TMI Blog2019 (9) TMI 192X X X X Extracts X X X X X X X X Extracts X X X X ..... ute that the accounts of the assessee were prepared in accordance with the provisions of Part II of Schedule VI of the Companies Act and the Hon ble Apex Court in the case of Apollo Tyres, [ 2002 (5) TMI 5 - SUPREME COURT] held in unequivocal terms that the AO while computing the income u/s 115J has only the power of examining whether the books of accounts are certified by the authorities under the Companies Act as having been properly maintained in accordance with the Companies Act; that the AO thereafter has the limited power of making the increases and reduction as provided for in the Explanation to the said section and to put it differently, AO does not have the jurisdiction to go behind the net profit shown in the profit and loss acco ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asing on that issue. Assessee, however, revealed the same by offering it to tax and also in the notes of accounts. It is only a difference of opinion between the Revenue and the assessee as to the treatment given to the capital gain either or not by routing it through the profit and loss account. We, therefore, do not have any reason to sustain the penalty and the same is directed to be deleted. - Appeal of the assessee is allowed. - I.T.A. No.280/Del/2016 - - - Dated:- 3-9-2019 - Shri O.P. Kant, Accountant Member And Shri K. Narasimha Chary, Judicial Member For the Appellant : Shri M.P. Rastogi, Advocate For the Respondent : Shri S.S. Rana, CIT DR ORDER ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Simultaneously, ld. AO initiated penalty proceedings u/s 271(1)(c) of the Act by issuance of notice dated 28.12.2011 and concluded the same by order dated 31.3.2014 by levying a penalty of ₹ 26,37,12,000/- u/s 271(1)(c) of the Act. 3. In appeal, learned CIT(A) deleted the penalty in relation to the addition made on account of the disallowance u/s 14A of the Act. Learned CIT(A), however, sustained the penalty on account of inclusion of capital gain on sale of shares of Dabur Pharma in the profit and loss account for the purpose of Section 115JB of the Act and sustained the penalty. The assessee is in this appeal before us challenging the same. 4. It is the argument of the ld. AR that the a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Further, according to the ld. AR, whether the crediting of the capital gain to the capital reserve account is proper is a debatable issue and in view of the decision of the Hon ble jurisdictional High Court in the case of Devsons P. Ltd., 329 ITR 483 (Del), no penalty could be levied. 5. Per contra, it is the argument of the ld. DR that the assessee had filed appeal against the assessment but subsequently withdrew the same which clearly shows that the assessee had admitted the default and, therefore, in view of decision in the case Union of India vs Dharmendra Textile Processors (2007) 295 ITR 244, CIT vs Zoom Communication (P) Ltd. (2010) 327 ITR 510 (Del) and Mak Data P. Ltd. (2013) 358 ITR 593 (SC), the assessee h ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the legislature has intended and cannot be extended to any other provision; and that what is deemed to be income under section 45 cannot be deemed to be income for the purpose of section 115 J, for the simple reason that book profits cannot include the deemed income and more particularly when, because of the operation of section 54E of the Act, the item in question is saved from that deeming provision; (iii) that the legislative history shows that the tax u/s 115J was with reference to the business profit and there is sufficient indication that the provisions was not intended to withdraw the concession granted in respect of computation of capital gains; (iv) that the proceeds by way of sale of an investme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Explanation to the said section and to put it differently, the AO does not have the jurisdiction to go behind the net profit shown in the profit and loss account except to the extent provided in the Explanation to Section 115J. 10. It is not the case of the Revenue that the profit and loss account of the assessee was not prepared in accordance with the provisions of Part II of Schedule VI of the Companies Act nor has it been that the same does not contain any certificate by the competent authority under the Companies Act as having been properly maintained in accordance with the provisions of the Companies Act. In such a situation, we are in agreement with the submission of the assessee that the non-inclusion of the capi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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