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2021 (10) TMI 217 - AT - Income TaxComputation of book profit u/s. 115JB of the Act by excluding prior period item - difference in net profit/loss taken by the assessee and the AO on account of provision for gratuity relating to earlier years as prior period item - HELD THAT:- For all practical purposes, the net profit as per books of account for the relevant period is net profit computed without making any adjustment by deducting prior period items or other appropriations made in the current financial year. If you go by this analogy then, provision for gratuity relating to earlier years claimed by the assessee under the head 'prior period items' comes below the line in profit & loss account. If you consider provision for gratuity relating to earlier years as item comes below the line of profit & loss account, then for the purpose of computation of book profit, net profit as per books of accounts should be considered before allowing deduction for provision for gratuity relating to earlier years. There is no error in reasons given by the AO to compute book profit u/s. 115JB of the Act by taking net profit as per profit & loss account before considering deduction claimed for prior period item being provision for gratuity relating to earlier years.
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