2014 (1) TMI 644

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....r setting off brought forward unabsorbed depreciation of Rs.94,70,234 under the normal provisions of the Act. Since the profit as per profit and loss account is of Rs.5,30,693/-, AO computed the book profit u/s.115JB of the Act at Rs.41,792/-. Thus, the computation was made u/s.115JB of the Act. Since in the normal computation of income under the provisions of the Act, AO made disallowance of Rs.10,88,746/- claimed by the assessee on account of fee paid to Rochester Institute of Technology, New York State, USA on the computer course pursued by Mr Naval Kumar, S/O Shri B.R. Kumar who holds 99% shares of the assessee company and other 1% being held by his wife Mrs Pushpa Kumar and stated that said amount of Rs.10,88,746/- spent on account of ....

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....(Guj). Hence, this appeal by assessee. 5. At the time of hearing, ld A.R. submitted that similar kind of expense was made in assessment year 2001-02, which was allowed by the AO himself. He referred pages 2 to 8 of PB, which contain copy of assessment order and profit and loss account for the said assessment year. He further submitted that in assessment year 2005-06, similar expenses were incurred and claimed by assessee. AO disallowed the claim on similar facts and initiated penalty proceedings. However, AO subsequently dropped the penalty proceedings and ld counsel referred page 17 of PB, which is copy of letter dated 29.3.2011 of AO to drop the proceedings initiated u/s.271(1)(c) of the Act. Ld A.R. further submitted that if the assessm....

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....at only Mr Naval Kumar was sent for such training programme after executing an agreement and no other employee was sent. He further submitted that at the time when Mr Naval Kumar was sent for pursuing said computer course, assessee company was not in the business of any computer related activity. He further submitted that said computer course is a period of 5 years from 30.11.2000 to 31.5.2005. ld D.R. submitted that said expenses claimed were not for business of assessee company but was an inflated claim. Therefore, levy of penalty on account of said payment of Rs.10,88,746/- as well as payment of salary of Rs.60,000/- are nothing but furnishing inaccurate particulars of income by claiming said expenses as business expenditure. He submitte....

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....is first computed under the normal provisions of the Act and tax payable on such total income is compared with the prescribed percentage of the book profits computed under section 115JB of the Act. The higher of the two amounts is regarded as total income and tax is payable with reference to such total income. If the tax payable under the normal provisions is higher, such amount is the total income of the assessee, otherwise, 'book profits' are deemed as the total income of the assessee in terms of section 115JB of the Act. It is stated that the income was computed as per the normal procedure was less than the income determined by legal fiction, namely, the book profits under section 115JB of the Act, the income of the assessee was assessed....