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of <h1>Preoperative interest expenses excluded from book profit calculation under Section 115JB. Assessing Officers' limited jurisdiction clarified.</h1> <h3>Commissioner of Income Tax - III Versus The Riddhi Siddhi Gluco Boils Limited</h3> Commissioner of Income Tax - III Versus The Riddhi Siddhi Gluco Boils Limited - TMI Issues:1. Interpretation of Section 115JB - Inclusion of preoperative interest expenses in computing book profit.2. Jurisdiction of Assessing Officer to examine Profit and Loss Account prepared in accordance with Companies Act.Interpretation of Section 115JB - Inclusion of preoperative interest expenses in computing book profit:The case involved a dispute regarding the inclusion of preoperative interest expenses while computing book profit under Section 115JB of the Income Tax Act. The Assessing Officer had added preoperative interest and prior period expenses for computing book profit, but the Commissioner Income Tax and the Income Tax Appellate Tribunal had deleted these expenses. The Tribunal referred to judicial pronouncements, including the decision in the case of Apollo Tyres Limited, emphasizing that the Assessing Officer cannot examine the Profit and Loss Account prepared in accordance with the Companies Act unless specified adjustments are allowed under Section 115JB. Relying on precedent, the Tribunal directed the Assessing Officer not to include preoperative interest expenses and prior period expenses in the computation of book profit under Section 115JB.Jurisdiction of Assessing Officer to examine Profit and Loss Account:A Division Bench of the Court, in a separate case, emphasized that the Assessing Officer cannot vary the Profit and Loss Account of a company audited and prepared in accordance with the provisions of the Companies Act. Citing decisions of the Apex Court, the Bench reiterated that the Assessing Officer's jurisdiction is limited concerning the examination of the audited accounts prepared in compliance with the Companies Act. Consequently, the Court concluded that no substantial question of law arose in the Tax Appeal, leading to the dismissal of the appeal.In conclusion, the judgments underscore the importance of adhering to the statutory requirements while computing book profit under Section 115JB and highlight the limited scope of the Assessing Officer's jurisdiction in examining audited accounts prepared in accordance with the Companies Act.
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