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TMI Blog2010 (8) TMI 398X X X X Extracts X X X X X X X X Extracts X X X X ..... dated order for the sake of convenience. 2. We first take up the appeal of the revenue in ITA No. 1802/M/2005. The only dispute raised is whether the book profit under section 115J should be computed with respect to the profit determined in accordance with the provisions of Part II and Part III of Schedule VI of the Companies Act, 1956 or as per the profit and loss account prepared and approved by the board of directors and placed before the AGM. Briefly stated the facts of the case are that the assessee for the assessment year 1988-89 had declared nil income in the return of income filed on29-7-1988. The assessee, for the purpose of computation of book profit under section 115J, had prepared the profit and loss account under the provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... fferent basis, the assessee could file a separate profit and loss account under the Companies Act for the purpose of section 115J. The Assessing Officer in the order dated 12-5-1992 giving effect to the order of CIT(A) computed the total income in the regular assessment at Rs. 13,97,170 but the book profit was computed by him on the same basis as in the original assessment ignoring the order of CIT(A). The Assessing Officer thus assessed the total income at Rs. 17,41,644. The assessee filed appeal against the order dated 12-5-1992 of the Assessing Officer and CIT(A) vide order dated 23-1-1995 directed the Assessing Officer to look into the facts and examine the items of revised profit and loss account. Further, in appeal against the order o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assessee and observed that the Assessing Officer had ignored the directions of the Tribunal to compute the book profit on the basis of profit and loss prepared under the provisions of Part II and Part III of Schedule VI of the Companies Act because the profit and loss account approved by the directors and placed at the AGM was on different basis. CIT(A) directed accordingly and allowed the appeal of the assessee aggrieved by which the revenue is in appeal. 4. Before us the Learned AR for the assessee argued that there were no provisions at the relevant time that profit and loss account for the purpose of book profit should the same as the one prepared and approved at the AGM. It was pointed out that sub-section (1A) of section 115J applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... erused the records and considered the rival contentions carefully. The dispute raised is in relation to computation of book profit under section 115J and the specific issue raised is whether the book profit should be computed with respect to profit declared in the profit and loss account prepared for the purpose of AGM or the profit and loss account prepared under the Companies Act. In this case there was difference in the profit computed under the two methods which was basically on account of basis of computation of depreciation which was different in the account placed before the AGM. The Assessing Officer had computed the book profit as per the accounts placed before the AGM as per which 30 per cent of book profit came to Rs. 17,41,644 w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n para (2) & (2.1) earlier. The assessee for the relevant year had declared nil income under the normal provisions of the Act. As regards the book profit, the assessee had computed the same with respect to the profit and loss account prepared in accordance with the provisions of Part II and Part III of the Schedule VI of the Companies Act which gave a negative figure. The book profit was computed as nil. The Assessing Officer however computed the book profit with respect to the profit and loss account prepared for the AGM which gave a profit of Rs. 58,05,481 prior to taxation. The Assessing Officer therefore computed the total profit at Rs. 17,41,644 @ 30 per cent of book profit . The total income computed under the normal provisions of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered the matter carefully. The dispute is regarding levy of penalty under section 271(1)(c) in relation to the total income determined by the Assessing Officer on the basis of book profit. The assessee had determined the book profit at nil on the basis of profit and loss account prepared as per Part II and Part III to Schedule VI of the Companies Act whereas the Assessing Officer had computed the book profit with respect to profit and loss account prepared as per the profit and loss account submitted before the AGM in which profit declared was higher because of different method of depreciation adopted therein. While dealing with the quantum appeal in this order we have upheld the order of CIT(A) holding that the book profit had been ri ..... X X X X Extracts X X X X X X X X Extracts X X X X
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