TMI Blog2013 (1) TMI 893X X X X Extracts X X X X X X X X Extracts X X X X ..... he basis of profit shown in the P L Account prepared in accordance with provisions of Part-II and Part III of Schedule-VI of Companies Act to which certain adjustments as provided in the Explanation-1 to Section 115JB(2) are required to be made. In the present case, the AO noted that the assessee had earned gross profit of ₹ 1,68,95,500/- from sale of its rights in the immovable property which had not been shown in the P L Account but had been taken directly to the balance sheet. He referred to the subclause (xi) of clause-3 of Part-II of Schedule-VI as per which the assessee is required to show the amount of income earned from investment in the P/L Account, distinguishing between trade investments and other investments. It was thus mandatory for the company to show profit/loss on sale of assets in the P L Account which had not been done. The AO thus concluded that the P/L account had not been prepared in accordance with Part-II and Part- III of Schedule-VI of the Companies Act. He referred to the decision of the Tribunal in the case of M/s. Bombay Diamonds Co. P. Ltd. in ITA No.7488/Mum/07 order dated 30.11.2009 in which in an identical situation, the assessee had not shown ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Supreme Court in case of Apollo Tyres (supra) and the judgment of Hon'ble High Court of Bombay in case of CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (supra), had upheld the adjustment made by the AO on account of profit from sale of investments. He also referred to the decision of the Mumbai Bench of the Tribunal in the case of Kopran Pharmaceuticals Ltd. Vs. DCIT (119 ITD 355) in which the Tribunal after referring to the judgment of Hon'ble Supreme Court in the case of Apollo Tyres (supra), held that the Hon'ble Supreme Court in the said case had laid down the general proposition of law whereas the judgment of the Hon'ble High Court of Bombay in case of Veekaylal Investment Co. P. Ltd. (supra) was specific on the issue of capital gain and, therefore, the judgment of Hon'ble High Court would prevail on the issue. 3.2 In reply, the ld. AR stated that none of the decisions of the Tribunal cited by the ld. AR had considered the later judgment of Hon'ble High Court of Bombay in the case of CIT vs. Adbhut Trading Co. P. Ltd. (supra), in which following the judgment of Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra), it was held tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... llowed the arrears of depreciation which had been upheld up to the level of the High Court. The Hon'ble Supreme Court observed that Section 115J provisions of which were similar to those of 115 JB was introduced in the Income tax Act with a deeming provision which made Companies liable to pay tax at least 30% of book profit as shown in its own accounts. For the said purpose, the section 115J made income reflected in the compan s books of account, the deemed income for the purpose of assessing the tax. The Hon'ble Supreme Court further observed that the use of the words in accordance with the provisions of part-II and Part-III of Schedule-VI of the Companies Act was made for the limited purpose of empowering the assessing authority to rely upon the authentic statement of accounts of the company and while so looking into the accounts of the company, the AO had to accept the authenticity of the accounts. It was so held by the Hon'ble Supreme Court that the AO has only the power to examine whether books of account are certified by authorities under the Companies Act as having been properly maintained in accordance with the provisions of the Companies Act. The AO, thereaft ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld in case of CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (supra), that capital gain not shown in the P L Account under the Companies Account cannot be added while computing to the book profit. The same position was reiterated by the Hon'ble High Court in case of CIT vs. Adbhut Trading Co. P. Ltd. (supra) in which it was held that once accounts including the P L Account had been prepared and certified by authorities under the Companies Act, it was not open for the AO to state that P L Account has not been prepared in accordance with the provisions of the Companies Act. The ld. DR pointed out that the Tribunal in case of Sumer Builders (P) Ltd. (supra) even after considering the judgment of the Hon'ble High Court of Bombay in case of CIT vs. Akshay Textiles Trading And Agencies P. Ltd. (supra), have held that the AO has power to re-cast the accounts prepared under the Companies Act, in case, these were not correctly prepared. Arguments advanced by the revenue have no merit in view of the issue having been already settled by the judgment of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. (supra), as pointed out earlier. Moreover, the Tribunal in the ca ..... X X X X Extracts X X X X X X X X Extracts X X X X
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