2011 (2) TMI 111

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.... be worked out on the basis of the adjusted books profits under Section 115JA of the Income Tax Act, 1961 is valid?"   2. This very question came to be considered by this Court in the decision reported in 302 ITR 22 (CIT v. RAJANIKANT SCHNELDER AND ASSOCIATES P. LTD.) and after detailed analysis, has held as under in paragraph 5.   "The Assessing Officer is not entitled to touch the profit and loss account prepared by the assessee as per the provisions contained in the Companies Act, while arriving at the book profit under Section 115J and the book profit so arrived at should be the basis for taxation and therefore the computation under Section 80HHC should be limited to the case of profits of eligible category only. The Tri....

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....ration was as under:-   "Whether for determining the "book profits" in terms of Section 115JB, the net profits as shown in the profit and loss account have to be reduced by the amount of profits eligible for deduction under Section 80HHC or by the amount of deduction under Section 80HHC?"   The Supreme Court ultimately answered the question in paragraph 10, which reads as under:-   "One of the contentions raised on behalf of the Department was that if clause (iv) of the Explanation to section 115JB is read in entirety including the last line thereof (which reads "subject to the conditions specified in that section"), it becomes clear that the amount of profits eligible for deduction under section 80HHC, computed unde....