TaxTMI 
TaxTMI 
2004 (9) TMI 322
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..... 45,200 which included capital gains earned on sale of land and building. Total income computed as per the provisions of the Act amounted to Rs. 74,884. Since this was less than 30% of the book profits shown by the assessee, the assessee's income was computed under section 115-JA of the Income-tax Act, 1961 (the Act). The book profit as per profit and loss account was Rs. 2,54,491 and 30% thereof being Rs. 88,347, the same was taken as the total income of the assessee for the year. Tax was levied at 40% on Rs. 88,350 and the demand was accordingly raised. 3. The assessee made an application under section 154 of the Act contending that its entire book profit comprised of long term capital gains and hence the same should be taxed at 20% a....
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....ft for taxation is a fictional total income to which no characteristics of a particular head of income can be attributed. Moreover, if at all there was a case for attribution, it was highly debatable and hence beyond the scope of section 154. 7. We have duly considered the rival contentions and the material on record. The Income-tax Act, 1961 seeks to levy tax on the total income of the assessee as computed under the provisions of the Act. It may so happen, and in fact it happens quite often, that the assessee may have actually earned profits in a business, yet, due to certain provisions in the Act, the taxable income as per the provisions of the Act may turn out to be nil or a negative figure. As a result of this, certain companies, tho....
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....ount has to be increased by the amount referred to in clauses (a) to (f) of the Explanation if they are debited to the profit and loss account. On scrutiny of the profit and loss account we do not find any such amount debited and hence the amount of Rs. 2,94,491 remains as it is. Now, this amount is to be reduced by the amounts referred to in clauses (i) to (ix) if they are credited to the profit and loss account. None of the amounts mentioned in clauses (i) to (ix) are credited to the profit and loss account and hence no reduction has to be effected. Thus, the book profit as envisaged by section 115-JA remains at Rs. 2,94,491 and 30% thereof amounts to Rs. 88,347. The net profit is arrived at after taking into consideration the income by w....
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....nbsp; ----------- Long-term-capital gains on sale 8,46,442 of land ----------- 74,884  ....
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....Section 115-JA is one such provision which deems 30% of the book profits to be the total income of the assessee. Book profit means the profit as per the profit and loss account prepared in accordance with the provisions of the Companies Act. The Companies Act does not classify the income into various heads like the Income-tax Act. Therefore, we do not see any reason as to why the plain meaning of the term "book" as given in section 115-JA should be given a go-by by classifying into various heads as per section 14 of the Act. In fact, that is not the mandate of section 115-JA, and if we do so, it would be against the mandate of section 14 itself. Further, the book profit determined under section 115-JA is a composite amount taking into consi....