9911796707
TMI Blog2012 (6) TMI 569X X X X Extracts X X X X X X X X Extracts X X X X ..... amount withdrawn provision for interest to financial institutions debited to Profit and Loss A/c. in earlier year now credited to Profit and Loss A/c. and included in the book profit u/s. 115JB of the Act. However, the CIT observed that on verification of annual report of the earlier year there is no provision made for interest. Further it is seen from the assessment record that the Assessing Officer has not called for and examined the report prescribed under Rule 40B in Form 29B prepared by an accountant (CA) verifying computation of book profit of the company as required u/s. 115JB of the Act. The said Form 29B should accompany the return of income filed by the assessee. The assessee has not filed such report and the Assessing Officer has neither called for nor examined correctness of computation of the book profit u/s. 115JB as verified by a CA. the Assessing Officer completed the assessment u/s. 143(3) of the Act on 30.11.2008 computing the total income of the assessee under normal provisions and the book profit u/s. 115JB was not computed in the assessment order. Thus, the Assessing Officer failed to call for and make proper enquiry on the computation of book profit u/s. 115J ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... added to the book profit. According to the AR there is no computation of book profit for the assessment year under consideration and being so, the CIT cannot take up this issue by invoking the provisions of section 263 of the Act. Further, he submitted that the assessment was completed u/s. 143(3) dated 13th November, 2008 wherein the Assessing Officer added the impugned amount which was not in the nature of income taxable under the provisions of the Act and the assessee went in appeal before the CIT(A). The CIT(A) considered similar issue and allowed the appeal of the assessee vide order dated 16th October, 2009. Being so, order of the Assessing Officer is merged with the order of the CIT(A). It was also submitted that the liability towards interest being an ascertained liability, no addition is warranted. Such debit is part of financial statement under the head "Finance Charges". The interest which was debited to Profit and Loss A/c. was added back on account of provisions of section 43B of the Act. It is also an admitted fact that there was no liability under the provisions of section 115JB of the Act for all the earlier years, as there was never any book profit owing to the fac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ared to be non-est, as the assessee had failed to rectify the defect in spite of notice issued u/s. 139(9) of the Act, deduction of interest claimed in such returns cannot be deemed to have been allowed and, therefore, interest waived by bank cannot be charged u/s. 41(1 of the Act. 6. Taking the clue from the above judgements, similarly, unless the provision created by the assessee towards interest liability allowed as a deduction while computing the book profit u/s. 115JB when the assessee writes back the same to the Profit and Loss A/c. then it should be considered for determining the book profit. It is nobody's case that interest liability has been allowed as deduction in earlier years. In other words, an allowance or deduction has been made in earlier years in respect of interest liability while computing the book profit and writing back the same could be added to the book profit. A reading of clause (i) to Explanation 1 to section 115JB(2) gives the above meaning. It is settled law that the language of the Act is plan and unambiguous, no interpretation therein is called for. For this proposition, he drew support from the judgement of Supreme Court in the case of Smt. Tarulata ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ividends. The first and foremost ground of the assessee was that the Assessing Officer could not assume jurisdiction to calculate the book profits for the year ended 31.3.1996 as well as for the year ended 31.3.1997 which was in appeal. On that ground the assessee was bound to succeed in view of the recent judgment of the Supreme Court in the case of Apollo Tyres Ltd. vs. CIT (2002) 255 ITR 273/122 Taxman 562. In the instant case, the Assessing Officer in effect recalculated the book profits not only for the year ended 31.3.1997 but also for the year ended 31.3.1996. OTS had two consequences, viz., (i) waiver and (ii) reduction of interest payable. If the OTS had to be ignored in toto then the interest of Rs. 11.43 crores were to be debited to the P&L a/c for the year ended 31st March, 1996, against the interest of Rs. 4.5 crores debited by the assessee. Only one aspect of the entire transaction could not be taken while ignoring the other aspect. In other words, the Assessing Officer ought to have done a complete exercise of recasting the P&L a/c as at 31st March, 1996, which only would have given him the correct figure of loss that had to be carried forward. Without recasting al ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ncome for the purpose of income-tax assessment is based on a variety of artificial rules and takes into account several fictional receipts, deductions and allowances. Thus, a clear distinction has been drawn out between commercial profits and assessable profits. On similar analogy section 41(1) which was brought into the statute to supersede the principle that under general law remission of a trade liability is income cannot be brought in for the purposes of calculating book profit under s. 115JA." 9. Further in the case of JCIT vs. Usha Martine Industries Ltd., (Kol.) (SB) 104 ITD 249, the Tribunal held as under: "The provision of section 115JA has an overriding effect upon the other provisions of the Income-tax Act. It is applicable only in the case of a company. As per this section, the Assessing Officer has to first compute the total income of the assessee as per the provisions of the Income-tax Act. Thereafter, he has to compute 30 per cent of the book profit. Then, he has to compare the total income, as computed as per the provisions of Act, with 30 per cent of book profit, computed as per section 115JA. If 30 per cent of the book profit is more than the total income, then ..... X X X X Extracts X X X X X X X X Extracts X X X X
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