TaxTMI 
TaxTMI 
2008 (2) TMI 815
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....d under section 143(3) of the Income-tax Act, 1961. 2. The assessee had filed a return of income for the impugned assessment year declaring a total income of Rs. 26,43,060 after adjusting the brought forward losses under the normal provisions of the Income-tax Act, 1961. So also, the assessee returned an income of Rs. 1,41,55,773 under section 115JB of the Act. Initially, the return was processed under section 143(1). Thereafter, the assessment was completed under section 143(3). 3. The assessee had sold during the relevant previous year, a factory gala at Saki Naka, for a consideration of Rs. 32,00,000. The cost price of the gala it Rs. 4,44,930 as reflected in the balance-sheet of the company. As per generally accepted accounting pr....
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....es made thereunder. (B) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in holding that the appellant has not followed the standard accounting proce dure in preparing its profit and loss account in disclosing its income even though the Accounting Standards also accept the option of the appellant to take the capital profit to the balance-sheet without passing it through the profit and loss account. (C) On the facts and in the circumstances of the case and in law, the learned Commissioner of Income-tax (Appeals) erred in not following the decision in the case of Sutlej Cotton Mills P. Ltd. v. Asst. CIT [1993] 199 ITR (AT) 164 (Cal) ; [1993] 45 ITD 22, where....
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.... of disclosure to distinguish the profits of exceptional nature from the regular profits arising out of business operations. It is in the light of the above compulsion and in accordance with the accepted accounting practices that the assessee-company has transferred the said amount directly to the capital reserve account. This is because the said amount of surplus does not have any connection with the operating results of the assessee-company for the impugned previous year. 7. The learned chartered accountant further argued that what is brought to tax under the minimum alternate tax (MAT) scheme is not the total income as computed under the normal provisions of the Income-tax Act, 1961, but on the other hand, what is brought to tax is "b....
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.... court has held that while computing the total income under the Income-tax Act, the assessee is required to take into account income by way of capital gains, and therefore, in computing the book profit, the assessee cannot exclude any capital gains. The court has held that Schedule VI to the Companies Act requires disclosure of credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of an exceptional nature. It is also necessary to disclose the profits or losses arising from such transactions. The court held, therefore, that the income from capital gains should be included for the purposes of computing book profits under section 115J. 10. We heard both sides and considered the matter. Here, the....
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....hedule VI to the Companies Act, requires disclosure of profits or losses from transactions of an exceptional nature. In the light of the said disclosure and accounting requirement mandated by Schedule VI to the Companies Act, the hon'ble Bombay High Court has held that the capital gains arising to a company should form part of the book profit for the purpose of section 115J. As far as this issue is concerned, there is no functional distinction between section 115J and section 115JB. Therefore, we find that the specific issue of capital gains, vis-a-vis minimum alternate tax profit has been decided by the jurisdictional High Court in the above judgment and we are bound to follow the above judgment. If so, the lower authorities have right....