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2016 (5) TMI 1035 - AT - Income TaxAddition for claiming the loss without the support of audited accounts - losses are claimed by the assessee on the investigation report carried out by KPMG - CIT(A) deleted the addition - Held that:- Supreme Court in the case of Lakshmi Machine Works (2007 (4) TMI 202 - SUPREME Court ) we find that income tax should be levied on the real profits. The real profit should be worked out on the basis of accounting principles and in the ordinary course of commercial trading. The accounting entries made in the books of accounts which are not in the conformity with accountancy principles cannot be regarded as conclusive evidence with regard to the actual profit or loss of the company. What is necessary to consider is the true nature of transaction whether resulting in profit or loss. In the instant case, we find that there were several financial irregularities as reported by KPMG but the AO rejected the same instead of verifying the genuineness of the report by holding that the matter is pending in the court of law. In our considered view the real income should be brought to tax and the AO should not merely rely on the data submitted by the assessee. Therefore we do not find any infirmity in the order of Ld CIT(A) - Decided against revenue Addition on account of excess depreciation claimed in the revised return of income - Held that:- AO disallowed the excess depreciation claimed by the assessee in the revised return of income on the ground that the revised return of income was not supported with the Tax Audit Report. However, we further find that the AO did not point out any defect in the working of excess depreciation claimed by the assessee. Now in our view, it is not appropriate on the part of the AO to disallow the excess depreciation without giving any findings in the claim of the assessee. - Decided against revenue Addition on account of provisions written back without having the supporting evidence - Held that:- The remand report of the AO that in the earlier years the provisions were disallowed by the assessee in the computation of income. Accordingly, in our view, the provision written back should be allowed as deduction from the total income of the assessee - Decided against revenue Profit declared in the original return of income held as book profit for the purpose of Section 115JB by CIT(A) - Held that:- Section 115JB of the Act starts with nonobstante clause ‘Notwithstanding anything contained in any other provision in this act, meaning thereby that the Section 115JB shall be applicable notwithstanding anything contained in any other provision of the Act and shall have overriding effect upon other provisions of the Act. The Section 115JB stipulates payment of Minimum Alternate tax based upon the book profit computed as per provisions of Section 115JB(2) of the Act. Book Profit shall be computed as per Section 115JB(2) of the Act which stipulates that Book Profit means net profit as shown in Profit and Loss Account prepared for financial year in accordance with Part II and III of Schedule VI to the Companies Act, 1956, also complying with other conditions as stipulated in Section 115JB(2) of the Act. Such book profit has to be increased by item Nos. (a) to (k) of the Said Explanation 1 to Section 115JB of the Act if they are debited to the Profit and Loss Account and from such profit item Nos. (i) to (viii) of the Explanation are to be reduced. The figure arrived at after the above exercise is the book profit of the assessee for the relevant previous years. In the instant case the profit declared in the original return of income was as per the requirement of section 115JB of the Act and the profit declared in the revised return does not meet the conditions laid down in the said section. Therefore we are of the view that there is no infirmity in the order of Ld. CIT(A) - Decided against the assessee.
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