TMI Blog2015 (12) TMI 760X X X X Extracts X X X X X X X X Extracts X X X X ..... Act but instead of disclosing the said item in the P&L A/c, it was disclosed in the Notes to the accounts, then such item of income or expenditure will be treated as part of the P&L A/c for the purpose of computing book profits u/s 115JB. Once P&L A/c is admittedly prepared as per Schedule VI of the Companies Act, then neither the AO has any power to tinker with it nor the assessee is permitted to claim exclusion or inclusion of any item of income or expenditure as the case may be, for the purpose of computing book profits u/s 115JB except the permissible adjustment provided under the Explanation to sec.115JB of the Act itself. It is not disputed that this amount does not fall in the ambit of any of the clauses of Explanation to 115JB. Therefore, once this amount has been disclosed in the P&L A/c prepared strictly as per provisions of Schedule VI of the Companies Act, the same cannot be excluded for the purpose of computing book profits u/s 115JB. See Apollo Tyres (2002 (5) TMI 5 - SUPREME Court) as well as CIT vs. HCL Comnet Systems & Services Ltd. (2008 (9) TMI 18 - SUPREME COURT). - Decided against assessee. - ITA No.726/Bang/2014 - - - Dated:- 7-10-2015 - SHRI VIJAY PAL ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ently those receipts which are statutorily excluded from definition of income u/s. 2(24) cannot be subjected to tax under this section following the Principles of law laid down by the Hon'ble Calcutta High Court in the case of SAIL DSP yr employees Association Vs UOI (2003) 128 TAXMAN 704 Cal. 7) The learned CIT (A) failed to appreciate that while, book profits as computed under Part II and Part Ill of Schedule VI to Companies Act, 1956 and not amenable for re- computation / recasting in the normal course, but there is no total bar in either the assessee or AO making such exercise in case of any manifest errors of including receipt notional income which will not fall within the definition of to disclose the working of the company during the financial year'. 8) The learned CIT(A) is also not justified in not admitting letter dated 08.02.2011 issued by ING Vysya Bank confirming that the remission of ₹ 43 lacs was towards the Principal under Rule 46A, which was, in fact, in compliance of the directions of the assessing officer, but received after conclusion of the assessment proceedings and no new facts were being canvassed for the first time before the lear ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the IT Act, 1961 [ the Act for short] was issued on 8/11/2006 whereby the AO sought to tax under MAT an amount of ₹ 43 lakhs being remission of liability of ING Vysya Bank Ltd. The assessee submitted before the AO that this remission of the liability was on account of principal amount of loan and therefore, the same is not in the nature of income which can be considered as part of the book profits u/s 115JB of the Act. The AO rejected the objections of the assessee and added the said amount of ₹ 43 lakhs while computing book profits u/s 115JB of the Act. The assessment was completed by the AO vide order dated 24/12/2007 determining the book profits for the purpose of MAT u/s 115JB at ₹ 43 lakhs. 4. Before the CIT(A), assessee reiterated the contention that the remission of the principal loan amount in one time settlement cannot be considered as income for the purpose of book profits u/s 115JB. The CIT(A) did not accept the contention of the assessee and had held that book profits arrived at as per the provisos of Schedule VI of the Companies Act cannot be tinkered with in view of the judgment of the Hon ble Supreme Court in the case of Apollo Tyres (255 ITR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... udgments as referred above. We note that the ratio of the decisions relied upon by the assessee is based on the premise that if an item of income or expenditure is required as per Part II of Schedule VI of the Companies Act to be part of P L A/c, but the same was not disclosed in the P L A/c and has been disclosed in the notes forming part of the accounts, then the said disclosure in the notes to the accounts would be treated as disclosure of that particular item of income or expenditure as the case may be, in the P L A/c for the purpose of book profits u/s 115JB. In the case in hand, the assessee got remission of liability of ₹ 43 lakhs under one time settlement by the ING Vysya Bank which has been disclosed by the assessee in the P L A/c. This disclosure, in the P L A/c is strictly as per the requirement of Schedule VI of the Companies Act and further in conformity with the mandatory accounting standard AS 5. Therefore, the treatment of the amount in the books of account and particularly in the P L A/c, is as per the provisions of Schedule VI of the Companies Act as well as accounting standard AS 5. Hence, any disclosure in the notes to accounts would not require any change ..... X X X X Extracts X X X X X X X X Extracts X X X X
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