TMI Blog2007 (1) TMI 201X X X X Extracts X X X X X X X X Extracts X X X X ..... les Ltd.[ 2000 (8) TMI 35 - KERALA HIGH COURT] is squarely applicable in the instant case to understand the amount deductible in terms of cl. (iv) of the Explanation below s. 115JA(2) of the Act. Following the aforesaid, in our view, for the purposes of cl. (iv) of the Explanation to s. 115JA(2) it is not the actual deduction u/s 80-IA which is relevant but what is relevant is the profits of eligible undertaking computed in terms of the P L a/c for the relevant previous year prepared in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act, 1956. Considering the order of the AO in the aforesaid light, the same clearly emerges to be untenable in the eyes of law. Factually speaking, there is no dispute that the net profit has been computed for the power co-generation unit of the assessee is in terms of the P L a/c prepared in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act, 1956. Therefore, in terms of cl. (iv) it is the amount that is deductible to arrive at 'book profits' u/s 115JA of the Act. AO while reducing the amount of deduction allowed u/s 80-IA from the 'net profits' shown in the P L a/c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iation under s. 32 of the Act in relation to the power co-generation unit and paper units of the assessee. As a result of this adjustment, the gross total income arrived before allowing of deductions under Chapter VI-A (i.e. s. 80-IA regarding power co-generation unit also) came to a negative figure and hence deduction under s. 80-IA was not allowable. Simultaneously, in the order passed under s. 154, the AO also worked out the income under s. 115JA of the Act as under : Computation of profits under s. 115JA Profits as per PBI account Rs. 3,23,00,114 Less Nil Profits under s. 115JA Rs. 3,23,00,114 Income under s. 115JA @ 30% of Rs. 3,23,00,114 Rs. 98,90,034 3. The assessee challenged the order passed by the AO under s. 154 with respect to the calculation of income under s. 115JA before the CIT(A). In appeal the assessee contended that the notice under s. 154 issued to the assessee was only with respect to the calculation of deduction under s. 80-IA as per originally allowed before allowing depreciation under s. 32 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;book profit' under s. 115JA of the Act. Learned counsel also pointed out that in the assessment originally framed under s. 143(3), there was no computation of income in terms of s. 115JA and that such a computation has been made for the first time in terms of impugned order of the AO passed under s. 154 of the Act. On merits, the learned counsel pointed out that in any case the adjustment made to the book profits under s. 115JA was contrary to the statutory provisions. For this proposition, the learned counsel has relied upon the decision of the Kerala High Court in the case of CIT vs. G.T.N. Textiles Ltd. (2000) 164 CTR (Ker) 185 : (2001) 248 ITR 372 (Ker) as also the decision of the Mumbai Bench of the Tribunal in the case of Dy. CIT vs. Govind Rubber (P) Ltd. (2004) 82 TTJ (Mumbai) 615 : (2004) 89 ITD 457 (Mumbai). Reliance has also been placed on the decision of the Supreme Court in the case of Apollo Tyres Ltd. (supra). 5. We have considered the rival submissions carefully. First of all the facts which have a bearing on the dispute on hand. In the assessment originally framed under s. 143(3), the assessee was allowed deduction under s. 80-IA of Rs. 3,30,44,329 on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sue, we find that the pleas of the assessee have ample force. The Explanation below s. 115JA(2), cl. (iv) reads as under : The amount of profits derived by an industrial undertaking from the business of generation or generation and distribution of power; or'. The amount referred above is to be reduced from the net profit, as shown in the P L a/c for the relevant previous year prepared in accordance with para 2 and 3 of Sch. (VI) to the Companies Act, 1956 in order to compute 'book profits' for s. 115JA of the Act. The assessee contends that what is excludible is the amount of profits of the eligible undertaking computed by it in terms of the books of account and not in terms of the computation provisions of the Act. The Revenue, on the other hand, contends that what is excludible is the actual amount of deduction which is ultimately allowed in respect of such profits. In this regard, we find that a similar controversy arose before the Kerala High Court in the case of G.T.N. Textiles Ltd. (supra) in relation to the amount to be excluded in terms of cl. (iii) of the Explanation to s. 115J of the Act. Clause (iii) of the Explanation below s. 115J(1A) relates to the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is squarely applicable in the instant case to understand the amount deductible in terms of cl. (iv) of the Explanation below s. 115JA(2) of the Act. Following the aforesaid, in our view, for the purposes of cl. (iv) of the Explanation to s. 115JA(2) it is not the actual deduction under s. 80-IA which is relevant but what is relevant is the profits of eligible undertaking computed in terms of the P L a/c for the relevant previous year prepared in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act, 1956. Considering the order of the AO in the aforesaid light, the same clearly emerges to be untenable in the eyes of law. 10. Factually speaking, there is no dispute that the net profit of Rs. 3,30,44,729 has been computed for the power co-generation unit of the assessee is in terms of the P L a/c prepared in accordance with the provisions of Parts II and III of Sch. VI to the Companies Act, 1956. Therefore, in terms of cl. (iv) it is the amount of Rs. 3,30,44,729 that is deductible to arrive at 'book profits' under s. 115JA of the Act. 11. We also find the action of the AO as untenable on another angle. The Hon'ble Supreme Court in the c ..... 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