Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2019 (5) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2019 (5) TMI 1258 - AT - Income TaxRevision u/s 263 by CIT - addition made by the TPO though but not added by in the computation of book profits u/s 115JB - whether the accounts have been prepared by the assessee in accordance with the provisions of Part II & Part III of Schedule VI of the Companies Act, 1956 together with applicable accounting standards ? - HELD THAT:- The accounts have been prepared in proper compliance with applicable accounting standards. There is no evidence brought on record by the ld. CIT that the accounts of the assessee have not been approved by the shareholders in the General Body Meeting or they have been subject to any enquiry by the Registrar of Companies for non-compliance to any accounting standards. Hence, the entire observations of the ld. CIT with regard to verification of compliance of provisions of section 297 of the Companies Act, compliance to accounting standards i.e. AS-18, AS-21 and AS-23 are totally irrelevant and not germane to the issue under consideration in the facts and circumstances of the assessee’s case. The issue as to whether the transfer pricing addition made by the ld. TPO had to be added back while computing book profits u/s 115JB was the subject-matter of adjudication by the Coordinate Bench of the Delhi Tribunal in the case of M/s Cash Edge India (Pvt.) Ltd. vs. ITO [2016 (1) TMI 598 - ITAT DELHI] This decision of the Delhi Tribunal was duly brought to the attention of the ld. CIT while giving reply to show cause notice issued u/s 263 and the ld. CIT conveniently ignored the same and does not whisper about the same in his final finding while proceeding to treat the order of the ld. A.O as erroneous and prejudicial to the interest of the revenue. CIT had only mentioned in Para 5 of his order that the transactions with related parties and associated enterprises require elaborate examination by A.O by conducting detailed enquires and verifications in the light of provisions of Companies Act, relevant accounting standards and income tax Acts. We find that the ld. CIT had not specifically pointed out any exact error committed by the ld. A.O while framing the assessment. Instead, the ld. CIT only directed the A.O to make detailed and roving enquires through the route of invoking revisional jurisdiction u/s 263. A.O is not empowered to make any addition or deletion to the net profit as per Profit & Loss A/c prepared in accordance with Part II & Part III of Schedule VI of Companies Act 1956 and relevant accounting standards thereon, other than those items specifically mentioned in Explanation 1 to section 115JB(2). Reliance in this regard is also placed on the decision in the case of CIT vs. HCL Comnet Systems and Services Ltd. [2008 (9) TMI 18 - SUPREME COURT]. There is no absolute allegation that the annual accounts of the assessee company were not passed/approved by the shareholders in the General Body Meeting. Thus order of the A.O was neither erroneous nor prejudicial to the interest of the Revenue warranting invocation of revisional jurisdiction u/s 263 - Decided in favour of assessee.
|