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2011 (12) TMI 222 - AT - Income TaxDis-allowance of deduction from the net profit on account of foreign exchange fluctuation due to restatement of term loan at the year-end while computing the tax u/s.115JB – Held that:- Provisions of section 115JB being code by itself, therefore the adjustments can be made as prescribed within this code. Under this code if a P/L account has been made in terms of the Companies Act, then no adjustment or tinkering is available except as provided in Explanation. See Apollo Tyres Ltd. v. CIT [2002 - TMI - 6081 - Supreme Court] As far as the "AS-11" is concerned, in simple language, it is expected from a business enterprise to adjust the interest difference, so that the amounts outstanding in Indian Rupees in the books of account of the assessee should match with the corresponding amount shown as outstanding by a bank or any third party in Foreign Exchange by applying the current Foreign Exchange Rate. Though at present we are not concerned about the interpretation and applicability of "AS-11" but to our humble understanding the Auditor have rightly accounted for the Foreign Exchange Fluctuation due to restated term loan and that was made the component of the net profit of the assessee-company. Further assessee has not demonstrated that as per Schedule-VI of Companies Act, the impugned income is beyond the scope of profit of the company. By very adoption and inclusion of the said income in the profits of the company it has been affirmed that the same had come within the ambits of the "book profit". We therefore hold that the assessee was not justified in reducing the said amount while computing the "book profit" – Decided against the assessee.
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