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2015 (12) TMI 1847 - AT - Income TaxMAT Computation u/s 115JB - Deduction on account of prior period expenditure from net profit shown in Profit & Loss Account for the purpose of computing book profit u/s 115JB - HELD THAT:- Only in cases where a particular item of income or expenditure is required to be disclosed in the Profit & Loss Account but was disclosed in the notes to accounts, then such item of income or expenditure will be treated as part of Profit & Loss Account for the purposes of computing profit u/s 115JB. Assessee has not brought on record anything to show as to how this amount was required to be part of Profit & Loss Account prepared in accordance with part II of Schedule VI of the Companies Act. We further note that the CIT(A) has allowed the claim of the assessee on the premise that once assessee has disclosed this amount in notes to accounts, then the same will be treated as disclosed in Profit & Loss Account and consequently has to be adjusted for computation of book profit u/s 115JB. CIT(A) has not gone into this aspect of the issue whether this prior period expenditure was required to be part of Profit & Loss Account as per Schedule VI of Companies Act or not. Therefore, if this amount was not required to be part of Profit & Loss Account prepared as per Schedule VI of the Companies Act, then undisputedly this amount not being part of any of the clauses of Explanation to sec. 115JB cannot be excluded from net profit for the purposes of computing book profit u/s 115JB. Since neither the revenue nor the assessee has furnished any record in support of their respective claims, whether this amount of prior period expenditure was required to be part of Profit & Loss Account prepared as per provisions of Schedule VI of the Companies Act, therefore, we set aside this issue to the record of the CIT(A) to re-examine the issue in light of the relevant provisions of Schedule VI of the Companies Act as well as the relevant accounting standard applicable on this item of expenditure and then give a finding whether this amount of prior period expenditure is required to be part of profit and loss account or not - Appeal of the revenue allowed for statistical purposes.
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