Home Case Index All Cases Income Tax Income Tax + AT Income Tax - 2016 (9) TMI AT This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2016 (9) TMI 496 - AT - Income TaxMAT computation - disallowance of the cost of improvement under the normal computation and under the provisions of section 115JB - applicability of companies act - Held that:- Whatever be the nature of profit or loss is incurred by the assessee it has to be disclosed in the profit and loss account mandatorily as per the provisions of the Companies Act, 1956. Only the assets & liabilities and the profit/loss carry forwarded from the profit and loss account are disclosed in the balance sheet. The format of balance sheet as provided under Schedule VI of the Companies Act itself indicate the fact that only the assets & liabilities including reserves and carry forward of profit/loss from the profit & loss account are to be disclosed in the balance sheet. Thus the profit determined in the profit & loss account of the assessee complying with the Companies Act shall be the “book profit” of the assessee company for the purpose of Section 115JB of the Act, subject to the other provisions of the Income-Tax Act. To make it clear, there is no provision in the Companies Act to directly absorb any profit or loss in the balance sheet directly other than routing it through the profit and loss account of the assessee. Therefore, it is apparent that the assessee company had directly absorbed the profit derived from the sale of its capital asset in the balance sheet thereby avoided to disclose the same in its profit and loss account in order to escape from the clutches of the provisions of section 115JB of the Income Tax Act. This is against the provisions of the Companies Act as well as against the Income Tax Act. The decisions cited by the learned Authorized Representative has not considered the mandatory provision of Companies Act, 1956 with respect to Schedule VI Part II & III. Therefore, we are of the considered view that the learned Assessing Officer has correctly computed the “book profit” as per the provisions of the Act, which is rightly upheld by the learned Commissioner of Income Tax (Appeals).
|