TMI Blog2006 (3) TMI 563X X X X Extracts X X X X X X X X Extracts X X X X ..... l appearing for the assessee and Shri D.Z. Patel, the learned departmental representative appearing for the revenue. 3. The first ground raised by the assessee in this appeal is that the CIT(A) has erred in not holding that the reopening of the assessment was bad in law. This ground is narrated in detail by the assessee in three paragraphs under main ground "A." We considered this issue in the light of the discussion available in the orders of the lower authorities. We find that the Assessing Officer has rightly issued notice under section 148 and reopened the assessment under section 147 and, therefore, the ground raised by the assessee against reopening of the assessment is liable to be dismissed. 4. The second ground raised by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iability being a subsisting liability, the amount should be deducted from the book profit and the provisions of section 115J should be applied only on such reduced profit. This was not accepted by the lower authorities and hence, this ground in the present appeal. 6. The learned counsel, Smt. Aarti Vissanji argued on this point at length. She invited our attention to pages 12 and 17 of the paper book filed before us, relating to the auditors report as well as notes on account forming part of Profit Loss Account and balance sheet as on 31-3-1989. She invited our attention to the qualification recorded by the auditors in their report regarding non-provision of gratuity and also the notes to account where it has been stated that liabili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mate charge is provided for in the accounts. She submitted that computation of book profit for the purpose of section 115J should not be an empty formality. The provisions of the Companies Act, 1956 provide for deducting all legitimate expenditure and charges in arriving at the profit or loss of a company. So long as the gratuity liability is an ascertained liability, it was necessary for the assessee to debit the same in its profit loss account. Even though this has not been done by the assessee-company, that omission is not a reason for the Assessing Officer to overlook that crucial factor and work out the book profit for the purpose of section 115J on an erroneous assumption that the profit declared by the assessee in its accounts was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessing authority at the time of assessment in the context of section 115J, the assessee has not made any attempt to explain whether the profit loss account of the assessee-company was revised or the auditors have issued any supplementary report or the assessee- company was contemplating any such damage control exercise regarding the statement of its accounts. The assessee has not done anything in that direction. 8. Now, the question is whether in spite of the profit reflected in the profit loss account prepared by the assessee-company should the assessing authority have gone further and made adjustment to the profit declared by the assessee as per its accounts for making provision for the gratuity liability. Section 115J has ..... X X X X Extracts X X X X X X X X Extracts X X X X
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