TMI Blog1998 (9) TMI 672X X X X Extracts X X X X X X X X Extracts X X X X ..... the AO could tax capital receipt under s. 115JA though not taxable under the IT Act, 1961. 2. The CIT(A) XII failed to appreciate that if receipt cannot be brought to tax under the provisions of IT Act, 1961 other than 115JA, it cannot be brought to tax under s. 115JA of the Act. 2. During the previous year under consideration (relevant to asst. yr. 1997-98), the company entered into an agreement with BASF of Germany, whereby BASF would exclusively distribute certain dyes in the whole world except India and USA 'the territory') and the company would not compete with BASF within the territory in respect of such dyes. BASF paid pound sterling six million (equivalent to ₹ 3306.06 lakhs) to the company as lumpsum premium in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al) (FB) 33,06,05,633 i.e. '17,42,48,395 2.1. While processing return under s. 143(1)(a) the AO held that the deduction claimed by the company to the extent of ₹ 33,06,05,633 in respect of receipt from BASF, Germany, included in the 'sale and operating income' is prima facie inadmissible, as not covered by any of the prescribed adjustment under s. 115JA(2) for the purpose of computation of book profits and hence not allowable. Thus the AO made an addition to the above extent under s. 143(1)(a) of the IT Act. The assessee went, in appeal before the CIT(A) against this addition made under s. 143(1)(a). 2.2. The learned CIT(A) after maki ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... inferred that the P L a/c prepared under this section need not necessarily be the same as the P L a/c laid before the annual general meeting of the company except insofar as the rate/method of depreciation is concerned. In other words variation is permitted from the P L a/c laid before the annual general meeting of the company if such variations are in accordance with Parts II and III of Sch. VI of the Companies Act issofar it applies to the purposes of s. 115JA. The purpose of s. 115JA is to quantify the total income chargeable to tax on a basis other than the basis under which the total income is computed under the normal provisions of the IT Act. Even in such a computation of total income chargeable to tax under s. 115JA there could be m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r any of the adjustments prescribed under the Explanation to s. 115JA. We uphold the assessee's contention that the impugned deduction will not come under any of the adjustments prescribed in the Explanation to s. 115JA. For the reasons mentioned in paras 2.4 and 2.5, it is a debatable issue whether the amount of ₹ 33,06,05,633 could be excluded in arriving at the net profit as per the P L a/c prepared for the purpose of s. 115JA in accordance with Parts II and III of Sch. VI to the Companies Act. Such a debatable issued cannot be a basis for prima facie adjustments under s. 143(1)(a) of the IT Act. In this view of the matter, we delete the addition made under s. 143(1)(a) of the Act. 2.8. Before parting with the case, we may a ..... X X X X Extracts X X X X X X X X Extracts X X X X
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