TMI Blog2017 (8) TMI 1480X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by him in accordance with IT Act is more than or less than such admitted income. It is only if as a result of company's total taxable income in accordance with IT Act by the AO, it is found to be less than 30 per cent of admitted book profits as discussed above, that resort has to be had to Section 115J and not otherwise. If the computation in accordance with provisions of IT Act gives better tax results, it is not at all required to go to Section 115J. The CIT has obviously exceeded its jurisdiction to find the order of AO to be erroneous, not on the basis of declared book profit, but on the basis of book profit computed by him and the Tribunal too fell in like error in accepting the position. - Decided in favour of the assessee - D. B. Income Tax Appeal No. 183 / 2014 - - - Dated:- 22-8-2017 - HON'BLE MR. JUSTICE K.S. JHAVERI And HON'BLE MR. JUSTICE INDERJEET SINGH For the Appellant : Mr. Anuroop Singhi with Mr. Aditya Vijay, Mr. N.S. Bhati For the Respondent : Mr. Sanjay Jhanwar With Mr. Prakul Khurana, Ms. Archana, Mr. Mahendra Gargeiya JUDGMENT 1. By way of this appeal, the appellant has assailed the judgment and order of the Tribunal whereby T ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... qualifies to be an eligible business under Section 32AB ? In regard to the first aspect, we must note that the tribunal as a question of fact based on material on record has come to the conclusion that the investment in the UTI by the assessee company is in the course of its business and its business of manufacture and sale of tyres and sale and purchase of units of the UTI are common in nature and both the businesses are intertwined and interlaced. This finding is accepted by the High Court also. We also find that this business of the assessee company of buying and selling of units is a business as contemplated under Section 32AB of the Act. The question then is: is it an eligible business under the said section ? The term eligible business is defined under Sub-section (2) of Section 32AB. As per that definition, all business of an assessee company will be an eligible business unless it falls under the type of business enumerated in Subclauses (a) and (b) of Section 32AB(2). It is nobody's case that this business of the assessee company is one of those businesses which fall under business enumerated in Clauses (a) and (b) of Sub-section (2) of Section 32AB. Therefore, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... even though the said Section creates a fiction to make the UTI as a deemed company and distribution of income received by the unit holder as a deemed dividend, by virtue of these deemed provisions, it cannot be said that it also makes the unit of the UTI a deemed share. In our opinion, a deeming provision of this nature as found in Section (3) should be applied for the purpose for which the said deeming provision is specifically enacted, which in the present case is confined only to deeming the UTI as a company and deeming the income from the units as a dividend. If as a matter of fact, the Legislature had contemplated making the units as also a deemed share then it would have stated so. In the absence of any such specific deeming in regard to the units as shares it would be erroneous to extend the provisions of Section (3) of the UTI Act to the units of UTI for the purpose of holding that the unit is a share. For these reasons, we are in agreement with the finding of the High Court on this point also. 4.3 In Commissioner of Income Tax, Bangalore vs. B.C. Srinivasa Setty AIR 1981 SC 972 wherein it has been held as under:- 17. The question which has been raised before us, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y audited, approved by AGM and filed with the Registrar of Companies who has certified its correctness except to the extent adjustments provided in the Explanation to Section 115J. This proposition of the Supreme court in our opinion should put quietus to the controversy of questioning the book profit shown in the P L a/c which have been duly audited, approved by AGM of the company and has been filed before Registrar of Companies who had no objection to the correctness to be beyond the scrutiny of the AO. If that is so, then the CIT was apparently in error in going through the book profit shown by the assessee and taking upon himself to examine whether any amount has been wrongly taken into consideration while preparing the P L a/c declaring the book profits to be contrary to the provisions of the Companies Act by resorting to its own view of true and fair result of company's working, whereas the company's accounts have been certified by its auditors to be in accordance with the provisions of the Act and approved in annual general meeting of the company and thereafter have also been certified by the Registrar of the Companies. This enquiry being beyond the juris ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... An alternative which is founded on admission of assessee, cannot be considered to find out whether such admission is acceptable or not. The provision does not give any authority to any instrumentality functioning under the Act to probe into finding book profit de hors what has been shown in the audited books of account which are placed before AGM and approved by the shareholders and certified by the Registrar of Companies when the same is filed with him. That is the acceptance by the shareholders and statutory authorities to be the result of company's affairs. Such accepted book profit has to be accepted by AO to find whether income computed by him in accordance with IT Act is more than or less than such admitted income. It is only if as a result of company's total taxable income in accordance with IT Act by the AO, it is found to be less than 30 per cent of admitted book profits as discussed above, that resort has to be had to Section 115J and not otherwise. If the computation in accordance with provisions of IT Act gives better tax results, it is not at all required to go to Section 115J. The CIT has obviously exceeded its jurisdiction to find the order of AO to be ..... X X X X Extracts X X X X X X X X Extracts X X X X
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