TMI Blog2022 (7) TMI 430X X X X Extracts X X X X X X X X Extracts X X X X ..... ounting Standards which are adopted for the purpose of preparing annual accounts under the Companies Act shall be adopted. This would clearly show the Legislative intent that while preparing the annual accounts for the purpose of Income Tax Act and the Companies Act, there should not be any difference in the Accounting Policies and Accounting Standards adopted for the purpose of preparation of annual accounts for both the purposes i.e. Income Tax Act and the Companies Act. In the present case, the assessee had prepared annual accounts without providing for liability towards additional cane price and the same were adopted in the annual accounts and laid before the AGM. For income-tax purposes, the appellant company had prepared a different set of annual accounts wherein the liability towards additional cane price was provided. Therefore, the question is which sets of annual accounts was prepared in accordance with provisions of section 210 of the Companies Act, 1956. One set of annual accounts prepared for the purpose of Companies Act and laid before the AGM, there is no qualification in the auditor's report on the annual accounts of the companies. Moreover, the liability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e the identical facts and common issues are involved in all the above captioned three appeals, we proceed to dispose of the same by this common order. 3. For the sake of convenience and clarity, the facts relevant to the appeal in ITA No. 80/PUN/2018 for the assessment year 2012-13 are stated herein. 4. The appellant raised the following grounds of appeal:- 1] The learned CIT(A) erred in confirming the action of the learned A.O. in making an addition of Rs. 6,47,41,354/- to the book profit computed u/s. 115JB of the Act. 2] The learned CIT(A) erred in rejecting the profit and loss account and the balance sheet prepared by the appellant company for the purposes of Income Tax Act by incorporating the provision for liability on account of additional cane price declared and paid by the appellant company after the annual accounts placed before the AGM were approved. 3] The learned CIT(A) erred in holding that for the purposes of working out book profit u/s. 115JB, the learned A.O. was justified in considering the profit and loss account prepared by the appellant company which was placed before an approved by the AGM and the appellant company had no right to prepare ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions of the Income Tax Act. Against the said return of income, the assessment was completed by the Assistant Commissioner of Income Tax, Circle-2, Sangli ('the Assessing Officer') vide order dated 26.03.2014 passed u/s. 143(3) of the Act at total income of Rs. 30,68,07,161/- under the provisions of section 115JB of the Act. The brief factual matrix leading to the addition of book profits is as under:- The assessee is engaged in the business of manufacture and sale of sugar. During the course of previous year relevant to the assessment year under consideration, the assessee company purchased sugarcane at the rate of Rs. 2,000/- per MT. The same was debited to the Profit Loss Account and accordingly, the annual accounts were prepared and audited financial statements like Profit Loss Account, Balance Sheet were laid before the Annual General Meeting (AGM) and got approved. However, subsequently, it was decided to pay an additional cane price of Rs. 175/- per MT and accordingly, additional cane price was made in the books of accounts of Rs. 29,00,02,398/- maintained for the next financial year i.e. F.Y. 2012-13. However, for the purpose of Income Tax Act, the provisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s and law, the claim of the assessee should be allowed on the principle of consistency. In support of proposition, he placed reliance on the decision of the Hon'ble Supreme Court in the case of Radhasoami Satsang vs. CIT, 193 ITR 321 (SC). 9. On the other hand, Ld. CIT-DR placed reliance on the order of the Ld. CIT(A) and submits that the order of the Ld. CIT(A) is well-reasoned and no interference is required. Further, he submits that an assessee is not entitled to prepare two sets of accounts viz. one for the purpose of Income Tax Act and another for the purpose of Companies Act. 10. We heard the rival submissions and perused the material on record. The issue in the present appeal relates to computation of book profits for the purpose of computing the tax liability u/s. 115JB of the Act. The provisions of section 115JB is self-constrained code and its create legal fiction, in the case of the companies, regarding the total income, where the income of an assessee computed under the normal provisions of the I.T. Act is less than the book profits, the book profits of the companies are deemed to be total income of the assessee. The provisions of section 115JB also prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ability towards additional cane price were not even approved by the AGM and even not submitted to the Registrar of the Companies. Therefore, there is no material on record indicating the first set of annual accounts are not in accordance with the provisions of section 210 of the Companies Act. The very fact that the annual accounts were re-cast by providing liability towards additional cane price goes to prove that the appellant company had not followed the same Accounting Polices and Accounting Standards which are adopted in the former set of annual accounts. Therefore, the second set of annual accounts cannot be adopted for the purpose of computing the tax liability under the provisions of section 115JB of the Act. Therefore, the Assessing Officer had rightly rejected second set of annual accounts prepared by the appellant company for the purpose of computing the tax liability u/s. 115JB of the Act. Therefore, we do not see any reasons to interfere with the orders of the lower authorities. As regards to the other argument relating to the 'principle of consistency', we are of the considered opinion that the principle of res-judicata, has no application in the income-tax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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