TMI Blog2018 (11) TMI 592X X X X Extracts X X X X X X X X Extracts X X X X ..... . He should also procure certificate from the auditor of the company that whether the adjustment of sundry balance written off is as per Schedule-VI of the Companies Act, 1956 and the book profit in the computation of income is as per Schedule-VI of the Companies Act, 1956. A.O should also get the audited balance sheet verified from the office of the Registrar of Companies under whose jurisdiction assessee company falls so as to get it confirmed that the audited balance sheet produced before the Tribunal is as per Schedule-VI of the Companies Act, 1956. In case a positive reply is received in favour of the assessee, A.O should decide accordingly as per law. Needless to mention that reasonable opportunity of being heard should be provided to the assessee. - Decided in favour of assessee for statistical purposes. Carry forward losses & unabsorbed depreciation - Held that:- In the return for the year under consideration the appellant company had set off brought forward losses and depreciation to the tune of ₹ 74,62,470/-. The set off of unabsorbed depreciation is regulated by provision of Section 32(2) of the Act subject to the provision of sub-section 72(2) of Section 73(3). ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... claim of set off on unabsorbed business loss and unabsorbed depreciation directed the Assessing Officer to verify the claim and allow it as per rules. 4. Now aggrieved both the assessee and Revenue is in appeal before the Tribunal. 5. We will first take I.T.A. No.453/Ind/2016 of the assessee raising following grounds; 1. That the learned CIT appeals erred in law and the facts of the case confirmed the disallowance of ₹ 5,00,000/- made by Assessing Officer out of selling and administrative expenses on ad hoc basis. The action of learned CIT Appeals is totally wrong on facts of the case. 2. That the learned CIT erred on facts of the case confirmed the action of Assessing Officer in computing the book profit under section 115JB. In spite of the facts that the assessee company prepared its profit and loss a/c as per Schedule V of the Income Tax Act. 6. At the outset Ld. Counsel for the assessee requested for not pressing Ground No.1 relating to disallowance of selling and administrative expenses at ₹ 5,00,000/-. We therefore dismiss assessee s Ground No.1 as not pressed and uphold the finding of Ld.CIT(A) confirming the disallowance of selling and admin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se and decrease are to be made to the book profit , which is the profit as shown in the statement of Profit Loss Account for the relevant previous year which is prepared in accordance with the provisions of the Act governing, such companies. For better understanding we need to go through the relevant portion of 115JB of the Act which reads as follows; 115JB. ( 1) Notwithstanding anything contained in any other provision of this Act, where in the case of an assessee, being a company, the incometax, payable on the total income as computed under this Act in respect of any previous year relevant to the assessment year commencing on or after the 1st day of April, 2010, is less than ten per cent of its book profit, such book profit shall be deemed to be the total income of the assessee and the tax payable by the assessee on such total income shall be the amount of income-tax at the rate of eighteen and one-half per cent. ( 2) Every assessee,- ( a) being a company, other than a company referred to in clause (b), shall, for the purposes of this section, prepare its 76[statement of profit and loss] for the relevant previous year in accordance with the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... itten off i.e. unsecured loans not payable, have been added in the profit and loss account below the amount available for appropriation. Now whether this particular amount of ₹ 2,57,30,466/- being sundry balance written off is a part of miscellaneous receipts to be added under the head income which will thereafter form the part of net profit before taxes or same could be adjusted to the amount available for appropriation needs to be looked into. 13. The Hon'ble Supreme Court in the case of Apollo Tyres Vs CIT 122 taxman 562 while adjudicating similar type of issue u/s 115J of the Act held that therefore, we are of the opinion, the Assessing Officer while computing income u/s 115J has only the power of examining whether books of accounts are certifies by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act. The Assessing Officer thereafter has the limited power of making increases and reductions as provided for in the Explanation to the said section. To put it differently, the assessing officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -inprogress and Stock-in-Trade xxx xxx Employee benefits expense Finance costs Depreciation and amortization expense Other expenses Total expenses xxx xxx V. Profit before exceptional and extraordinary items and tax (Ill- IV) xxx xxx VI. Exceptional items xxx ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 15. Book profit as mentioned in the Provision 115JB of the Act refers to the profit before taxes which is arrived at S.No. IX of the above referred statement of profit and loss account. The format of the Profit Loss Account in the case of the assessee as placed on record before us deviates from the standardized format of statement of profit and loss as per Schedule-VI of 1956 at some places. 16. In normal parlance such sundry balance written off which the assessee has itself accepted to be an income forming part of the head Income whereas in audited balance sheet the adjustment has been made from the amount available for appropriation. In such situation there needs proper verification at the end of the Assessing Officer who shall verify/ examine the audited balance sheet of the assessee vis- -vis Part-II of Form of statement of Profit Loss Schedule-VI of the Companies Act, 1956. He should also procure certificate from the auditor of the company that whether the adjustment of sundry balance written off is as per Schedule-VI of the Companies Act, 1956 and the book profit in the computation of income is as per Schedule-VI of the Companies Act, 1956. Ld.A.O should also ..... X X X X Extracts X X X X X X X X Extracts X X X X
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