TaxTMI 
TaxTMI 
2009 (11) TMI 903
X X X X Extracts X X X X
X X X X Extracts X X X X
.... guidelines issued by RBI with reference to FEMA, 1999 held the transaction as business loss as against speculation loss treated by the Assessing Officer. Aggrieved with such order of the CIT(A), the Revenue is in appeal before us. 5. The learned DR fairly conceded that the issue is against the Revenue and in favour of the assessee by the decision of the Hon'ble Supreme Court in the case of CIT vs. Woodword Governor (I) Pvt. Ltd., reported in 294 ITR 481. In view of the above submission of the learned DR, this ground raised by the Revenue is dismissed. 6. Grounds of appeal No. 2 by the Revenue reads as under: "On the facts and in the circumstances of the case and in law, the Ld. CIT(A) erred in deleting the disallowance of interest amounting to Rs. 82,49,728/-." 7. Facts of the case, in brief, are that the assessee has debited a sum of Rs. 82,49,728 being interest paid on borrowed funds and claimed the same as business expenditure. The Assessing Officer observed that the funds on which the interest has been paid were utilised for the purpose of making investment from which the income has to be computed u/s. 45 of the Income-tax Act, 1961 (the Act) and not u/s. 28 of the Act. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ider the above amount as a part of book profit u/s. 115JB of the Act. On being questioned by the Assessing Officer it was submitted that since the rights in booked premises were held as capital asset, the profit arising from the sale thereof was not credited to the Profit and Loss A/c. It was submitted that the surplus of Rs. 10,38,13,765 arising on the sale of the rights in the booked premises did not constitute trading profit. It was further submitted that the accounts of the assessee company were duly certified by the auditors and the same has been adopted in the AGM. The said audited accounts were filed with ROC. Reliance was placed on the decision of the Hon'ble Supreme Court in the case of Apollo Tyres Ltd. vs. CIT reported in 265 ITR 273 and the decision of Hon'ble Bombay High Court in the case of Kinetic Motor Co. Ltd. vs. DCIT reported in 262 ITR 340 and it was argued that no adjustment can be made to the book profit of the assessee u/s. 115JB of the Act on account of this profit. 12. However, the Assessing Officer was not convinced with the above submissions of the assessee. Referring to the provisions of Companies Act, he observed that every company has to prepare its a....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed in the AGM. He further submitted that the company Apollo Tyres Ltd. was a widely held public limited company whereas the assessee in the instant case is a closely held company. He further submitted that the various decisions relied on by the learned counsel for the assessee were rendered in the context of the provisions of section 115J or 115JA whereas the section involved in the appeal relates to provisions u/s. 115JB. 15. The learned counsel for the assessee, on the other hand, reiterated the same submissions as made before the Assessing Officer and the CIT(A) and submitted that the assessee company has correctly credited the above amount to the Balance Sheet instead of Profit and Loss A/c. 16. We have considered the rival submissions made by both the sides, perused the orders of the Assessing Officer and the CIT(A) and the Paper Book filed on behalf of the assessee. We have also considered the various decisions cited before us. There is no dispute to the fact that the assessee in the impugned assessment year has earned gross profit of Rs. 10,38,13,765 on account of sale of its rights in an immovable property. There is also no dispute to the fact that this income has not bee....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of a partnership firm to the extent not adjusted from any previous provision or reserve. Note : Information in respect of this item should also be given in the balance sheet under the relevant provision or reserve account. (b) Profits or losses in respect of transactions of a kind, not usually undertaken by the company or undertaken in circumstances of an exceptional or non-recurring nature, if material in amount. (c) Miscellaneous income. (xiii) (a) .... (b) .... (xiv) .... (xv) .... 18. From a bare reading of the above it is clear that the Profit and Loss A/c. of a company shall disclose every material feature including credits or receipts and debits or expenses in respect of non-recurring transactions or transactions of exceptional nature also. Further the company is also required to set out the various items relating to the income and expenditure of the company arranged under most convenient heads and disclosing profit or loss in respect of transactions of a kind not usually undertaken by the company or undertaken in circumstances of exceptional or non-recurring nature if material in amount. 19. However, in the instant case we find although the assessee has earn....
X X X X Extracts X X X X
X X X X Extracts X X X X
....a book profit of Rs. 2,22,10,525 as against the book loss of Rs. 1,64,49,937 which was confirmed by the Tribunal. On further appeal to the High Court, the Hon'ble High Court had held that under the Companies Act both straight line method and written down method are recognised, therefore, once the amount of depreciation actually debited to the Profit and Loss A/c. and was certified by the auditors it was not permissible for the Assessing Officer to make book adjustments. 23. Thus from the above it is clear that the assessee has debited the depreciation in the Profit and Loss A/c. as per one of the recognised methods. Further the issue before the Hon'ble High Court was under the provisions of section 115J of the Act. However, in the instant case the assessee has bypassed the provisions of Part II and Part III of Schedule VI of the Companies Act and directly credited the profit to the reserve account. Therefore, the decision of the jurisdictional High Court is also not applicable to the facts of the present case. Similarly the decision of the co-ordinate Bench of the Tribunal in the case of Orson Trading Pvt. Ltd. is also distinguishable and not applicable to the facts of the present....