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M/s Aruppukottai Sri Jayavilas Ltd Versus The Commissioner of Income Tax, Madurai

2015 (8) TMI 179 - MADRAS HIGH COURT

Computation of Book Profits for the purpose of Section 115 JA - whether AO was right in adding a sum which was directly credited to the 'Capital Reserve' Account on account of revaluationof 4000 Equity Shares in Shri Ramalinga Mills Ltd. by transfer to its subsidiary company confirmed by ITAT? - Held that:- The Tribunal in this case, relied upon the decision rendered in the case of Kumudam Printers Pvt. Ltd. came to be challenged before this Court [2011 (3) TMI 889 - MADRAS HIGH COURT ] and this .....

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ncome Tax (Appeals). Since the issue on jurisdiction and limitation touch on the very reopening of the assessment, we feel, the proper course herein would be to set aside the order of the Tribunal, remand the matter back to the Tribunal with a direction to consider the issue of limitation and the jurisdiction under Section 147 to reopen the assessment - Decided in favour of assessee for statistical purposes. - Tax Case Appeal No. 395 of 2007 - Dated:- 30-6-2015 - R Sudhakar And K B K Vasuki, JJ. .....

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right in holding that in arriving at the Book Profits for the purpose of Section 115 JA of the Income Tax Act, 1961, the Assessing Officer was right in adding a sum of ₹ 4,71,41,600/- which was directly credited to the 'Capital Reserve' Account on account of revaluationof 4000 Equity Shares in Shri Ramalinga Mills Ltd. by transfer to its subsidiary company without consideration as per the directions int he Arbitration Award and confirmed by Court Decree?" 3. The Tribunal in t .....

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clude capital gains for computing the book profits under Sec. 115J. Even under Clause 3 (ii) (b) of Part II of Schedule VI to the Companies Act, 1956, profits or losses in respect of transactions or transactions of an exceptional or non-recurring nature are to be disclosed. This shows clearly that capital gains should be included for the purposes of computing book profits. This view was fortified by this Tribunal vide order dated 14.7.2004 in the case of Kumudam Printers Pvt. Ltd., in ITA No. 17 .....

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uation. The Assessee has not revalued the investments. On the other hand, it has transferred Unquoted Equity Shares. Therefore, the ratio of this decision relied on by the Assessee is against the Assessee. Accordingly, we reverse his order on this issue and restore that of the Assessing Officer." 4. The assessee has distinguished the decision of Kumudam Printer's case which finds place in paragraph 4 of the order of the Tribunal. 5. At the time of final hearing, it is brought to our not .....

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