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Binary Semantics Ltd. Versus ACIT, Circle-3 (1) , New Delhi

2016 (1) TMI 499 - ITAT DELHI

Addition on book profit of the interest received on tax refund - Held that:- In the case of the assessee, the refund was determined in previous year 2010-11, corresponding to assessment year 2011-12 i.e. present assessment year, so the interest also accrued only in assessment year 2011-12 and not in any year earlier to it. Therefore, we hold that the interest of ₹ 4,66,110 accrued in relevant assessment year only.

In the case in hand the interest was not only accrued in the rele .....

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ities (2010 (7) TMI 794 - ITAT HYDERABAD ), we hold that the amount of ₹ 2,50,737 was correctly added by the Assessing officer while computing the book profit of the assessee and no interference is required in the order of the learned Commissioner of Income-tax (Appeals). - Decided against assessee - ITA No. 5773/Del/2014 - Dated:- 11-12-2015 - SMT. DIVA SINGH, JUDICIAL MEMBER AND SH. O.P. KANT, ACCOUNTANT MEMBER For the Appellant : Sh. Sanjay Kalra, CA For the Respondent : Sh. Yatendra Si .....

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n tax refund of ₹ 2,50,737/- is incorrect as interest for the year 2010-11 (up to the date of receipt of refund) was already included in income of the Company. The addition is arbitrary, unlawful and against facts. 3. The appellant prays for leave to add, alter, amend or withdraw from any of the grounds of appeal at or before the time of hearing. 2. The facts in brief as culled out from the orders of the lower authorities are that in the revised return of income filed, the assessee declare .....

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e P&L account, therefore, he added the balance amount of ₹ 2,15,737/- to the book profit of the assessee and assessed the income accordingly. Aggrieved, the assessee filed an appeal before the CIT(A). Before the ld. CIT(A), the assessee accepted that while making entries for interest in the profit & loss account, due to mistake at the lower level of the accounts department, this omission occurred but it was not intentional. However, the assessee requested that following the judgmen .....

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, he submitted that the Assessing Officer could only make the adjustment to book profit which is permissible under the explanation given in Section 115JB of the Act. The learned CIT(A) did not accept the submission of the assessee and sustained the addition made by the Assessing Officer. 3. Before us, the learned Authorized Representative of the assessee reiterated the arguments/submissions made before the learned CIT(A) that the AO cannot alter the book profit except the circumstances permitted .....

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uired to be credited for the period from 1st April, 2010 to November, 2010 in the year under consideration, against which, the assessee had already credited ₹ 2,15,373/-. In view of the submission of the assessee, the ld. AR argued that as the assessee was not required to credit the entire amount of interest of ₹ 4,66,110 in the year under consideration, the books of account for the year were in compliance to part II and part III of the schedule VI of the Company Act and, hence, rely .....

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id refund should have been assessed in the year of accrual and not in the year in which it is received. In the case of the assessee, return for AY 2009-10 (in which refund was due) was filed in financial year 2009-10 and that refund was received in November, 2010, so as per the assessee, the interest on said refund was to be accrued for the period from 1st April, 2009 to 31st March, 2010 and period from 1st April, 2010 to November, 2010. The ld AR stated that interest of 1,85,663 was pertaining .....

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becomes due to the assessee under the Act, he would be entitled to receive interest thereon. For clarity, the relevant part of the section is reproduced as under: " 244A. Interest on refunds (1) Where refund of any amount becomes due to the assessee under this Act], he shall, subject to the provisions of this section, be entitled to receive, in addition to the said amount, simple interest thereon calculated in the following manner, namely:- (a) where the refund is out of any tax collected a .....

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ned [under sub- section (1) of section 115 WE or] on regular assessment; (b) in any other case, such interest shall be calculated at the rate of [one -half percent] per cent for every month or part of a month comprised in the period or periods from the date or, as the case may be, dates of payment of the tax or penalty to the date on which the refund is granted." Further, the section 237 of the Act says that if any person satisfies the Assessing Officer that the amount of tax paid by him fo .....

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sessment year, so the interest also accrued only in assessment year 2011-12 and not in any year earlier to it. Therefore, we hold that the interest of ₹ 4,66,110 accrued in relevant assessment year only. Before the CIT(A), the assessee also duly accepted that it was mistake at lower level in his office therefore, it could not credit the full amount. 6. Now, issue arises before us whether the AO was correct in adding the balance amount of interest of ₹ 2,50,737/- to the book profit. B .....

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in (2010) 4 ITR 551, after considering the judgement of the Apex court in the case Apollo Tyres Ltd (Supra) held that : "We have considered the rival submissions and perused the materials available on record and the case laws relied upon by both the parties. We have taken into consideration the ratio decidendi of all the decisions relied upon by the rival parties. The omission of reference to some of the cases in the order is either due to their irrelevance or to relieve the order from the .....

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alculate the net profit and then follow the adjustments of MAT as usual: (1) If it is discovered that P&L a/c is not drawn up in accordance with Part II and Part III of Sch. VI of the Companies Act. However, the AO cannot disturb the net profit as shown by the assessee where there are no such allegations, fraud or misrepresentation but only a difference of opinion as to whether a particular amount should be properly shown in the P&L a/c or in the balance sheet, (2) If accounting policies .....

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