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TMI Blog2023 (8) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... vision, (2) Travel Division, and (3) Investment Division. 3. Under the Resort Division, respondent was running a resort namely "Infinity Resort" at Corbett, Ramnagar, w.e.f., 15th July 2008. Respondent demerged its resort division to a company called "Khatau Resorts Pvt.Ltd. in accordance with section 391 to 394 of the Companies Act, 1956. The demerged scheme was approved by Company Court on 19th September 2008. 4. Pursuant to the demerger, respondent transferred its resort division along with all assets and liabilities, except, remaining business. As part of remaining business, respondent retained certain investments in shares of companies and borrowings from financial institutions. As per the scheme approved, respondent reduced the book ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dent declared nil income for Assessment Year 2009-2010, in regular computation of income and loss of Rs. 64,21,12,555/- was computed under section 115JB of the Act. This computation of income was based on the annual accounts prepared for the year ending 31st March 2009, which was audited by its statutory auditors and approved by share holders. Audit report does not contain any adverse observation regarding treatment given in the accounts for this item. Auditors have accepted the book treatment in respect of loss arising on account of demerger. While framing the assessment under section 143(3), the Assessing Officer (AO) accepted the income as NIL, as per the regular computation of income, but, on computation of book profit under section 115 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of section 115JB of the Act as the net profit as disclosed before provision for fringe benefit tax, prior period adjustment and extraordinary adjustment which is not provided in Explanation 1. 10. Having heard the counsel and having considered the impugned orders and the memo of Appeal, we have to observe that the treatment given by respondent in its accounts have been approved by the Company Court while approving the scheme of demerger. Moreover, the statutory auditors have accepted the book treatment in respect of loss that arise on account of demerger. 11. It is well settled that as per Explanation 1 below section 115JB(2) of the act, only adjustment as permitted to the book profit are those as provided in the said explanation. The pu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tatutory obligation also to examine and be satisfied that the accounts of the company are maintained in accordance with the requirements of the Companies Act. It does not empower the Assessing Officer to mark upon a fresh enquiry in regard to the entries made in the books of account of the Company. 13. Section 115JA was changed to 115JB pursuant to Finance Act, 2000, w.e.f., 1st April, 2001. We also find that the conditions given in explanation 1 in section 115JB is the same as explanation 1 in section 115JA, barring few minor differences. But the undisputable position is once the accounts of the company have been scrutinized and certified by statutory auditors and approved by the Company in general meeting and the Registrar of Company is ..... X X X X Extracts X X X X X X X X Extracts X X X X
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