Tribunal deletes adjustment under Section 115JB, assessee's appeal allowed for Assessment Year 2011-12.

The Tribunal allowed the assessee's appeal, deleting the adjustment under section 115JB for the Assessment Year 2011-12. The Tribunal held that the Assessing Officer exceeded jurisdiction by making an adjustment not envisaged by Explanation 1 to Section 115JB. Relying on a precedent, the Tribunal ruled that the Assessing Officer cannot go behind the net profit shown in the profit and loss account, except as provided in the Explanation to section 115JB. Consequently, the impugned adjustment was deleted, and the assessee's appeal was successful.

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Issues:
Adjustment of book profits under section 115JB for Assessment Year 2011-12.

Analysis:
The appeal concerns the adjustment of book profits under section 115JB for the Assessment Year 2011-12. The Ld. Deputy Commissioner of Income Tax-1(2) framed the assessment for the impugned year, determining the income of the assessee at Rs. 133.23 Lacs under normal provisions. The assessee, a resident corporate entity engaged as a reinsurance broker, filed a return showing income of Rs. 130.34 Lacs. The book profits for Minimum Alternative Tax [MAT] calculation were computed at Rs. 224.51 Lacs, differing from the assessee's computation of Rs. 221.63 Lacs. During assessment, an amount of Rs. 2,24,898/- debited under repairs and maintenance was disallowed for both normal income and book profits under section 115JB, leading to a higher tax liability under MAT provisions.

The assessee contested the adjustment before the Ld. CIT(A) but was unsuccessful. The appeal before the Appellate Tribunal challenged the adjustment under section 115JB. The Authorized Representative for the assessee relied on the decision of the Hon’ble Apex Court in Apollo Tyres Ltd. Vs CIT to argue that the Assessing Officer cannot go beyond the net profit shown in the profit and loss account, except as provided in Section 115JB. The Senior DR supported the Ld. CIT(A)'s stand.

After considering the arguments and relevant legal provisions, the Tribunal found that the adjustment made by the Assessing Officer while arriving at book profits was not envisaged by Explanation 1 to Section 115JB. Citing the judgment of the Hon’ble Apex Court in a similar context, the Tribunal held that the Assessing Officer does not have the jurisdiction to go behind the net profit shown in the profit and loss account, except as provided in the Explanation to section 115JB. Drawing an analogy from the cited decision, the Tribunal deleted the impugned adjustment under section 115JB and allowed the ground raised in the appeal.

As a result, the assessee's appeal was allowed, and the impugned adjustment under section 115JB was deleted. The order was pronounced in the open court on 7th September 2018.

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