Book profit under Section 115JA excludes provision for diminution in investment value where it is not a liability provision.

Provision for diminution in the value of investments was treated as a reduction in asset value, not as a provision for liability, for purposes of book profit under Section 115JA. Since the Assessing Officer can adjust the profit and loss account only to the extent permitted by the Explanation, clause (c) concerning provisions for liabilities did not apply. The provision therefore could not be added back while computing book profit, and the assessee's computation was accepted.

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Issues: Whether provision for diminution in the value of investments was required to be added back while computing book profit under Section 115JA.

Analysis: The computation of book profit was examined in the light of the Explanation to Section 115JA and the principle that the Assessing Officer cannot go behind the profit and loss account except to the extent permitted by the statutory adjustments. The provision in question was treated as a provision for diminution in the value of assets and not as a provision for liability. On that basis, it was held that clause (c) of the Explanation, which concerns provisions for liabilities, was not attracted.

Conclusion: The provision for diminution in the value of investments could not be added back to the book profit under Section 115JA, and the assessee's computation was accepted.

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