TMI Blog2014 (6) TMI 1029X X X X Extracts X X X X X X X X Extracts X X X X ..... those cases where the accounts have been properly maintained. When the Statute provides for computation of book profit of the assessee being a Company which has computed the total income under this Act in respect of any previous year, it has to be implied that the legislature intended to mean that the assessee, being a Company, has computed total income correctly as per the provisions of the Act. If the total income has not been correctly computed, then the bar created limiting the jurisdiction of the Assessing Officer would not be operative. For the aforesaid reasons, the findings of the learned Tribunal indicated above are reversed. Net profit computation for the purposes of section 115JA - On account of depreciation, the learned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act but had not chosen to provide the same in its Profits Loss A/c. and has shown the same as per the Notes on Accounts. The Profit Loss A/c. prepared by the assessee as per Part II III of Schedule VI of the Companies Act clearly shows that the Profit Loss A/c. was prepared by the assessee was completely in accordance with the said provisions which laid down that depreciation could be charged to the Profit Loss A/c. or could be provided for or also could not be provided for after making necessary mention about it the Notes and Schedules to the Profit Loss A/c.. Once the assessee chooses not to provide for depreciation in its Profit Loss A/c., it is not open to the assessee to make adjustment for the depreciation for which he i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ted that the learned Tribunal fell into a patent error in not appreciating that notes of account are a part of the balance sheet or profit and loss accounts, as the case may be, under sub-Section 6 of Section 211 of the Companies Act. He drew our attention to a judgment of the Delhi High Court in the case of CIT-vs-Sain Processing And Weaving Mills P. Ltd., reported in 325 ITR 565, wherein for reasons discussed in the judgment the Division Bench came to the following conclusion: 19. To our minds the use of the expression net profit makes it clear that depreciation not debited to the profit and loss account will have to be taken into account while determining the book profit under section 115J of the Act as long as it forms pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... be prejudicial to the interest of the Revenue. In this view of the matter, we set aside the order of the learned Commissioner of Income-tax. In the result, ground No.2 is allowed. Mr. Khaitan submitted in reply that the Apex Court in the case of Apollo Tyres Ltd. [supra] held at page 280 as follows: Therefore, we are of the opinion, the Assessing Officer while computing the income under section 115J has only the power of examining whether the books of account are certified 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ined in any other provisions of this Act, where in the case of an assessee, being a company, 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, 1997 [but before the 1st day of April, 2001] (hereafter in this section referred to as the relevant previous year) is less than thirty per cent of its book profit, the total income of such assessee chargeable to tax for the relevant previous year shall be deemed to be an amount equal to thirty per cent of such book profit. When the Statute provides for computation of book profit of the assessee being a Company which has computed the total income under this Act in respect of any previous ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o show the prior period items/extraordinary items separately so that their impact on the current profit or loss could be perceived. The fact that the assessee adopted the alternative approach of showing such items in the statement of profit and loss after determination of current net profit or loss, did not mean that these items were not to be taken into account in computing the net profit as envisaged in section 115JA. Thus, what the assessee had done was only to indicate the prior period items/extraordinary items separately. This did not mean that the figure of net profit was to be arrived at de hors these items. Thus, the Tribunal was correct in law in holding that the Assessing Officer had failed to appreciate that the net profit for th ..... X X X X Extracts X X X X X X X X Extracts X X X X
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