2015 (10) TMI 1463

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....red in deleting the adjustment/addition in computing Book Profit u/s 115JB of the IT Act, of Rs. 3,52,78,000/- of waiver of principal amount on one Time Settlement (OTS) of loan by Vijaya Bank, without appreciation the findings of the AO for making such an addition. 2. On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the adjustment/addition in computing Book Profit u/s 115JB of the IT Act, of Rs. 3,52,78,000/- of waiver of principal amount on one Time Settlement (OTS) of loan by Vijaya Bank, without appreciating that the directly transfer of the amount to General Reserve without routing the same through Profit & Loss Account" 3. On the facts and in the circumstances of the case and in law,....

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....the form of waiver of principal amount of loan which were directly credited to 'General Reserves' in the balance sheet, which ought to have been routed through profit and loss account and therefore, would have form part of the book profit. 3. The assessee's case on merits before the Assessing Officer was that in the relevant year, one time settlement (OTS) was entered into by the assessee with Vijaya Bank in respect of loan liability. The loan borrowed from Vijaya Bank in the earlier years was utilized for the capital expenditure and capital expansion. Under the OTS Agreement, lumpsum payment of Rs. 7 crores against total outstanding of Rs. 12,81,12,000/- was to be made. Thus, there was waiver of Rs. 5,81,12,000/-, which was ....

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....at, once the profit and loss account has been prepared under Part-I & Part-II of Schedule-VI of the Companies Act; duly certified by the Auditors; placed before the shareholders and adopted/approved by the AGM, then the Assessing Officer cannot make any adjustments to the company's book profit except to the extent provided in Explanation 1. The assessee here in this case has prepared its account in accordance with the Schedule-VI of the Companies Act and, therefore, he held that the addition made by the Assessing Officer in the book profit is not correct. 5. Before us, Ld. Counsel supported the order of CIT(A) and submitted that this issue is now well settled by series of decisions rendered by various High Court and by this Tribunal ....