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2023 (1) TMI 45 - HC - Income TaxPrior period adjustments to be included or excluded for working out book profit for the purpose of Section 115J - HELD THAT:- The statute does not provide that prior period adjustments are to be excluded to work out the book profit as per sub-section (1A). In Apollo Tyres Limited [2002 (5) TMI 5 - SUPREME COURT] was considering amongst others the question as to whether an assessing officer while assessing a company under Section 115J of the Act can question the correctness of the profit and loss account prepared by the assessee in accordance with Parts II and III of Schedule VI to the Companies Act, 1956. Looking into the accounts of the company, an assessing officer under the Act has to accept the authenticity of the accounts with reference to the provisions of the Companies Act, 1956, which obligates the company to maintain its account in a manner provided by the Companies Act, 1956. Therefore, AO while computing the income under Section 115J has only the power to examine whether the books of accounts are certified by the authorities under the Companies Act, 1956, as having been properly maintained in accordance with the Companies Act, 1956. Assessing officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said Section. Putting it differently, Supreme Court held that an assessing officer does not have the jurisdiction to go beyond the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J of the Act. If that be the position, assessing officer could not have taken another figure as the net profit instead of the net profit of Rs.33,222.00 shown as per the profit and loss account prepared in terms of Parts II and III of Schedule VI to the Companies Act, 1956. That being the position, the substantial questions of law as extracted above are answered in favour of the appellant and against the respondent.
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