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2019 (1) TMI 1348 - AT - Income TaxMAT - computation of book profit - Not excluding waiver of principal and interest under one time settlement with lender while computing the book profit under section 115JB - Held that:- When the auditors of the assessee company had disclosed all the particulars and had qualified the crediting of the amount of ₹ 162,30,33,516/- in the profit & loss account by way of ‘notes' to the accounts, therefore, it was obligatory on the part of the A.O to have considered the same while determining the ‘book profit‘ under Sec. 115JB. We are unable to persuade ourselves to subscribe to the reading of the profit & loss account in isolation by the A.O, de hors qualification of the same by way of ‘notes‘ of the auditors to the financial statements. We thus in all fairness are of the considered view that as the A.O had failed to consider the crediting of the waiver of the loan of ₹ 162,30,33,516/- in the profit & loss account in the backdrop of the qualification of the auditors by way of ‘notes‘ to the accounts in context of the same, therefore, the matter requires to be restored to his file for fresh adjudication. The A.O shall in the course of the ‘set aside‘ proceedings readjudicate the claim of the assessee that the waiver of loan was not liable to be included while determining the ‘book profit‘ under Sec. 115JB after taking cognizance of the aforesaid qualifications of the auditors. Interest on delayed payment of TDS - Rejecting of claim in respect of deduction of interest paid to the income-tax department - Held that:- The provisions of imposition of penalty and interest are distinct from the provisions for imposition of tax. In the backdrop of the aforesaid settled position of law, we are of the considered view that the interest on delayed payment of TDS cannot be disallowed under Sec. 40(a)(ii) of the Act. In our considered view as the interest on delayed payment of TDS is not on the personal tax but is attributable to the tax which the assessee has deducted in respect of payment to others, therefore, the same would be allowable u/s 37. Thus conclude that interest on delayed payment of TDS would be allowed as a deduction while computing the income of the assessee under the head “Business or Profession”. However, as the said issue was never contested by the assessee before the A.O, therefore, we restore the matter to his file for verifying the veracity of the claim of the assessee that the amount was paid towards interest on delayed payment of TDS. In case the claim of the assessee is found to be in order, then the A.O shall give consequential effect in terms of our aforesaid directions. Non granting deduction in respect of prior period adjustments (net) while computing the ‘book profit‘ under Sec. 115JB - Held that:- Starting point for determining the ‘book profit‘ under Sec. 115JB is the ‘net profit‘ shown in the profit & loss account for the relevant previous year prepared as per Part II and III of the Companies Act, 1956 (1 of 1956), which is further subject to the adjustments contemplated in Explanation 1 of Sec. 115JB. The claim of the assessee that the starting point of computation of ‘book profit‘ under Sec. 115JB should be the profit as per the profit & loss account after making all provisions, transfers to various reserves, appropriations and transfer from various reserves does not find any support from the mandate of law. We thus in terms of our aforesaid observations find no infirmity in the order of the CIT(A), and are of the considered view that he had by declining to accept the interpretation accorded by the assessee to Sec. 115JB had rightly upheld the order of the A.O in context of the issue under consideration. We thus in terms of our aforesaid observations uphold the order of the CIT(A) as regards rejecting of the claim of the assessee for deduction in respect of prior period adjustment (net)
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