from AOP on which tax is not payable by the memebrs of AOP - The share of income from an AOP is includible in the hands of the members of the AOP for taxation u/s 67A of the Act - But as per sec 86 of the Act, if the conditions are satisfied, then income tax shall not be payable by the Assessee in respect of his share of income of the Association of Person. The joint venture is in the nature of a firm and hence share of income should be excluded in computing book profits - However, no copy of return of income of Joint Venture brought on record to suggest that Joint Venture was assessed as a firm so as to exclude its income from the computation of book profit u/s 115JB of the Act – there was no merit in the argument of the counsel that the share of income of the joint venture should be excluded from the book profit of the assessee – Decided in favour of Revenue.
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