Book profit under section 115J cannot exclude section 54E capital gains unless the statute expressly permits it.

Book profit under section 115J is computed as a self-contained statutory code, beginning with the profit and loss account prepared under the Companies Act and allowing only the adjustments expressly permitted by the Explanation to section 115J(1A). The non obstante clause overrides the normal computation provisions of the Income-tax Act, so exemptions available under other charging or exemption provisions do not apply unless specifically incorporated for section 115J. On that basis, long-term capital gains otherwise eligible for exemption under section 54E cannot be excluded from book-profit computation under section 115J.

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Issues: Whether long-term capital gains eligible for exemption under section 54E of the Income-tax Act, 1961 could be excluded while computing book profit under section 115J of the Income-tax Act, 1961.

Analysis: Assessment under section 115J operates as a self-contained code for computation of book profit. The starting point is the profit and loss account prepared in accordance with Parts II and III of Schedule VI to the Companies Act, 1956, and only the adjustments specifically permitted by the Explanation to section 115J(1A) can be made. The non obstante clause in section 115J overrides the normal computation provisions of the Act. Since there is no provision in Chapter XII-B authorising exclusion of capital gains on the basis of section 54E, the claimed deduction or exclusion cannot be allowed in the book-profit computation.

Conclusion: The exclusion of long-term capital gains under section 54E while computing book profit under section 115J is not permissible, and the answer is against the assessee.

Ratio Decidendi: Book profit under section 115J can be adjusted only in the manner expressly provided in the statutory explanation, and exemptions available under the normal provisions of the Income-tax Act do not apply unless specifically incorporated for section 115J computations.

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