TMI Blog2009 (11) TMI 903X X X X Extracts X X X X X X X X Extracts X X X X ..... of its business, therefore, the assessee has not fulfilled the conditions of section 36(1)(iii) for allowing the said expenses from the business income. He accordingly disallowed. HELD THAT:- We find the CIT(A) has given a finding that no investment has been made during the year and the borrowed funds are utilised for making payments to the sundry creditors. The factual findings given by the CIT(A) could not be controverted by the learned DR. Therefore, we find merit in the submission of the learned counsel for the assessee that the AO disallowed the interest expenditure only on mere presumption without bringing any material or evidence on record. In absence of any material brought before us to controvert the factual findings given by the learned CIT(A) that no fresh investment has been made during the year, therefore, this ground by the Revenue being devoid of merit is dismissed. Book profit u/s. 115JB computation - addition being the surplus from the sale of rights in the premises made - profit which was taken directly to the Balance Sheet as capital reserve without routing the same through the Profit and Loss A/c - On being questioned by AO as submitted that since t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Revenue reads as under: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in treating the loss incurred on cancellation of foreign exchange forward contract as business loss. 3. After hearing both the sides, we find the Assessing Officer treated the loss on cancellation of foreign exchange forward contract at ₹ 25,75,000 as speculation loss and added to the total income of the assessee. 4. In appeal, the learned CIT(A) following the decision of the Hon ble jurisdictional High Court in the case of ITO vs. Badradas Gauridu Pvt. Ltd. reported in 261 ITR 256 (Bom) and the guidelines issued by RBI with reference to FEMA, 1999 held the transaction as business loss as against speculation loss treated by the Assessing Officer. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 5. The learned DR fairly conceded that the issue is against the Revenue and in favour of the assessee by the decision of the Hon ble Supreme Court in the case of CIT vs. Woodword Governor (I) Pvt. Ltd., reported in 294 ITR 481. In view of the above submission of the learned DR, this ground raised by the Revenue is dismissed. 6. G ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reads as under: On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the addition of ₹ 10,38,13,765/- being the surplus from the sale of rights in the premises made by the AO to the book profit u/s. 115JB. 11. Facts of the case, in brief, are that the assessee has made investment in the rights in booked premises at Bharat Diamond Bourse in the preceding years. The said rights were sold during the year and the assessee earned a profit of ₹ 10,38,13,765 which was taken directly to the Balance Sheet as capital reserve without routing the same through the Profit and Loss A/c. The assessee did not consider the above amount as a part of book profit u/s. 115JB of the Act. On being questioned by the Assessing Officer it was submitted that since the rights in booked premises were held as capital asset, the profit arising from the sale thereof was not credited to the Profit and Loss A/c. It was submitted that the surplus of ₹ 10,38,13,765 arising on the sale of the rights in the booked premises did not constitute trading profit. It was further submitted that the accounts of the assessee company were duly certified by th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case and has not been overruled by the Hon ble Supreme Court. Referring to the decision of the Hon ble Supreme Court in the case of Apollo Tyres Ltd. (supra) he submitted that the Hon ble Supreme Court has decided the issue in favour of the assessee in a case where the accounts were prepared as per Part II and Part III to Schedule VI of the Companies Act whereas in the instant case, admittedly, the accounts are not prepared as per the provisions of Companies Act. Simply because the auditors have certified the Profit and Loss A/c. in violation of the provisions of Companies Act it cannot be said that the Assessing Officer has no jurisdiction to go beyond the audited accounts adopted in the AGM. He further submitted that the company Apollo Tyres Ltd. was a widely held public limited company whereas the assessee in the instant case is a closely held company. He further submitted that the various decisions relied on by the learned counsel for the assessee were rendered in the context of the provisions of section 115J or 115JA whereas the section involved in the appeal relates to provisions u/s. 115JB. 15. The learned counsel for the assessee, on the other hand, reiterated the same ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loss account shall set out the various items relating to the income and expenditure of the company arranged under the most convenient heads ; and in particular, shall disclose the following information in respect of the period covered by the account: (i) . (ii) . (xi) (a) The amount of income from investments, distinguishing between trade investments and other investments. (b) Other income by way of interest, specifying the nature of the income. (c) The amount of income-tax deducted if the gross income is stated under sub-paragraphs (a) and (b) above. (xii) (a) Profits or losses on investments showing distinctly the extent of the profits or losses earned or incurred on account of membership of a partnership firm to the extent not adjusted from any previous provision or reserve. Note : Information in respect of this item should also be given in the balance sheet under the relevant provision or reserve account. (b) Profits or losses in respect of transactions of a kind, not usually undertaken by the company or undertaken in circumstances of an exceptional or non-recurring nature, if material in amount. (c) Miscellaneous income. (x ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion of Hon ble Supreme Court in the case of Apollo Tyres Ltd., in our opinion is not applicable to the facts of the present case. 22. Similarly in the case of Kinetic Motor Co. Ltd. (supra) the assessee had debited an amount of ₹ 6,32,65,430 on account of depreciation on the basis of WDV which is one of the permissible methods under the Companies Act although the assessee used to provide the depreciation on the straight line method in its corporate accounts. The above resulted in a book loss of ₹ 1,64,49,937. These accounts were certified to be true and fair by the auditors. The Assessing Officer took the view that there was no justification for the assessee to change the basis of providing depreciation and reworked the depreciation and arrived at a book profit of ₹ 2,22,10,525 as against the book loss of ₹ 1,64,49,937 which was confirmed by the Tribunal. On further appeal to the High Court, the Hon ble High Court had held that under the Companies Act both straight line method and written down method are recognised, therefore, once the amount of depreciation actually debited to the Profit and Loss A/c. and was certified by the auditors it was not permissi ..... 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