TMI Blog2016 (7) TMI 524X X X X Extracts X X X X X X X X Extracts X X X X ..... the assessee, which was duly audited and presented in the A.G.M. As held by the Hon’ble Supreme Court in the case of Apollo Tyres (2002 (5) TMI 5 - SUPREME Court ), the profit reflected in the Profit & Loss Account, which is duly audited and presented before the A.G.M., cannot be tinkered with except by way of adjustments, which are permissible as per Explanation to Section 115JB. It is an undisputed position that the adjustment on account of profit arising from sale of shares, which was not credited to the Profit & Loss Account of the assessee-company is not covered by such Explanation. Moreover, it is also pertinent to note that this issue was examined by the Assessing Officer during the course of assessment proceedings and the claim of the assessee thereon was accepted by the Assessing Officer on such examination by applying his mind, as is evident from the relevant observations recorded by the Assessing Office. Thus we are of the view that there was no error in the order of the Assessing Officer in not including the profit arising from the sale of shares of M/s. Apeejay Finance Group Limited in the book profit as alleged by the ld. CIT in his impugned order calling for revision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d income. The ld. CIT, therefore, issued a show-cause notice under section 263 requiring the assessee to show-cause as to why the assessment made by the Assessing Officer under section 263 containing the above errors should not be revised under section 263. 3. In reply, the following explanation was offered by the assessee on the issue of the profit arising from sale of shares of M/s. Apeejay Finance Group Limited credited in the accounts for the subsequent year:- 1. Section 11SJB(2) stipulates mandate on every company to prepare its profit and loss account for the relevant previous year in accordance with the provisions of Part 11 and III of schedule VI to Companies Act, 1956 in terms of the accounting principles and accounting standards laid down in the provisions of Section 210 of Companies Act. 2. It is a fact that while preparing the Profit Loss account for the period 01.04.2005 to 31.03.2006, capital gain of ₹ 1,51,80,500/- arising from sale of shares was omitted to be considered by the assessee-company. But the said capital gain was accounted for during the period from 01.04.2006 to 31.03.2007 as prior period income. 3. Accounting Standard-5, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es Act and it was thus a case of misrepresentation of accounts by the assessee with a view to reduce the book profit for the year under consideration. He held that this profit was required to be added while computing the book profit and the order of the Assessing Officer on this issue was erroneous as well as prejudicial to the interest of the Revenue. As regards the disallowance under section 14A, the ld. CIT found that the amount of interest as well as the average value of investment as taken by the assessee for arriving at the figure of disallowance under section 14A was not as per the books and, therefore, the disallowance under section 14A read with Rule 8D should have been at ₹ 58,13,404/- instead of ₹ 1,572/- as made by the Assessing Officer. He was also of the view that the working of short-term capital gain made by the assessee on sale of flats as per section 50 was wrong and the same was accepted by the Assessing Officer without necessary examination. He, therefore, set aside the order passed by the Assessing Officer under section 143(3) holding the same to be erroneous as well as prejudicial to the interest of the revenue and directed the Assessing Officer to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the Assessing Officer in accepting the quantum of short-term capital gain arising from the sale of eight flats, the ld. counsel for the assessee submitted that the Assessing Officer in the order passed under section 143(3) read with section 263 has already examined this issue and decided the same in favour of the assessee. He contended that the assessee has thus no grievance left on this issue so as to challenge the impugned order of the ld. CIT on this aspect of the matter. 7. The ld. D.R., on the other hand, submitted that the treatment given by the assessee in not crediting the profit arising from the sale of shares of M/s. Apeejay Finance Group Limited to the Profit Loss Account for the year under consideration was not as per the Companies Act as rightly pointed out by the ld. CIT in his impugned order passed under section 263 and there was thus a clear error in the order of the Assessing Officer in not adding the same while computing the book profit of the assessee under section 115JB. He contended that there was thus a clear omission on the part of the assesese in not including this amount in the book profit and the assessee cannot be allowed to take benefit of such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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